Will this work?

ToReadItSanctifiesIt

I want to buy a car for £10,000. I will need to borrow £5,000.


I don't want a personal loan because I will have to pay interest on that. So I'm thinking of a credit card that is offering 0% APR for 12 months or whatever. Each month I will pay off the minimum payment (and maybe a little more on top). Then just before the 12 months of 0% APR are up, I will do a balance transfer to a new credit card offering both; free balance transfers and 12 months 0% APR. I'll repeat this process until the card(s) are payed off in years to come.


Is that going to work, or have I overlooked something?


Thanks

Slayerx

When you apply for a credit card there is no guarantee you will get the limit you want.

Also for that to work on the first card it would need to be 0% on purchases which don't normally last as long as balance transfers.

YorkshireBoy

When you find a card offering fee-free BTs and 12 months 0% interest, be sure to let us all know.


Alternatively, get 29 months 0% interest on cash into your current account (with a 4% one-off fee) by successfully applying for an MBNA card.

bsms1147

YorkshireBoy wrote: »

When you find a card offering fee-free BTs and 12 months 0% interest, be sure to let us all know.

Tesco did a 12 month 0% balance transfer (no-fee), 0% purchase card last year, so it does happen. Rare though.

ToReadItSanctifiesIt

Hold on...


If I use an 18 month interest free credit card (assuming I get one with a £5000 limit). I will pay the minimum repayment off each month and not have to pay any interest within that first 18 months.


Then, just before the 18 month deal ends, I'll get a balance transfer credit card and transfer the remaining debt onto that. With that I will have to pay a transfer fee of about 3%, then continue to pay off the minimum repayment each month as I did before. If I still haven't cleared the debt before the deal on this card ends (eg 30 months free), I will repeat the process by getting another balance transfer credit card.


So all it will ever cost me is the initial interest on transferring the debt onto a new balance transfer credit card each time, correct?

bsms1147

ToReadItSanctifiesIt wrote: »

So all it will ever cost me is the initial interest on transferring the debt onto a new balance transfer credit card each time, correct?

Yes, and any credit card transaction fee when buying the car (probably around 2-3%). Plus the repayment of the actual capital.

YorkshireBoy

ToReadItSanctifiesIt wrote: »

So all I will ever have to pay is the initial interest fee on transferring the debt onto a new balance transfer credit card each time, correct?

I've modified your post above, just so you get the terminology.


There will, of course, be a 2-3% fee charged by the dealer for paying that amount on a credit card.


And are you just using examples of 3 cards, or do you envisage it taking you over 4 years to repay the £5,000?

forgotmyname

Will a dealer accept a credit card payment of £5000? How much will he charge to accept that?

Minimum payment over 18 months wont make a dent into the gross balance. I just clicked a min payment calculator and it said 14 years to pay off £5000 at the minimum payment even with zero interest.

Buy a car for £5000?

What IF you cannot get a £5000 credit limit or you cannot get an interest free card next time?

ToReadItSanctifiesIt

It may well take me over 4 years to repay the debt. Clearly that is not ideal, but it is a manageable low cost debt that I see as a small burden in the face of no other debts to speak of, either now nor in the foreseeable future. So that's okay?

sharpy2010

ToReadItSanctifiesIt wrote: »

So that's okay?

Personally I'd say yes, its ok, as I'd find that deal acceptable - different people think different things though, so really its YOUR call as to whether you think its ok or not.

Nebulous2

It will work as long as your circumstances continue to meet the application requirements and companies keep offering 0% cards to you. I was looking at doing something similar last year and decided a personal loan at 5% would have been the way to go. My credit card (MBNA) was offering me a BT but they wanted a 5% fee. I certainly didn't want to go over 3 years to pay a car, so a 3 year personal loan was a better fit in my view.

Eventually I decided to keep my car for at least another year.