Car finance - can I avoid/cut interest?

fuzzgun19

I took out car finance through a dealer with Santander last year.
The deal was that the dealer paid the 'interest' for the first 12 months (they pay it into my account). This was because I was expecting to receive a lump sum of cash this year, and I was going to use this to pay off the car finance, but that is now fallen through.

The first 12 months will be up at the end of July 2014.

I have £2100 cash that I can pay off the loan as a part payment. This should leave a settlement figure of about £2000 left. The APR on the finance is 20%.

My credit file (on Noddle) is clean - No defaults, late payments, CCJs, AP markers etc, the only 'debt' I have is a catalogue company currently with a £0 balance (I sometimes use it and pay in full), and this car finance.

I was looking to try to either avoid, or cut interest when the 12 months is up after July, and figured I have the following options.

• Try to get a 0% interest credit card that allows 'Money transfer'.
• If I am turned down for a card, try to get a personal loan for the remainder with a lower APR than the current car finance (20%).

Am I right in thinking these are my only two options, or can anyone advise if there may be another way?

Tixy

If neither of your options work the other option would be to overpay the loan each month to at least minimise the overall interest.

fuzzgun19

Thank you Tixy, I didn't think of that.

fuzzgun19

I've just applied for a Virgin Money 29mth 0% card, and been accepted with a limit of £1300.

I've never done a money transfer before. How much of that £1300 could I transfer to my bank.. £1250, which leaves £50 for the 4% fee?

Is this how it works?

jonesMUFCforever

The website does not state the % that you can transfer - unless this is in the terms and conditions you electronically accept.
Just in case I would keep £50 clear so try £1250.

Tixy

Most cards allow a maximum transfer of either 90% or 95% of your limit.
But they'll should tell you either when you phone them to do the transfer or when you log in to the online banking section.

happycamel_2

How about doing all your normal spending on the card (groceries, fuel etc) and then using that money to overpay the loan.

fuzzgun19

happycamel wrote: »

How about doing all your normal spending on the card (groceries, fuel etc) and then using that money to overpay the loan.

I'm not sure how you mean? Sounds complicated.

Tixy

fuzzgun19 wrote: »

I'm not sure how you mean? Sounds complicated.

This method works if you have a card with 0% on purchases. Bascially any purchases you would normally use your debit card for you use your credit card instead.
This means you are left with more money in your bank account which you could then use to pay off a debt charging interest - like the car loan in your case.

It can be useful for someone who cannot get a card that offers money transfers. Or can sometimes be cheaper than a money transfer card overall (depending on how much of their day to day spending someone can do on the card/how big the balance they want to shift to a credit card is).

fuzzgun19

Tixy wrote: »

This method works if you have a card with 0% on purchases. Bascially any purchases you would normally use your debit card for you use your credit card instead.
This means you are left with more money in your bank account which you could then use to pay off a debt charging interest - like the car loan in your case.

It can be useful for someone who cannot get a card that offers money transfers. Or can sometimes be cheaper than a money transfer card overall (depending on how much of their day to day spending someone can do on the card/how big the balance they want to shift to a credit card is).

Thanks for explaining Tixy.

Say I spend £30 on groceries at Asda, use the 0% card, then I put the £30 cash I would have used at Asda as a payment off the car loan?

Sorry, just trying to get my head around it.. I kind of get the idea, knowing me I'd balls it up somehow.

I'm so used to using cash/debit card in everyday life.

thebritishbloke

fuzzgun19 wrote: »

Thanks for explaining Tixy.

Say I spend £30 on groceries at Asda, use the 0% card, then I put the £30 cash I would have used at Asda as a payment off the car loan?

Sorry, just trying to get my head around it.. I kind of get the idea, knowing me I'd balls it up somehow.

I'm so used to using cash/debit card in everyday life.

Money transfer is probably the easiest option for you then. Better to take a £50 fee than pay 20% interest!