Newbie here...have I done my homework?

james_09

I have done exactly what you are thinking of doing with £12k over the last 3 years. I have about £2k remaining which will be paid off by the end of this year.
If you are disciplined and have a good credit rating it is a very cheap way to borrow money and has the added bonus of being able to repay the balance at any time with no penalties.

CLAPTON

Garbs wrote: »

There is no way I'd be able to repay the full amount after 20 months, it would require a balance transfer to a 0% card....hopefully!

well, a 7,500 loan with only 120 pm payments will take
-at 0% interest over 5 years to repay
and with typical CC rates about 7-8 years to pay off

this does not make financial sense
rethink your need for 7,500

danielley

Also I think that there will be a % fee for the new card when you transfer the balance to the new card...

Garbs_2

There is some truly great, independent advice on here......
The money is for a private motor vehicle [ie not a trader] so cash is required.
The Derbyshire bank do a loan for over £7,500 at 5.8% over 5 years.
This is a great rate, but as above, I'm trying to pay as little interest as possible.

CLAPTON

a cheaper car would be one alternative

dtsazza

Garbs wrote: »

There is no way I'd be able to repay the full amount after 20 months, it would require a balance transfer to a 0% card....hopefully!

This is the potentially tricky part.

There is no guarantee whatsoever that 0% credit cards will accept you in 20 months' time. The economic situation might change such that these don't even exist. Or strict regulations make borrowing more expensive, etc.

I would make sure that you are, if not happy with the worst-case situation, then able to deal with it. Let's say that you can't get a new credit card in 20 months' time, and you end up having to pay standard interest rates (probably 20%-ish?) on your outstanding balances then.

Would that be an absolute killer for you, or merely a bit of a pain but manageable? Remember that right now, you are committing to paying that residual back at 20%. Hopefully you'll be able to do so much more cheaply, but you have no way to guarantee this, and it won't invalidate your current agreement if you can't. So you have to be prepared for that.

(And so based on how likely you consider this eventuality to be, and how long you think it will take you to pay back, it might end up more rational to go with an e.g. 7% personal loan over the period - paying more in the best-case but much less in the worst-case.)


Otherwise, everything looks reasonable.

Garbs_2

dtsazza wrote: »

Otherwise, everything looks reasonable.

Dtsazza,
Thank you....but when you say everything looks reasonable do you mean one particular option or both?

dtsazza

Garbs wrote: »

Dtsazza,
Thank you....but when you say everything looks reasonable do you mean one particular option or both?

I'm not sure what you mean by that - I was responding in particular to this bit of your OP:

Does this sound ok? Am I missing anything?

So I meant to imply that I don't think you're missing anything, apart from possibly the risk aspect of being "stuck" with the debt, which might make a conventional loan more attractive.