Loan or credit card?

3541daniel

Hi,

I am new to the forum and am not sure if this is in the right place, please forgive me if its not

i am looking to borrow around 12k over 4-6 years for the purchase of a new car.

i am trying to decide what is the best way to go, either borrow the money via a loan or take out credit cards on 0% and then do balance transfers to repay the debt for 4-6 years

a little bit about my financial situaton. 26 years old, 20k before tax. i am a homeowner (value 180k) which i own outright. it was inherited from my grandparents however i am paying my sister 500per month for her share.

i have no outstanding debt apart from 400 on a 0% credit card for my car insurance. this is the first and only card i i have had.

my current car i also owned outright (no outstanding finance) and has a value of around 5k. i would be adding this in to the ourchase to get to the target price of 17k

advice please? i only really want to pay around 200 per month what is the best way to do this?

many thanks

CLAPTON

hopefully no responsible lender will give a 12k loan to some-one who only earns 20K
its also unlikely that some-one earning 20k will get a credit card for 12k let alone one with 0% deal

MFWannabe

Probably not want you want to hear; but my advise would be not to do it. I very much doubt any one will lend you that amount of money anyway. If you are in such a good financial position why did you have to put car insurance on a credit card?
I would advise saving and then if you still want to but the car at least then you will be able to buy it outright

drbesty

Do you not think its abit insane to spend your entire annual salary on a car?

3541daniel

may be you are right but i not spending my entire salary, 12k over 6 years is just over 200 per month @7.8% which i can easily afford. this would work out even cheaper if some was put on 0% interest cards.

car insurance was 500 i thought 0% over 12 months was easier than paying upfront, i only used the 500 of my 4000 limit. plus i got cash back from quidco which i put straight in.


lets for example say i lowered my sights onto a smaller amount which is the best way to go? i really need to move soon as my car is loosing value p/x was 6750 this tiime last year this year 5000


thanks for your comments

MFWannabe

3541daniel wrote: »

may be you are right but i not spending my entire salary, 12k over 6 years is just over 200 per month @7.8% which i can easily afford. this would work out even cheaper if some was put on 0% interest cards.

car insurance was 500 i thought 0% over 12 months was easier than paying upfront, i only used the 500 of my 4000 limit. plus i got cash back from quidco which i put straight in.


lets for example say i lowered my sights onto a smaller amount which is the best way to go? i really need to move soon as my car is loosing value p/x was 6750 this tiime last year this year 5000


thanks for your comments

You are asking to borrow £12,000 when you earn £20,000; no lender will lend you that amount of money as that is over half your yearly salary; plus you also have access to £4,000 on the above credit card; how does any lender know that you're not also going to go and spend that aswell; accumalating £16,000 of debt.
As for your car losing money; all cars lose money unless they are old classic cars. Even if you trade the current car in and bought another car how much do you think the new car is going to be worth in 12 months time? And you will have also got into debt for it aswell. My suggestion would be to keep current car and save as much as possible (at least the amount you were planning to spend on a loan each month); then when you have saved decide if you then want to spend all your savings on a new car