Loan Vs Credit Card

bob_e70

I am looking to borrow £6500 to put towards the purchase of a car. Originally i was going to get a loan, but what is stopping me from getting a 0% credit card, paying into it monthly and then transferring the remaining budget to another 0% card when the offer expires?

Kind regards,

Bob

BLT_2

bob_e70 wrote: »

I am looking to borrow £6500 to put towards the purchase of a car. Originally i was going to get a loan, but what is stopping me from getting a 0% credit card, paying into it monthly and then transferring the remaining budget to another 0% card when the offer expires?

Kind regards,

Bob

Nothing whatsoever provided you can

a. Get a credit card with 0% on purchases for a12 months.
b. Get subsequent credit cards at 0% agreed.

Its a good way to get a car, just be aware that many places will charge a 3% premium on credit card purchases, which at 3% will be 180 pounds. Far less than the interest on a 14.9% loan over 3 years however

justsimon

Its tempting to put it on a credit card, however, from my conversations with friends and family the temptation to add additional spending is too much, it can be a slippery slope to increased debts.

That's not to say its not a good idea - You need to factor in

1.Will another 0% deal be available when you need it
2. Will you be accepted for the card
3. How much of the debt would you have paid off after 0% expires
4. If you cant find another card how much will it cost you for the remainder of the debt in interest and how long will it take to pay it off

Sainsburys are doing loans at the moment with 8.8% APR typical on loans from £5,000 - £7,499 - If you took out a loan with them over 3 years it would cost you around

Payment per mth - £205 per mth
Interest over 3 yrs - £882
Interest per year - £294 per year


If you got interest free card for 12mths and payed say £227 per mth for the 1st year you would have paid back £2724 take that from your total of £6500 leaves your debt at around £3776.

If you then didnt get an intrest free deal on a card and had to pay 16.9% apr over 2 years monthly repayments would be around £184.37. Total repayments would be £4424, interest would be £648.98.

That would save you around £230 ish pound compared with the loan above.

Jon_B_2

How can you guarantee you'd be able to get a credit limit of £6500+?

Wutang_2

Jon_B wrote: »

How can you guarantee you'd be able to get a credit limit of £6500+?

Usually by applying.

[Deleted User]

it would be unusual for most people to be offered £6500 limit on a new card atm.

BLT_2

woodbine wrote: »

it would be unusual for most people to be offered £6500 limit on a new card atm.

I just got one at 0% until Jul 11

dizzyblonde82

BLT wrote: »

I just got one at 0% until Jul 11

Just out of interest who is your new card with?

BLT_2

dizzyblonde82 wrote: »

Just out of interest who is your new card with?

Egg, I am not sure if they are a hard card to get or not, I assume with that sort of limit its not sub prime?

dizzyblonde82

BLT wrote: »

Egg, I am not sure if they are a hard card to get or not, I assume with that sort of limit its not sub prime?

I already have an egg card, just waiting for my new santander card to arrive but they don't tell you the limit before you receive the card which is kind of annoying!

BLT_2

dizzyblonde82 wrote: »

I already have an egg card, just waiting for my new santander card to arrive but they don't tell you the limit before you receive the card which is kind of annoying!

That must be peculiar to Santander, every credit card I have ever had has advised the credit limit immediately. The largest one I was ever given was 9250, with offers like that based on an internet signature is it any wonder people get into difficulty