0% credit card/Car finance - please help?

chrismoll

Hello all,

I am looking to get a new car and thinking that a credit card is the best option for me. Here is my situation:

- I am looking to spend £3000
- I can afford about £350 for 6 months then the remainding £150 a month for the next 6 months

Car finance tend to charge a percentage on their lending so my thought is to take out a 0% credit card on purchases, pay the car in full on the credit card and just pay off the amounts by the monthly amounts above.

HSBC currently do:

• 0% on purchases for 12 months from account opening
• 2.9% for two years on balances transferred within 30 days of you opening your account. 2.5% balance transfer fee applies (minimum £5)
• Typical 15.9% APR variable after introductory period
• No annual fee to pay

It seems like it would work to me but I am not very familiar with credit cards so I wanted to know if im missing anything.

Does it seem that I can pay off the £3000 in the year with 0% interest at the monthly rates I have suggested above or am i missing a secret charge or something?

also is this the best way?

Thanks in advance,
Chris

emma396

Some car dealers don't take credit card, you probably need to check first. If they do, there is usually a charge.

YorkshireBoy

The dealer will probably charge 2-3% in fees, so £60-90. If he doesn't, you didn't haggle hard enough!

2.5% minimum payments are £75 per month.

Set up a minimum payment DD, save the additional monies, and clear by the 12 months end date and that's the job done.

There are cheaper (as in completely free-free) ways to buy the car using credit cards, but since you've no experience with them maybe your HSBC option is the best one.

Bokkens

You have the right idea but the wrong card.
Very few dealers will accept CC as payment as there is a fee for them to make the transaction.
If you have a look at Virgin you will see it is 0% for 15months and they allow you to Balance Transfer the credit limit into your bank account then you pay for your car from there.

chrismoll

thanks Bokkens, i was wandering if you know the maximum you can transfer for 0% on the virgin card. The reason I ask is because i may put the lending upto £6000, put £3000 in my ISA and just let it get in interest (£187.50) and use that to help pay off the card in the last month?

Is this possible and I much prefer your suggestion to my original idea.

Just to add he did say that the charge for using CC was 1-2% so £30-60.

I have noticed there is a 3% handling fee for balance transfers from virgin so wont this mean it would be better to take the credit card and have the 1-2% applied from the car dealership?

Bokkens

95% =5700 +BT fee added on to your first payment of £25 = £194.86 followed by 14 monthly payments of £25.
If you were stoozing all of the funds you would effectively get these payments back as they would come of your final payments ie £57 less 15x25 = £375.
The Virgin BT rate is 2.98% of the amount moved (see above for £6000).If you took £6 and put £3k in Barclays Tax haven ISA the interest earn over the next 12-14months would pay for the BT fee for moving the whole £6k.

missile

I got my local Audi dealer to accept part payment of 2 x £2,ooo on two CC and no extra charge.