0% Credit Card vs PCP Used Car Finance

viperpurple

Hello,

The Situation:

1. Need to buy a used car as we are losing the company car (around £13000)
2. Have savings to use as a deposit (Upto £4000)

The Plans

1. Plan A
   We get a 0% purchase 27 month credit card for £10000 and then pay off double the expected depreciation of the vehicle over the 27 months.
   At 27 months we either part exchange or sell the car to pay off the credit card and start again (risk is if the car is worth less than the remaining credit) or we transfer to another 0% card and carry on paying off the balance plus the balance transfer fee.
   
   
2. Plan B
   We get the 0% purchase card as above but after the first month transfer is to a 0% 40 month card at 2.55% and then carry on as above but till the 40 month limit. This reduces the risk as we have a longer term and don't have to reply on the current 0% trend being around in 2 years. It will cost slightly more however.
   
   
3. Plan C
   We just go with a normal PCP finance deal to buy the car
   

We are interested in any problems you can see with the plans to use the 0% credit cards and also is plan B too cautious and not worth the extra cost, no matter how small.

Thanks for any response and advice

Adam

bigadaj

First question is do you need to spend £13k on the new used car, £4K may not be enough to get you a suitable car but paying les money out will be easier to manage.

Any car dealer will,be charging you for using a credit card which needs to be factored into the deal, and the other factor is to see how much finance is likely to cost you, paying a rate of a few per cent skews the relative benefit compared to paying 10% plus.

Plan b see,s to add cost with little practical benefit, the concern is your financing a depreciating asset, also coming from a comoany car have you factored in running and maintenance costs that are likely to arise?

Also how are you calculating the depreciation, you'll lose a couple of grand driving it off the forecourt, after that the rate will reduce, how much have you assumed for this say £250 a month?

Is the deal,being financed by a car allowance and if so is employment secure, loss of a job would mean no means of payment as well as lack of salary. In that case keeping the money in a separate savings or current account earning interest would be preferable and be more flexible.

andyfromotley

Plan D - we save up and only buy cars for cash. ;-)