Can I pay off car PCP with a 0% credit card?

moneyisfortherich

Hello, we have a car on a PCP currently costing £300 per month, but the majority of this pays off interest. So far this year we've paid £1.12 off the capital!

At the end of the term (June next year) the car is predicted to be worth approx £15000, but the outstanding finance amount will be £29000. We put £11000 deposit into the car so I'm beginning to worry we're going to be in serious negative equity.

I wondered if it's possible to use a 0% balance transfer credit card to transfer the car loan onto. Then at the end of the 12 months 'ish' term bounce it to another 0% card again and continue like that until it's paid off.

Any advice on whether it's possible and how much it impacts your credit rating would be welcome. Thank you.

eskbanker

Balance transfer credit cards can only be used to transfer balances between credit cards.

Subject to status, etc, you can get money transfer cards, which basically allow money to be made available in your current account, and from there to anywhere else…

https://www.moneysavingexpert.com/credit-cards/money-transfers/

However, if your loan is in £29K territory, don't expect anywhere near that as a credit limit on a new card!

MyRealNameToo

https://forums.moneysavingexpert.com/discussion/6667420/can-i-pay-off-car-pcp-with-a-0-credit-card

You should have paid off a lot more than £1.12 off the capital assuming you are up to date with payments and no late payment fees etc were added. There is no way you got a 66 year loan on a car

Are you wanting to move the whole loan to a CC including the balloon?

BT won't work as its credit card to credit card only mechanism. Money transfer card is the likely solution but if you are talking £15k balloon plus circa £3,600 to get you to the balloon thats a big limit you'll need. Some get that and more but most dont.

A 0% purchase card is likely to be problematic too, most lenders dont take CC payments and even if they do your card issuer may well treat it as a cash advance rather than purchase so no 0% period

MasterG83

Working in this industry, for a lender, you wont be able to use a credit card to partially pay or fully pay a balance.

general rule with a PCP is put down as little as possible as its rarely returned at the end in a calculative way.

If you have paid 50% of the total amount payable then you can voluntarily terminate the agreement. Be aware that a vehicle inspection will take place and any non wear and tear damage, outlined by the BVRLA, will be chargeable as well as any excess mileage as indicated on your finance agreement.

AutoEnvoy

You don't need to worry about negative equity. If you've kept within the mileage limit and the car is in good condition, you simply return it and walk away. You owe nothing beyond the monthly payments you've made. The negative equity is the finance company's problem, not yours. This is literally what PCP is designed for!

moneyisfortherich

This is the "amortisation" For the duration of the contract. Good news, I was wrong about £300 a month, it's £212. Bad new, I was right about not paying off any of the capital. We're currently on month 12 of the contract.

I'm very confused! I've double checked the details of the purchase. We traded in an old car (with outstanding finance) for £17,000 but there was £24000 of finance left on it, so we owed £7000 to the dealership. A bad financial decision, but we needed a bigger car for our family. We put another £10000 into the new car (so in total gave the dealership £17000). The car we bought was approx £40000. We borrowed £30000 and pay £212 a month for 24 months, but will still owe £30000 at the end of the term.

Even more confusingly we asked for a settlement fee for the finance and was given an answer of £31000. How can it be more than the 'bubble payment' if we pay it off early surly we avoid the intrest we'd pay for the next 12 months?

I've rounded to nearest thousand in the above to make typing easier!

If anyone can explain it to me I'd be very grateful. Many thanks again.

webmasterpolo

In simple terms, yes you can move the finance to a 0% credit card, either pay the balance (or part balance) with a 0% purchase credit card, or use a money transfer 0% card to fund your debit card and pay with that. Or pay on your normal card then balance transfer to a 0% balance transfer card. I've cleared PCP with 0% cards in the past after they offered an extra years warranty for PCP only. MSE has sections on all these card types to explain how they work https://www.moneysavingexpert.com/borrowing/

In future you can also use these methods to buy the car instead of PCP as I usually do. To get better deals you can buy on a normal interest bearing credit card, then balance transfer to a long term eg 36mths 0% balance transfer card, purchase cards tend to offer only about 12mths 0%. Trick is to get the 0% card in place before the purchase as sometimes it takes weeks.

My last 3 cars were done using 0% cards over the past 16 years, my latest one I bought recently they wouldn't accept credit card for more than 10k, so did 10k on a 0% purchase card, rest on a money transfer 0% card, then will balance transfer both near the end of the term to 0% balance transfer card(s), thus paying 0% interest with lower monthly payments than PCP. Only fees are the small setup fees the credit card companies charge c.3% which over 3 years is only 1%pa. Meanwhile the money to clear them remains invested in my portfolio for the past 16 years growing by more than 1%.

Actually very simple to do if you have excellent credit to get the good deals, just diarise the dates and prepare in advance.

HTH

-Web

Nebulous2

There's a lot I don't understand about your post I'm afraid.

First of all you didn't give the dealer £17,000. You gave them £3000. A £17000 car plus £10000 cash is £27000, less the outstanding £24000 finance is a net £3000.

A £29000 balloon on a £40000 car over 2 years seems very high. Is this definitely PCP?

Finally - why on earth would you borrow on a credit card to pay it off? If you get to the end of the PCP and the guaranteed minimum value is £29k, on a car worth £15k, your best option would be to walk away.

Otherwise you are paying £29k for a car which is only worth £15k, almost double what it is worth.

Getting a credit card on 0% to transfer the debt, possibly as a money transfer, would theoretically be possible, but for a new card a limit over £30k would be very unusual. You might find yourself juggling 3 or 4 cards, possibly with different terms and lengths of 0% period.

Then at the end of the 0% you would need to reapply. Credit cards will often have a standard rate of interest around 25%. If you can't move it to a new deal at that point you could end up paying 25% interest on £25k of debt, with a car which may be worth £10k by then.

Jami74

https://forums.moneysavingexpert.com/discussion/comment/81991936#Comment_81991936

I don't know anything about car finance, but it sounds like you borrowed £30,000 and are only paying the interest on it on it for two years. Then at the end of the two years you have to pay the £30,000 back. Maybe a settlement figure is higher because they add a bit on for admin fees or to account for some of the interest you won't be paying.

If you want to keep the car I guess you have to find a way to pay the £30,000. Did you realise at the beginning of the finance deal that you'd have to pay this? Maybe a loan from your bank would be cleaner if they allowed penalty free overpayments so you could pay down the loan faster and pay less interest.

Or if it's one of those deals where you can hand the car back without owing anything maybe that would be the best way. You could borrow to buy a £5000 car and pay it back quite quickly at £300 a month and not have the stress of a five figure debt sitting over your head.

born_again

@webmasterpolo

In simple terms, yes you can move the finance to a 0% credit card,

Only If the PCP finance provider will take a CC for the payment. Many will not. So OP would need to check 1st.

Never mind the odds of getting a CC with a limit to pay it off.

webmasterpolo

https://forums.moneysavingexpert.com/discussion/comment/81993292#Comment_81993292

As I said you can use a debit card funded with a money transfer card if necessary.