Paying Loan off with Credit Card

swd94

Hi guys,


A little new to this so please bare with me.


I've recently bought a car (initially on finance) but then paid it off in full immediately with a bank loan (lower APR) which has saved some money from the initial finance cost.


I have roughly 17k on the loan over a 6year period, although intend to have this paid off much earlier. A way I have thought this could work is as below:


I currently have to pay £300 p/m for my loan at an interest rate of 8ish% (don't have paperwork to hand but its 8. something!)


If I were to apply - and be successful in getting a money transfer card with a 0% interest rate over 2 years or so and then max out whatever limit they give me (lets say 5000) I would then owe 12k on the loan. I can then arrange to reduce the term of 6 years to whatever the 5k reduction allows which would save interest.


What I need to know is if this will work. I would be able to pay off the 5k credit card within the allotted 0% period which will save the interest on this amount as well as the outstanding loan amount.


If that does sound fault proof would I be able to simply repeat this process after the initial 5k card is cleared with a new card?


Apologies if that is confusing, hopefully you can make sense of it.

[Deleted User]

Just check any early settlement charges, but broadly that will work.

You wouldn't 'arrange to reduce the term' though - it will stay as it is but would be repaid earlier by maintaining the contractual payments.

swd94

The loan has no charge for over payments - I think a charge for paying the loan off in full but if I just leave a small amount (a month or so) and let that run that will get around it I think?

foxy-stoat

Who is the lender?

swd94

Tesco bank

Years_of_debt

Just ask them if you’re allowed to make a payment off of your loan with a credit card, if they say yes then happy days!
I’ve read before someone wasn’t allowed to clear the balance of their loan with a CC - not sure if this was a payday loan though so that would be different.
Also because you’ve taken finance and then a loan, applying for a CC for 5k in such a short space might not get approved - just something to think about.

Craig1981

have you checked a loan over payment calculator?

could you afford the extra £200 a month?

if you were to pay contractual £300 for your loan, and then an additional £200 (as you would on the 24 month money transfer card you hoping to get) as over payment, you will save around £2100 in interest, and loan paid off in 39 instalments

swd94

They don't accept credit cards, however plan is to transfer the card limit into current account and pay it from there.


That sounds a healthy saving! Yeah the extra 200 isn't a problem - was planning on paying it directly onto the loan

MallyGirl

did you get a 0% money transfer card? If not then you can't transfer money from a CC into your current account