Want to pay off car loan

stealthy_singh

Hi everyone, I'n new to the forum but have used the site for a few months now. It's brilliant!

Anyway to business. I bought a car in March and had a 6.2% finance deal to pay it off in two years. Not a problem so far. I'm paying £290 a month. Problem is I'm taking a new job which will see me take a pay cut for a year starting next month. So I wanted to try to minimize this outgoing for a year if I could. So I saw the halifax 0% deal for 12 months for purchases and applied for the card. They are sending me the terms and conditions, over the phone I was told I should get a credit limit of £5200. Now I checked what it would cost me to repay the loan whole now and it works out to £5296.48. I thought great I could use the credit card to pay off the loan (with a little from my current account) and pay £104 each month.

The thing is I got thinking seeing as it's repaying an existing loan and not purchasing something does it count as a balance transfer (which if it does even with the fee it works out a cheaper option in the short and long term). BUT! There always is one, could it be counted as a cash advance as cash to pay off the loan. If it is then I would be paying money out my nose for ever to pay it off (didn't bother to do the sums exactly but looking at the rates they are exorbiant!).

Does anyone here know which of these the above transaction would be classed as? Sorry if it's a bit confusing let me know if it is and I'll try to explain it better!

Thanks.

MrsTinks

It would be a balance transfer not a new purchase or cash advance

YorkshireBoy

I'm pretty certain you will not be able to BT the loan to the card - at least not directly.

Perhaps the easiest way would be to obtain an Egg Money card and BT a ficticious debt from here to the Halifax card. This will create a positive balance on the Egg Money card, which you can then transfer to your current account (fee-free) and settle your loan with a cheque.

You should factor in further BT fees down the line, and be aware that if you miss a payment on the Halifax card they will remove the 0% rate and put you on the standard rate - likely to be around 9.9-15.9% APR, ie far more than your current loan.

stealthy_singh

tine and YorkshireBoy thanks for the info.

YorkshireBoy - Why do you think I won'tbe able to balance transfer the loan to the card? Surely If I pay the remaining debt by giving my credit card number like I'm going to make a payment it would go through. Could you please explain this? Sorry if I sound a bit dim

Phantom_Flan_Flinger

What he's saying is that the loan company probably won't accept a credit card as a way to settle your loan.

YorkshireBoy

Phantom_Flan_Flinger wrote: »

What he's saying is that the loan company probably won't accept a credit card as a way to settle your loan.

The loan company may accept payment by credit card, but not directly with you quoting the 16 digit number to them. This is because you generally can't pay credit with credit.

However, there are some cards (most notably Egg [Card & Money]) which allow balance transfers from loans and current accounts as well as other credit cards, and will 'push' the money to the loan company by BACS and take on the debt.

You won't be able to easily get at your £5K Halifax credit limit without routing it through a super balance transfer card such as Egg, MBNA, Mint...and Egg Money is the only one that will give super balance transfer functionality for free.

Obviously you'll still have your (3%?) Halifax BT fee to pay, and don't forget to factor in any early settlement penalties your loan company imposes.

stealthy_singh

Ok I see what you mean YorkshireBoy. I reckon it's best to call halifax and see if they do balance transfer the loan in this case rather than by giving the the 16 digit number.

But surely balance transfers between credit cards is the same as paying credit with credit?