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Credit card for car purchase

Hi folks,

I'm 25 and have never had a credit card or purchased anything on credit/loan before.

My car died last week, so I'm looking at used cars around £5500. I've saved up £4500 of that so I'll need to borrow £1k to cover the remainder, and it looks like a 0% credit card would be the best way to do this without getting slapped with interest & fees via dealership finance or bank loan.

It's not urgent, I've got about 3 months til I need to replace the car so I'm still saving up.

How does it work in the first place? Do I need to get a starter card, use it for a couple of months on random purchases at the supermarket to gain some credit history, use that to buy the car in June, then immediately get a 0% balance transfer card and swap the debt onto that?

Or should I apply for a 0% purchase card right off the bat? (Just to double check, does a 16 month purchase card only give 0% interest for 16 months after the card was issued, or is it 16 months per purchase, even a year later?)

Also, is there any way to take advantage of a 0% card to buy from a private seller or dealership that doesn't accept credit cards?

Would I be better using a 0% purchase card to pay for my bills for the next few months and save the cash into my savings account to pay for the car, then repay the bills before the 0% period runs out?

Sorry for all the questions, I know nothing about this! Thanks.

Comments

  • [Deleted User]
    [Deleted User] Posts: 35,242 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    You're unlikely to get a 0% purchases card with a very limited credit history, though one application woudn't hurt.

    If you do use a card, you'll almost certainly be charged a fee by the lender.

    Your best approach would be to buy a card for £4,500. Apply for a basic credit card with your bank or the likes of aqua, Barclaycard Initial, etc and use that regularly to build up a credit history.

    A 16 month 0% offers starts when you account is created and ends 16 months later. So the later the purchase, the less time you have. There is also usually a fixed window in which to make the offers (eg the first 3 months).
  • eskbanker
    eskbanker Posts: 35,378 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    Your best approach would be to buy a card for £4,500
    Better still, buy a car for £4,500! ;)
  • eskbanker wrote: »
    Better still, buy a car for £4,500! ;)

    This, definitely.

    Plus as you have another 3 months save like billy o and you could easily have enough. The difference between a car at 5.5K and 5K is negligible.

    Really don't go into debt when you don't need to, otherwise you may end up with a signature like mine!!
    £1000 Emergency fund No90 £1000/1000
    LBM 28/1/15 total debt - [STRIKE]£23,410[/STRIKE] 24/3/16 total debt - £7,298
    !
  • Thanks for the replies guys.

    Reason I'm willing to spend so much on this car is because I'm sick of spending £3k on a "reliable" car with high mileage that ends up needing half that much again on repairs and gets scrapped after 2 years. :mad: (See Sam Vimes' theory of economics.) This time I want a better quality, less abused car that will last longer before I run it into the ground.

    I'll take your advice on board and just get a credit card to build credit, but live like a hermit til summer, and see if I can scrape that last £1k together on my own.

    If I can convince the boss to put me on the company van's insurance then that'll massively alleviate the need for a car; I have a bike & need an excuse to use it more, hehe.
  • chanz4
    chanz4 Posts: 11,051 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Xmas Saver!
    not about the amount, its about the make / model your going for. New cars are as bad
    Don't put your trust into an Experian score - it is not a number any bank will ever use & it is generally a waste of money to purchase it. They are also selling you insurance you dont need.
  • Yep my last car was a 2008 1.6L diesel Focus which I got at 120k miles. I'd read they were great cars, German engines, run to the moon, etc.... turns out that's the 1.8 - the 1.6 is a Peugeot engine with a notorious injector leak problem that turns the oil to carbon sludge and kills the turbo. :(

    This time around I'm looking at 8th gen 1.8L petrol Honda Civics under 50k miles. My mate bought one at the same time as I bought my Focus, his has gone through two tyres and that's it! I know it's pretty luck of the draw but they've got a great rep for being reliable, plus loads of support forums for advice on repairs & common faults. £5500 is the going rate for what I want, and if it's wiser to wait and save than use credit, that'll have to be the plan. :)
  • fudgecat
    fudgecat Posts: 289 Forumite
    Part of the Furniture 100 Posts Combo Breaker
    Hi,
    The advice on here is very sound. Check out the Which magazine second hand car report - it is very reliable and detailed. We bought our Berlingo diesel 4 years ago based on the information given at the time for about £5K and have had minimal maintenance and v good fuel economy, plus it will carry just about anything! We did a private sale which allowed the top of the range model with 50K on the clock. We DID use a credit car balance transfer to a bank account - I think it was an MBNA.
    Whether you just save like mad and spend less or go for a small loan, if you can be disciplined about purchasing and paying off in full, it might be worth getting a credit card to establish your credit for future car purchases. Good luck!
    Debt September 2020 BIG FAT ZERO!
    Now mortgage free, sort of retired, reducing and reusing and putting money away for grandchildren...
  • Thanks for the input :) What do you mean by "a credit card balance transfer to a bank account" - were you able to take money from the credit card, put it in your account, and use it to pay cash for the car? Were there fees for that?
  • fudgecat
    fudgecat Posts: 289 Forumite
    Part of the Furniture 100 Posts Combo Breaker
    Hi
    Yes, exactly that. It is called a super balance transfer and only certain types of cards can do it (I think the credit card info on this website might specify which ones). There is a percentage fee that is charged. Generally you need a pretty good credit rating to get one, hence my advice about building your credit profile. If you are planning to do this try the Cap 1 Luma card. Horrrible interest, but you won`t pay it if you settle in full every month and this will help to build your credit profile quickly.
    Fudgecat
    Debt September 2020 BIG FAT ZERO!
    Now mortgage free, sort of retired, reducing and reusing and putting money away for grandchildren...
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