Are my sums right?

onwards&upwards

I will need to buy a second hand car in the next couple of months. Looking to spend about 5k, I only need a little city runaround.

I was thinking I would initially pay on credit card and then pay that off in full when two regular savers mature, one in Jan and one in Feb.

However, I have two money transfer offers on my MBNA card (0 balance on there currently). One is for 0% APR with a 4% fee for 18 months one is for 3.9% APR with no fee for 36 months.

I currently put £500 a month into the regular savers (Nationwide and HSBC) but I could swap to spending £250 paying off the card and putting £250 into a new regular saver as well as the £6000 from the old ones

My maths works this out as a fee of £200 or interest of £175 for the money transfer depending on what deal I go for. While 3 regular savers running for a year, say one at 5%, one at 3% and one at 2.75% would net me £173.33 so close to breaking even, but without losing my cash!

Seems 5% regular savers are a thing of the past which is a big shame.

What would you do if you were me?

YorkshireBoy

The best way would be to delay the car purchase until February.

If you need the car now, then the cheapest way would be to borrow at 3.9% APR whilst saving at 5% AER. Then use the regular saver maturity funds to reduce and then pay off the debt next Jan and Feb.

daveyjp

First you need to ensure the car dealer accepts a credit card payment for full payment of £5,000.

onwards&upwards

YorkshireBoy wrote: »

The best way would be to delay the car purchase until February.

If you need the car now, then the cheapest way would be to borrow at 3.9% APR whilst saving at 5% AER. Then use the regular saver maturity funds to reduce and then pay off the debt next Jan and Feb.

I don’t need the car now but I will definitely need it before February, I don’t currently own one but will have to probably in December/January.

Can I ask why you would choose to pay off the debt straightaway rather than over 18 months and keeping cash available for emergencies etc?

onwards&upwards

daveyjp wrote: »

First you need to ensure the car dealer accepts a credit card payment for full payment of £5,000.

I’m looking at money transfer options so would be paying in cash not actually on the CC.

YorkshireBoy

onwards&upwards wrote: »

Can I ask why you would choose to pay off the debt straightaway rather than over 18 months and keeping cash available for emergencies etc?

You'd be buying your emergency fund (in the form of a 4% fee) rather than saving it. You'll be building an emergency fund at the rate of £500 per month from Jan/Feb, less the cost of car ownership of course.

For any emergencies over and above £500 per month (rare?) use a credit card.

onwards&upwards

YorkshireBoy wrote: »

You'd be buying your emergency fund (in the form of a 4% fee) rather than saving it. You'll be building an emergency fund at the rate of £500 per month from Jan/Feb, less the cost of car ownership of course.

For any emergencies over and above £500 per month (rare?) use a credit card.

I see what you mean, I think it’s hard to give up cash in the bank when the last year is the first time in my life i’ve ever had any! :rotfl:

If I buy the car for 5k in December and pay it off in Feb, the 3.9% interest would be less than £30.

Terry_Towelling

Just make sure the car isn't a money pit.

onwards&upwards

Terry_Towelling wrote: »

Just make sure the car isn't a money pit.

I don’t think there’s any way to ever really be sure of that sadly!

Terry_Towelling

onwards&upwards wrote: »

I don’t think there’s any way to ever really be sure of that sadly!

Quite so, but you owe it to yourself (and your financial wellbeing) to get as far from a dog/pup as you can.

What sort of car and what age are you looking at?

born_again

onwards&upwards wrote: »

I’m looking at money transfer options so would be paying in cash not actually on the CC.

So you are looking at a possible 3% fee on that, £150. So long as you can get a card with that sort of balance, and will allow a cash transfer.

Add in doing that you will lose any possible S75. So at least put the deposit on the CC.