Credit card or car finance dilemma

Paulm1285

Hi, I have a debt reducing dilemma and need some advice!
I am currently half way through paying off car finance with VW with just under £4000 left to pay at 11.7% apr (initially borrowed £6995 - worked out as £11,159 with interest over 60 month period).

I also have about £7k on credit card at 0% (I have another card with £0 balance offering me 0% apr for 12 months, if I transfer balance before 30th June).

My dilemma is, I have come into some money which should completely pay off the car finance, but I am not sure whether to do this, or knock it off the credit card balance.

I pay £151 a month at the moment to VW, and about £150 to the credit card.

Any advice would be much appreciated!

harrys_dad

It is hard to advise without knowing your full financial situation. Maybe post up an SOA? Have you got a settlement figure for the car finance? Are there any penalty clauses for early settlement? Will you get some interest rebate? Are you currently living within your means?

On a slightly separate issue, why do people buy cars on high APRs over a five year period? Financial madness.

ValHaller

In your position, I would pay off the car finance and put the surplus into a savings account. In the meantime, I would be paying minimums on the card and diverting the rest of the £301/month you are currently paying into the savings account. If you run out of 0% finance, pay down the credit card with the savings account.

FireWyrm

Hard to say really. My gut feeling would be to pay the car finance, but that presupposes that the interest wasnt loaded up front on the loan in which case, paying it gets you nothing except peace of mind. Tell us more about the car loan....what are the penalties for early payment for instance?

worriedwilf

Hey, personally I would pay the car finance and transfer the credit card balance to the 0% offer that you have.