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Johnaldo

Anyone used a 0% credit card to finance a van or tow car?

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Having just bought a van, I’m now looking to upgrade my tug … but I need a little help finance-wise! (Don’t panic, you don’t need to put your hands into your pockets 😁)

 

I’ve looked as leasing, car loans, PCPs, credit card loans and HP … but these zero-percent cards caught my eye. They seem to be the obvious way to go - pay of the minimum monthly and pay of the whole lot on time - but are there any drawbacks?

 

Advice wanted please from anyone who’s gone down this route.

 

TIA, John.

 

 

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Can you get a credit limit that high on a zero-percent credit card ?

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Depends on you upper credit limit. I have a low %cc at 5%. I have just taken advantage of a CASH advance on a 0% VIRGIN until Oct 2021 to have a new roof on the house. I have used in the past the 5% to purchase a car. There are some good deals around

Edited by Organman
Edited

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There are plenty of car dealers offering 0% finance. I just used some of their 0% money to top up my latest tug purchase. That’s got to be whole load easier than a cc

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14 minutes ago, Jacko1 said:

There are plenty of car dealers offering 0% finance. I just used some of their 0% money to top up my latest tug purchase. That’s got to be whole load easier than a cc

I found the main draw back was the fixed payments. On the cc I find I can under/over pay at will when I have spare cash available.,

 

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10 hours ago, Johnaldo said:

...but are there any drawbacks?


Years ago I would take out a 0% card that allowed cash withdrawals, bank the cash, pay the minimum then pay it off at the end trousering the interest on the way - it hammered my credit rating. It didn’t stop me getting mortgages and the like but it reduced my previous exceptional rating so further checks/ assurance were required.

 

I asked the mortgage advisor why this would be as they were paid off fully, she described that you have a debt showing against an unsecured account that has unnecessarily high interest (the fact it was 0% wasn’t recoded, the standard rate was as it’s a credit card v a personal loan/ PCP etc) and you only pay the minimum each month.

 

Never done it since.

 

As with everything there is a downside - 0% on cars isn’t really that as the discounts aren’t as good as the deposit contribution on a 4.9% deal (the finance is paid for somewhere...!).


I’m happy to take out a PCP for the benefits then pay the lot off - we did this with our current car which got me 2 years warranty, MOT cover, roadside assistance and 2 services on the approved used scheme.
 

If you need to borrow then the cheapest way is either via a mortgage (but pay it off as if it was a loan, ie don’t pay £15k over 20 years but do it over 3-5) or a personal loan - 3% on £7,500-15,000 is typical which is, frankly, as cheap as chips.

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Your best bet is high deposit and balance on HP with Black Horse.  Then you have the protection of BH if you have issues with the caravan and dealer gives you the run around.  Easier to deal with finance company that trying to deal with a credit card company.

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Credit Card charges are usually higher than debit card charges for the retailer, and it may be that they won't let you pay with a cc...

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Years ago when 0% start up rates and transfer rates were introduced I used to "play the field" but what I actually saved was hardly worth the hassle. Check what credit limit you would get with a new 0% card as they often give a relatively low initial limit then increase it after the interest free period has ended. You might also find that the dealer will make an additional charge for using a credit card.

 

If you do buy on finance, then always compare the total amount payable after all the offers have been applied, that's the only true way to work out which is the best value. It is very easy to make credit deals look good when in truth they offer no real benefit, or may even be more expensive than a standard loan. I'm in the fortunate position of not needing to finance new cars nowadays, but the last time I did I sourced the loan through clear score, the credit reference agency who suggested a loan with 3.3% apr and as it came from a bona fide lender, not an HP factory I was free to make additional payments or early repayment without penalty and as they add the interest to the balance as the loan ages, rather than in one lump sum when you take the credit out that makes a huge difference on interest paid.

 

You could then always select a comfortable repayment period, say five years, but overpay to complete sooner and save some interest. 

Edited by PMW

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I don't believe it's legal anymore to have a credit card surcharge!

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5 minutes ago, Ched said:

I don't believe it's legal anymore to have a credit card surcharge!

 

Correct - but it's legal for a supplier not to accept credit cards, only accepting debit cards.

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I do something called stoozing, which is basically load all my spendings into a zero percent card and save what I would use to pay back as it offsets against my mortgage.

I use two cards and have managed a considerable amount that makes a good dent in the interest part of my mortgage.

When I get them, I set up to repay the minimum balance and make sure I clear them before the dates the interest starts again.

Never had an issue, the only thing to be aware of is that my credit rating has taken a beating as I am shown having used a large amount of the credit available to me. Saying that I have never been refused the next card or had an issue at mortgage renegotiation time.

Best i got on one was three years!!

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In answer to the OP, yes, many times.

 

I also got a FREE car once. I paid on a credit card and at the time, rather than offering interest free, lenders were offering 5%, sometimes upto 8% off the balance transferred. So one was BoS card with £5000 owed. The balance transferred to the new lender was £4750!  I kept doing it until I'd pocketed £5000. Each time, I had to say the balance was more than it was otherwise it would have been infinite.

 

Russ

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Depends on how much you want to borrow as to the amount on your credit card.  We've used credit cards to pay for items of a couple of thousand pounds, but always made sure that it was paid off by month end, so not to pay any interest.  It can work, but remember, if you miss a payment, or don't want to pay off as much, the interest begins to rise and rise, hence, being in debt

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5 hours ago, Guzzilazz said:

Credit Card charges are usually higher than debit card charges for the retailer, and it may be that they won't let you pay with a cc...

Our local Hyundai dealer refused to accept payment by credit card for my little second car last October. I was hoping to “bag” some extra loyalty points and pay the balance off in full the following month, but I had to make a Bank Transfer before they would release the car! 

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I've used a credit card for deposits up to £1k for both cars and caravans, but they've always wanted the balance either by bank transfer or using a debit card

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