Money transfer card worth it in this situ?

therealslimcj

Hi I'm possibly being daft but want to run the numbers before applying for money transfer card...

I've got a personal loan with Santander, taken out a few months ago to buy a car. £7400 capital balance on it still. 7.3% interest.

I can get MBNA 26 months 0% but with 3.99% fee (not quite the 2.99% I hoped for). The pre-application states that that's based on a £1200 limit.

My question is this: how do I run the numbers to see exactly how worth it it is? Obviously, ideally I could get a 0% card for the full amount, but is it a no brainer ie if the loan interest is 7.3% and fee is 3.99% then any amount I can move out the loan is a win? Can't work out how to do the numbers in a spreadsheet to see the savings...

maxximus75

The £1200 is just quoted for comparison purposes. You actual credit limit will be decided upon full application and you would know until you apply.


Even with the fee its a lot less than the 7.3% you are paying at the moment and the fee is a one off so will be around £295.


As long as you can pay the amount borrowed off in the 26 months you'll be saving in interest.


So, say you paid the £295 off straight off and left the borrowed amount of £7400 - then if you paid £284.61 per month you will be fully paid off.


In regards to how much you will save, you have not stated how long your loan term is?

[Deleted User]

You may lose money by moving it, depending on how quickly you'll pay it off.

The 4% fee is charged on the starting balance - so equivalent to paying 8% interest on a declining balance if you were to pay it off over a year.

Compare the 4% fee to the interest you'll pay on loan.

therealslimcj

Thanks for the help on this, both.

Maxximus, the £1200 I assumed was a guide but that's useful to have confirmation that it may be different. My guess though is that it won't be near the £7400 outstanding balance, so a question remains around at what point it might not be worth doing if I'm still paying the loan off at the same time, OR whether if it's a lower transfer rate than loan interest rate, whether it's ALWAYS a good idea.

Also, the loan term is 36 months, but the card rate is for 26 months. If unable to pay off the balance in full the plan was to do a balance transfer at that point to a 0% balance transfer card...

ZX81, I think I follow; when paying the loan off, with interest calculated daily, the interest amount reduces as the balance declines. Whereas paying the 4% upfront means over the same period, the interest/fee payment has been done upfront?

Feels like there is a spreadsheet in this but as good as I am with excel, I can't work out how I'd do it vis a vis the daily calculated interest rate and how it would impact if paid a chunk onto a card!