Cheap way to borrow money

Winnie_the_Wild

Hello, I'm looking for some advice please.

I would like to borrow £4,687 to pay a final payment on a car finance agreement that is due mid March and am looking for the cheapest way to do this. I will pay off the money over 24 months. I have a very good credit rating so was thinking I could take out a 0% spending credit card as some seem to give over 24 months interest-free but have found out that the Finance company won't accept payment by credit card. Also, I was not sure if you could find out in advance what credit limit you could get - I only have one credit card (Tesco) which has a £7k limit which I pay off in full every month and I'm not sure if this is considered a lot as I seem to recall it started out much lower many years ago.

I could take out a £5k personal loan (e.g. Admiral 3.4%) but over 2 years this will cost about £175 in interest so I was wondering if anyone had any bright ideas. Thanks.

Ben8282

You really have 2 options.
First option is the loan.
Second option is a money transfer credit card.

Winnie_the_Wild

Thanks for answering Ben8282.

Looks like the best buys for money transfer credit cards have a 3% or 4% fee for 24 months interest free so similar to the Admiral loan. Sad there is no way to do this for free. At what point in the process do you find out how much money you will be allowed to transfer and how do they decide? Are the credit card companies likely to offer £4k or £5k? The loan may be the simpler option.

Tranquil

Is there an option for not paying the final payment for the car? I.e handing it back and starting a new (lower cost) monthly agreement. I used to want to ‘own’ a car after having paid 5 years monthly payment but then I realised that the final payment was probably not much less than what the car was worth by this point! I know some people really value their cars etc but think carefully about whether it’s financially sensible to not just hand the car back and start a new agreement. Remember cars are completely depreciating assets and you are unlikely to get back what you’ve paid for it (plus interest you’ve paid on a loan) if you end up selling (assuming it’s a regular car and not something extra special!)
Taking out a £5k loan to make a final car payment so then you own the car just seems not to make much financial sense to me but obviously I don’t know the whole situation.
Although if you are definitely going ahead - If you are unable to get a 0% interest and fee money transfer credit card, best bet is to get a loan but remember this is an expensive way to essential move the debt around (as you will have already paid a lot of interest on the car finance agreement).

Winnie_the_Wild

Hello Tranquil, thanks for your reply.

There is an option to hand the car back but I'm minded not to. It's my wife's car, a Fiat 500 which is 4 years old with 30k miles now and she has owned from new and she loves it. There would be a charge to hand it back as she has gone 10k over the allowed mileage and also there is some minor damage both inside and out that, after reading the relevant guides, is definitely more than allowable wear and tear. If I was exchanging for a new car, I think the dealer would be more lenient on the damage but I want to break the cycle of keeping owning new cars because, as you say, they depreciate fast in the early years. She needs a car and at least I'm 100% sure this one has not been crashed and has been regularly services, etc. Also my kids turn 17 this year and this would be a good car for them to learn to drive in and I assume the insurance for them will be a little lower in an older, cheaper car. If I have my way, we'll keep it for another 4 or 5 years.

I'm tending towards getting a 2-year, loan at the moment.

phillw

Tranquil wrote: »

I used to want to ‘own’ a car after having paid 5 years monthly payment but then I realised that the final payment was probably not much less than what the car was worth by this point!

The final payment is supposed to be what the car is worth.
The payments you'd been making up to that point are the depreciation.

I could never bring myself to buy a car under PCP because the salesman is literally telling me how much money the car will lose in value every month.

afis1904

You could get a curve card and use it as debit but pay with your credit card if they accept debit card payments

born_again

afis1904 wrote: »

You could get a curve card and use it as debit but pay with your credit card if they accept debit card payments

Just make sure that your credit card provider does not process curve purchases as a cash transaction... Some are.
So that would totally defeat the whole 0% purchase idea.

Coveredinbees!!!!

If you have time you could get a 0% spend card, do all your regular spending on it and use the money you didn't spend to pay off the loan. It's the way I offset my entire mortgage to 0%.

Winnie_the_Wild

Thanks for all the information everyone who has responded. I've applied for a 0% spend Barclaycard and am going to see how much I can spend on that rather than on my normal credit / debit card to build up enough in my current account to pay off the loan in mid March.