0% Credit Card vs Loan to settle PCP

amiddle1892

Good evening all,

My 3 year PCP for my car comes to an end in December and I am looking to keep the car but will have a balloon payment of around £10,000 that I do not have. I was wondering whether you can get a 0% interest credit card over a long period with a limit that high, or whether I will have to take out a loan instead?

Any help or other options greatly appreciated.

Thanks in advance!

[Deleted User]

Not nearly enough info to say.

You can get cards with that sort of limit. But whether you will depends on your circumstances.

You also need to define a long period - how long do you need to pay it off? If you can't do it within a year or two, can you afford repayments at a rate or 20-30% if you can't BT it?

Does the PCP company accept card payments, or do you need a money transfer option?

Lastly, would your circumstances and credit file support any kind of decent rate loan or card?

m1at1

If I were in the same situation I would definitely go for a loan, unless I knew I had a brilliant credit score, was sure to be offered a £10k credit limit right off the bat, and was sure to be able to get a new card once the 0% period ran out (unlikely on all counts). If you go for a 0% offer, there's no guarantee you'll later be able to shift this debt to another 0% or low% card, which could land you in serious trouble. Also, a loan of 10k would, in my opinion, likely have a higher cashflow index than a card, which is good (i.e. lower monthly repayments by stretching over 5y). Finally with a loan there isn't the temptation to only make minimum repayments.

Ben8282

That is the problem with this PCP business. 3 years on and its pay £10000 or loose the car. What if you can't get a loan or card for the £10000? What will you do?
If you had taken out a proper loan in the first place you would not now be in this position.
A BT card will be of no use as you can't do a BT to pay off the PCP. You will need a money transfer card. As to whether you will get it or not, impossible to say. Presumably the PCP is showing on your credit files with a balance in excess of £10000. That will not help you to get loan or 0% card unfortunately. You can use the eligibility checker to find out if you are likely to be accepted for a card but you will have no idea of the credit limit until you actually apply. If your existing credit cards have this sort of limit and are not maxed out, then yes maybe. If not, then it is not a realistic expectation. and you will have to go for the loan option

amiddle1892

Thanks for your replies everyone. My credit score is pretty good. Only got one credit card at the moment with a £1500 limit on which has been paid in full every month on time. My initial thought (whether card or loan) was to pay off the remainder over three years.

I guess I am going to have to contact some companies directly and find out what they will offer me.
Thanks again.

[Deleted User]

amiddle1892 wrote: »

My credit score is pretty good. Only got one credit card at the moment with a £1500 limit on which has been paid in full every month on time.

Having only one card with a £1500 limit suggests your credit history may be a bit limited. Remember that your credit score doesn't reflect how lenders will view you.

It would be worth trying some soft search eligibility checkers before applying for anything.

amiddle1892

That's true. Previously had a mortgage as well that was all paid up so that should be on there too. I will try some eligibility checkers.

Cheers!

Nasqueron

Ben8282 wrote: »

That is the problem with this PCP business. 3 years on and its pay £10000 or loose the car. What if you can't get a loan or card for the £10000? What will you do?
If you had taken out a proper loan in the first place you would not now be in this position.
A BT card will be of no use as you can't do a BT to pay off the PCP. You will need a money transfer card. As to whether you will get it or not, impossible to say. Presumably the PCP is showing on your credit files with a balance in excess of £10000. That will not help you to get loan or 0% card unfortunately. You can use the eligibility checker to find out if you are likely to be accepted for a card but you will have no idea of the credit limit until you actually apply. If your existing credit cards have this sort of limit and are not maxed out, then yes maybe. If not, then it is not a realistic expectation. and you will have to go for the loan option

There is no problem with the "PCP business" as you call it. The figures are presented up front and the OP knew 3 years ago he would need to make the balloon payment or trade the car in at the end for a new deal, it's not the fault of the finance company or dealership if they weren't saving the money. For me PCP meant a 0% deal for 3 years while the money for the car was earning me interest and I have the money for the final payment in a savings account ready for payment even though my finance doesn't end until December 2017

OP - check the loan finder on this site, you are much more likely to get that finance (albeit it might be expensive) than get a credit card with enough credit to make a 10k payment (and add on a dealer CC fee for a sum that size) or to do a 10k money transfer unless you have a high salary (like 30k + based on your info).

MSE inspired advice - don't take on finance without reading everything first

tidds

I don't think at any point the OP suggested they were unaware this was going to happen. They have just decided that they want to keep the car (which is theoretically more MSE than getting another brand one one and extending the PCP).

The loan option is much better and much more likely, Zopa at the minute seem to be giving quite good rates.

Nasqueron

tidds wrote: »

I don't think at any point the OP suggested they were unaware this was going to happen. They have just decided that they want to keep the car (which is theoretically more MSE than getting another brand one one and extending the PCP).

The loan option is much better and much more likely, Zopa at the minute seem to be giving quite good rates.

OP signed up for PCP with a final balloon payment of 10k, 3 years later they say they don't have the money - despite the time period giving them plenty of time to save up, it's not like it's an unexpected debt. Planning for paying this debt off should have begun 3 years ago