Can anyone help?

sweetkat30

Hi, My husband and I have recently bought a new car, with finance. We are paying over two years but at the end have to pay the balance of £4200, this is including £900 interest. If we pay the loan off in full before hand we pay less interest which is what we want to do. We are interested in finding out the best way to do this. I think it would be with a credit card but couldn't pay the balance in full each month. I've been looking at the 0% offers but are these just if you can pay the balance in full each month? Does anyone have any advice???

Thankyou
Sweetkat30

KiKi

An interest-free credit card comes with a period of time for which the credit you have taken out is interest-free. For example:

You pay off the loan with a 12 month interest-free credit card (say, £6000). You have to pay back at LEAST the minimum payment required each month, and you have to pay it off in FULL by the end of the 12 months to benefit from the entirely interest-free privilege.

If you fail to pay the min each month, or fail to pay it back in full at the end of the interest-free period, you will pay interest on the whole amount at a usually much higher rate than your loan (eg, 21%). So if you fail to pay the minimum in the *first* month, that's it, your 0% privilege is gone. You will be charged interest from that point on.

You should only commit to this if you are absolutely certain you can meet the minimum payments, and if you can pay off in full at the end of the period, as it is almost certain that your loan rate is less than a credit card rate.

Depending on how you pay the loan, you may be required to do a balance transfer. This means transferring the debt of your loan to be a debt on your credit card. Card providers charge for this (say, 3% of the amount transferred). You'll need to factor this in, depending on the card. You also need to get a card that gives you enough credit in the first place to cover your loan.

In addition, make sure you VERY CAREFULLY check ALL your loan T&Cs to make sure you're not penalised for doing this.

HTH
KiKi