[Soul_Glo]

Previously I have used PCP Finance, HP Finance and brought several cars outright in cash.

My first ever PCP deal, at the end of the agreement I decided to hand the car back in and walk away because I wanted a change of brand.

Recently, I have come to the end of a 36 month HP. The deal seemed good because there was a pricing error on the website and the dealership honored this so I therefore almost broke even. I put £6000 in as a deposit. The car was on the website for £12,000 and at the end of the agreement the car is worth £6500. IIRC the interest paid was around £1200. In my eyes that is not as bad as a PCP.

Having done my research now I think PCP is the absolutely worse way to fund a car. I learned the hard way from this sting in the tail.

Times are changing... with a mortgage renewal and wanting to pay off the house quicker... there is not so much disposable income.

So I had a thought... 0% interest credit card for 24 months? Has anyone done that before... if so then how did it work out for you?

Any thoughts welcome.

[un1eash]

I've bought a car worth £3k before on credit card, most places will charge you a few % for using a credit card though which wasn't much and I got this knocked off the asking price. If you've got the credit amount and know you can pay it off then it's not a bad way to buy, some cards are even offering 0% on balance transfers so you can move the amount from card to card.

[djgandy]

I've used 0% CC before. The problem is getting a large enough balance on the 0% card. Usually you'll get a 20 month or so 0% period and a crappy limit to start with.

First step is to phone them and say I don't want this card because the limit of £1000 is pointless. I got mine upped to 3k after that. Then you need to spend for a few months, before you can up the limit. So after 6 months you can get yourself a 0% card with 6-7k limit on it, and 14 months interest free.

If you can be bothered it's a good idea, just make sure you pay it off obviously. The alternative is just get a a loan which at 3% or so barely has any costs for borrow 10k

[gangzoom]

At the end of the day its different for every one and depends on what deals are been done.

I've had a car on PCP before and realised it was a horrible deal and settled early. But I went with PCP again on my current car because the dealer discounts + 0% finance + £0 deposit made it a no-brainer.

One thing to bear in mind is the stupid low mortgage interest rates at the moment, if you have a big enough LTV value there are mortgages with rates of under 2% for the first 2-3 years.....Santander will give you 3% interest on £20K (pre-tax), you can open one for the wife, and than another combined account. That will get you £90/month interest post-tax (assuming higher tax bracket) if you have the funds....Which might be more than what your save by paying off the mortgage early with the same amount of money.

Personally I wouldn't go down the route of financing a car I haven't got the cash to buy out right. If you have the cash to pay off the 0% credit cards, and have a good enough system in place to avoid the various fees etc, than it's all good. But if you get it wrong, or cannot clear the debut at the end of the term your looking at some very very stupid APR rates.

[Soul_Glo]

Thanks guys some solid advice. My CC is at 6K at the moment. A bit of spending and paying back may help. Then the rest of the balance can be cleared with savings and a part exchange. So that would be around 10.5K. It seems doable. I remember when the credit crunch hit and we were on a tracker mortgage at the time.

[pmmcbl]

If you plan ahead and get additional cards it could work on the long term. I have used my credit card to purchase a car for over 10k. My plan to for a quick turn around and make some money. Worked for me.

[gangzoom]

Originally Posted by Broken_Gearbox

I remember when the credit crunch hit and we were on a tracker mortgage at the time.

Same here....But I really dread to think what would happen to all the people going for 90-95% LTV mortgages now, if the rates end up at the previous 'normal' of 5-6% rather than <3% which is the current norm.

Credit is very cheap at the moment and the housing market around us is crazy, house are selling before they even hit the sales website, opening offeres are apparently the asking price....Brings back memories of 2008 when I bought my first house....Just before the last crash....Luckly we don't need to move again for a while, I ain't getting my hands burnt twice in a row if another 'correction' is on its way.

[doughboy]

Negative interest is the only way for the banks to go when things dip again.

See Switzerland and Sweden, they take money off you when you put it in the bank....

It's coming our way...

[djgandy]

Originally Posted by doughboy

Negative interest is the only way for the banks to go when things dip again.

See Switzerland and Sweden, they take money off you when you put it in the bank....

It's coming our way...

Sadly I fear the same. More of the medicine that isn't working. They are already trying to figure out how to ban cash so you have no choice but to lose your money. This is modern economics for you.

[doughboy]

We've gone back to cash, trying to stop using the cards all the time.

Its actually nice to go out with a was in your pocket and pay for meals etc with cash. very satisfying, when everyone else is waiting for the card machine..

Use it or lose it as they say...

[gangzoom]

Originally Posted by doughboy

Negative interest is the only way for the banks to go when things dip again.

See Switzerland and Sweden, they take money off you when you put it in the bank....

It's coming our way...

...and I thought 1.6% on a 1 year ISA was bad.

So when printing none existent money stops working the plan is to make all the citizens spend all their savings.....

At least it's a good excuse to go and blow £50K on a Tesla

[RCUK]

My mate bought a 911 on credit cards

He got 4 cards, £10k limits on each (more or less) then balance transferred it all to an existing card with no balance, and closed that account - so he moved the £40k into his usual account...

Then he bought the car with the cash, and paid off the minimum balances each month, after 18 months sold the car for more than was left on the cards!

18 months motoring cost him sod all!

[gangzoom]

Originally Posted by RCUK

My mate bought a 911 on credit cards

He got 4 cards, £10k limits on each (more or less) then balance transferred it all to an existing card with no balance, and closed that account - so he moved the £40k into his usual account...

Then he bought the car with the cash, and paid off the minimum balances each month, after 18 months sold the car for more than was left on the cards!

18 months motoring cost him sod all!

Don't most places charge you 2-3% on top for larger purchase if done on card, and most card companies that charge another 2-3% for balance transfers?? If he had the cash, why not just pay the £40K upfront. If he withdraw £40K of cash off a credit card, that there would have been another cash transfer fee??

[Vish8895]

0% cards are the way to go. My mate has bought his E90 for £8000 on a 0% card, if managed properly you literally pay 0% interest on the £8000K loan.

[Gooner_M]

If you have the available balance and a good transfer offer (usually a 0% balance transfer to bank account option) then putting a load of money onto your credit card is a great way to save money.
I've just put a shade under 20k onto a credit card which has cost me a few hundred quid in fees to transfer it to my account. I then paid for my car outright and my finance is the minimum card payments every month interest free.

BMW wouldn't allow me to put a large amount onto a credit card so it had to be done this way via a debit card.

The hard part to this is getting your available credit card limits high enough, these days credit card companies aren't giving out high limits very easily!

[gangzoom]

Originally Posted by Gooner_M

BMW wouldn't allow me to put a large amount onto a credit card so it had to be done this way via a debit card.

But surely that means you had at least £20K cash in your debit account. Unless you did a cash advance on a credit card or balance, which most are 3%. Given you can get a £20K loan from the bank for 3.5% interest, your not really saving that much money on interest compared to just a normal bank loan.

More to the point, if you had £20K cash in your debit account, why bother with paying a x% credit card transfer fee in the first place??

[Gooner_M]

Originally Posted by gangzoom

But surely that means you had at least £20K cash in your debit account. Unless you did a cash advance on a credit card or balance, which most are 3%. Given you can get a £20K loan from the bank for 3.5% interest, your not really saving that much money on interest compared to just a normal bank loan.

More to the point, if you had £20K cash in your debit account, why bother with paying a x% credit card transfer fee in the first place??

I did have cash in my account, but not the full amount for the purchase.

A 5 year bank loan for 20k at about 3.5% (If you can get this rate) will cost you nearly 2k in interest. Most people will will be offered 6-7% or upwards, costing you about 4k over 5 years.

20k credit card balance transferred to my bank for 18 months at 0% costs about £380 in interest, a big saving, even if I need to transfer some of the outstanding balance again.

[gangzoom]

^^

But your comparing the interest over 5 years on a loan versus 18 months. 18 months of interest on a £20k loan is about £500 at 3.5%, so hardly any more expensive than paying a 3% transfer free on a credit card.

Have you also got a £20K 0% credit card limit??

I fully understand the benefits of having access to 0% credit cards, but I simply don't get how some people claim they can buy everything they want on them. Most new credit cards only a credit limit of £1000-2000 pounds. By the time you persuade the card company to increase the limit your only a limited time of 0% interest left....At which point your have to repay the whole amount or face 20-30% APR.

Yes you can arrange another load of 0% cards, but it gets very complicated quickly. Surely if your going to spend so much time and effort sorting that out the why not use the tired and tested method of 'Buying only what you can afford' or shock-horror SAVE UP for something over a period of 1-2-3 years is the most prudent financial option?

[gangzoom]

Here's a cheap loan from Sainsbury.

Borrow £15k over 12 months and your pay only £273 in interest. I've 'earned' more interest/cash back from my Santander 1-2-3 account over the last 8 months

http://www.sainsburysbank.co.uk/borr...BNAVISOURC0001

[Thermobaric]

Just looking at the Santander calculator. Am I being a bit dim but how does it get £592 in interest on a balance or £20K at 3%? Should be £600 surely?

[gangzoom]

I think it's actually 2.99% APR. There's also the £2 (Going it £5) monthly fee. Also don't forget to add in Tax implications. Even so it's as good as the best fixed rate ISA - without having to 'lock' the money in. I believe you can have x3 1-2-3 accounts per household for a max of £60K at 3% interest....Which in the current climate beats just about evey other 'safe' savings option. I wish we had opened one up sooner.

[Thermobaric]

Ah right. That makes sense. Looks like a decent deal. £414 a year of interest on £20k after basic tax and yearly fee. Not bad.