Paying off car HP with credit card

Skinty_McGinty

Hello everyone, I am a long time lurker here and had some great advice from the site over the years.

I have a car HP agreement which I am looking to pay off early, possibly taking adantage of a 0% Barclaycard offer. I can afford to overpay by approx £300 a month.

I have thought of a few options which I will list, and was wondering if someone who is better at maths than me can advise which is best from a financial viewpoint.

The facts -

£199.07 per month - 44 payments remaining
£9008.25 outstanding (there is a small balloon payment at the end).
£7584.43 - settlement figure if I paid in full today.

The APR on the agreement is 13%

Both myself and my wife have Barclaycards, and between us have enough credit limit to cover this in full. I have £6500 limit, she has £9800 limit.

We both always have 0% balance transfer offers available, and once or twice per year, one of us gets the 6.9% life of balance offer. The time on the 0% offers varies from month to month, but is usually 10 to 14 months.

As these are balance transfer offers, I would have to pay this using another credit card, then balance transfer to Barclaycard. The fees incurred would be 3% from the HP company for paying using a credit card, and 2.9% for the balance transfer.

The options I see that I have are:

1. Make the £300 overpayments directly to the HP finance company.

2. Wait for one of the Barclaycards (hopefully the wife's) to get the life of balance 6.9% offer and then settle the HP agreement in full using another card, then transfer to Barclaycard (3% + 2.9% fees incurred). I would then be paying off Barclaycard at £499.07 per month. This offer only seems to come up once or twice per year.

3. Transfer as much as I can afford to pay off, to a Barclaycard 0% offer. For example, if they give me a 12 month offer, transfer 12 x £300 = £3600 and repeat this every 12 months or so. The standard rate is 17.9% so I wouldn't want to revert to this.

Was hoping that someone who is good with APR calculations can advise the best way to proceed with this, and whether the fees stil make it worthwhile.

Many thanks

Tixy

I haven't worked out all the maths but a couple of thoughts

Barclaycard sometimes offer money transfer offers to existing customers (where you transfer the money in to your current account and use that to pay off a loan etc). Might be worth both asking BC if they have any such offer available to you, which means only 1 transfer fee not 2.

2. Wait for one of the Barclaycards (hopefully the wife's) to get the life of balance 6.9% offer and then settle the HP agreement in full using another card, then transfer to Barclaycard (3% + 2.9% fees incurred).

Have you checked if you can pay the HP company the balance via credit card?

Skinty_McGinty

Thanks for your reply Tixy. I can definitely pay off the HP company using a credit card. They just charge a 3% fee for the privilege.

They only charge 1.5% for debit card so what you say about transferring to a current account might be an option worth exploring. This offer has never appeared on either of the Barclaycard accounts online, so are they likely to offer it if I call them?

TadleyBaggie

Probably makes no sense to pay Barclaycard a fee to transfer the money to your current account and then the HP company a fee to pay by debit card. Almost certainly a higher combined fee than the 3% for a straight credit card transaction would be.

[Deleted User]

So

If you pay off using a CC you will incur a bill of: £227.53.

New Balance: £7811.87

2.9% Transfer fee on that = £226.54

New balance = £8038.41

So you have instantly added £450+ onto the bill.

At the £499 month payment on a CC it would take you 16months to clear.

If you have to keep changing the CC every 12 months, your going to be increasing that and relying on getting a CC with a BT allowance sufficient to enable you too. A lot of possible things that Could go wrong (Could)

Alternatively - You could get a bank loan.

Nationwide £7500, 36 months 4.9% Pays back £500 on Interest.

Make you overpayments and your talking £200 interest and clearing it in 16 months in an easier to manage payment.

Personally, if circumstances enabled, i would get a low interest rate loan, and make over payments on it.

I have a 5 year loan, which got me a lower interest rate, and i make huge overpayments every month (I'm talking over £3,000 in three months in over payments!), which means my interest payments on £11,000 will about £300.

I use this spreadsheet to help me manage my loan (Allows adjustments for overpayments etc

Excel Template
External Source - Microsoft.com


HTH

Tixy

Skinty_McGinty wrote: »

They only charge 1.5% for debit card so what you say about transferring to a current account might be an option worth exploring. This offer has never appeared on either of the Barclaycard accounts online, so are they likely to offer it if I call them?

Is there a way you can pay off the HP with no fee? E.g. by bank transfer?
If neither of you have ever had that offer then possibly not, but might be worth calling them if you decide it is the best option.

Another option might be if either of you is able to get accepted for a new 0% card with MBNA. Money transfers for 4% but for 26months, so you would have it paid off before you needed to think about switching again. Post Office would be 2.98% fee and 16months to clear it and again it should be clear within the 16months.

Although also consider the option of a cheaper personal loan - but of course that would depend on what APR you could get accepted for and whether it would be less than the HP.

Skinty_McGinty

Thanks for the advice Newbieboy and Tixy. I was planning to pay it off without taking out further credit but you have given me some food for thought.

It looks like a bank loan with a low enough APR may well be the most sensiblenidea.