Credit Cards to Purchase Car?

steady__eddie

I tried to do this a couple of years ago but the dealer refused to sell me a s/hand car on c.c., he refused to give me a reason so I surmised that the credit card company rake off would have bitten into his profit too deeply !

Reaper

steady__eddie wrote:

I tried to do this a couple of years ago but the dealer refused to sell me a s/hand car on c.c., he refused to give me a reason so I surmised that the credit card company rake off would have bitten into his profit too deeply !

That's not the way to do it. The dealer will be charged a couple of percent by the credit card company which is a hefty wack on a car. Frankly if he is willing to do it you haven't negotiated hard enough. Stop, negotiate another couple of percent off and pay by cash/cheque instead.

What you need to do is move the money from a credit card to your bank account and pay from there. Read up on how to do an SBT here.

nh

Pricy147 wrote:

I have funded by car through credit cards for over 4 years, and have paid next to no interest in this time. One thing I would suggest if you are to do this however is this: DO NOT FUND THE CAR THROUGH CREDIT CARDS.

If you fund the car through credit cards, and as people here have said - you cant renew the deals - you end up paying 16/17% interest.

What you need to di is firstly apply for a loan. But not a normal loan....an offset loan. Inteligent Finance are the company I use - however there are other about such as First Direct, etc. Get the 6k loan you need which will be around the 8.9% mark probably.

now you have set monthly payments, and you know the interest rate wont go up - and you are guaranteed that money until you repay it.

Now go for the credit cards. Get 6k worth of credit cards at 0% and transfer into your offset current account. this will mean you wont get payed interest on the funds - but wont pay any interest on you car loan. If you exceed you 6k - you will receive interest on the supless in your current account (this is stoozing).

By doing this - if ou cant get the 6k you need - you arent running the risk of having to sell the car to repay the cards. You will simply revert to paying the 8.9% you originally borrowed.

I have done this on a 15k loan for over 4 years - and probably payed about £200 interest in that time - the interest should be over £100 per month!

Hoep this helps....

When you say offset, does that mean you have to have a morgage with them? I assume not, I am just confused by the terminology.

Is this the same as Cahoot's flexible loan where they give you a limit and you use as much or as little as you want? I think that is a great idea. I am thinking of borrowing £20k on 0% cards to do up kitchen/bathrooms etc in September. This would be great as a back-up, and it is something I hadn't thought of.

t_i_g_e_rr

Offset loan: Same as an offset mortgage, but not used to finance a house. The loan is 'offset' by a current account. Offset means that if you have a £6,000 loan offset by a current account with £4,000 in, you will only pay interest on £2,000. The benefit of this arrangement is that you still have a loan for £6,000, so you can take all the money out of your current account at any time (a good back up plan when you are using CC's as a 0% loan). Repayments would still reduce the loan as normal.

empfun

ips_saint, what car are you getting?

ips_saint

Thanks for the replies everybody!

I'll try to address all of the questions I have been asked:

Reaper - I have considered what would happen if, for any reason, I was jobless in 18 months. The worst that would happen is I would move home and save money that way - I am sure I could keep up the repayments. Though obviously I would not want to live to pay off a car!

johannamse - they are about as much as a loan repayment would be - in that case, I would not get a new car (so question answered, really!)

nh - I like your idea - I am quite lucky that I do not have an expensive lifestyle and prefer to save my money, but I do like my cars (hence getting itchy feet for a new one!). I plan each financial month and have a spreadsheet allocating my salary to costs (bills, saving for car incurance etc.)

zcaprd7 & moggins - that was my original plan with my current car - I was thinking I would really like a nice car.

Pricy147 - sounds like you did it well - was it all much hassle?

t_i_g_e_rr and prenticesa - I might look at a flexiloan and offset loan, but after reading the posts here, I may continue to save for the next 18 months and see where I stand.

empfun - I was looking at a Golf GTI <5 years, 50k on the clock, and more importantly, insurance group 10!

After thinking it over more and reading peoples thoughts and experiences, I will likely hold off. It would be nice to get a new car but it is not a necessity right now and it does carry risks no matter what way I finance it. Thanks everyone.

nh

t_i_g_e_rr wrote:

Offset loan: Same as an offset mortgage, but not used to finance a house. The loan is 'offset' by a current account. Offset means that if you have a £6,000 loan offset by a current account with £4,000 in, you will only pay interest on £2,000. The benefit of this arrangement is that you still have a loan for £6,000, so you can take all the money out of your current account at any time (a good back up plan when you are using CC's as a 0% loan). Repayments would still reduce the loan as normal.

So what you have to do is get the loan, say £6k, pay for the car, then get £6k from 0% credit cards, put that 6K in the current account which your loan is offset against, so you pay no interest?

Then you have to make the minimum payment on the credit cards each month - do you have to make a minimum payment on the loan as well?

millietwoshoes

hello,
I am in a fairly similar situation wishing to purchase a new car and am very interested in the suggestion to buy the car with an offset loan. Then apply for 0% cards and transfer the money etc etc but can you please explain :(sorry I am not financially literate??)
You say transfer the money from the 0% credit cards to the offset current account - Is this the same thing as the offset loan which you used to originally buy the car???

I have just read a few more replies and understand a little better - Does it matter if your current account is not in credit - I understand that it will affect how much interest you pay but does it affect the ability to get an offset loan??
thank you

Pricy147

all the gumpf on offsetting is available on the Inteligent Finance web site; https://www.if.com.

Basically as said earlier - its a normal loan and can be used for any purpose. What you have in your current account with them is offset against your loan. So if you have a loan for 10k, and 5k in your current account - you pay interest on the remaining 5k of the loan. No capital is payed off the loan however (only through monthly payments). So the cash in your current account can be withdrawn at any time. Vice verca - if you have a 10k loan, and 15k in your current account - you will pay no interets on the loan, and receive interest on the surpless 5k. Therefore offsetting with credit cards at 0% efectively give you a zero percent loan (if you can cover the full amount).

You repay the loan like any loan (out of your wages). You repay the minimum payments on the credit cards out of the money you are offsetting. Once the introductory rate ends - you pay it off.

Skint_Catt

Hi all,

I've just bought a second hand car for £5k on a cashback credit card from a garage. There was a sign in his office that said he would charge 2% on top for using a credit card, but he didn't when he put it through the machine. Applied for a Virgin 0% credit card and have just had the £5k from Virgin transferred into my current account to pay off the cashback card. Job Done. Never had any credit problems (but have backup should I need it) so don't envisage a problem moving card deals in 9 months.

I NEVER pay interest on anything I don't have to.