RADEoN

iTrader: (12)

I have a credit card check here (my limit on this particular card is 15,100) for 0 percent for 1 year, or, 1.9 percent for the life of the balance.

I could likely pay the car off within the year, but I'm not sure if it's risking it, as I like wasting money on toys.

What I'm asking here is, is it worth it to pay it off with the credit card check?

I owe 7,800 on the car as of today. My loan on the car was for 12,500 in October 2009. I've been paying more than the minimum payment on it every month. My interest rate is 8.25.

The pluses are, of course, I would likely save a ton of money on interest, and I would also be able to drop insurance on the car when it's parked in my garage for the winter (usually from october till about now, and i pay 160 a month in insurance for both cars).

My payment is roughly 255 per month for the car. I've been paying 300. How would you guys go about this?

also, would it smash my credit having almost instantly 8,000 dollars in CC debt pop outta nowhere?

JNR_Design

iTrader: (3)

Be careful that by writing a check it's not considered a cash advance, where as they screw you on the interest.

Gary Wells

I am not familiar with a Credit Card Check, but it sounds like a scam to me. I pay my credit card bill the minute that I get it. I am not about to let them make any money off of me. In the credit card world, I and others like me are called deadbeats.

mike_v

You have to be missing something - card companies are not out to give you a good deal. Most of those checks charge a percent of the loan from go. After that, maybe it's some rate based on prime + 1.9. If it is 1.9 for the life of the loan, check what the default rate is. That's what you'll get if you're one day late. To never be one day late - you better pay on their website because they play games.

They also have the right to change the rate when they feel like it, and if you don't want the new rate you have to close your account. A closed account with a balance is not good.

Still - if it is 1.9 and you know you'll never be late - JUMP ON IT!

aurora40

iTrader: (1)

You have to be 100% on paying it off in time. Otherwise they usually charge you interest retroactively. Sounds good if you can do that. 8+% is pretty steep.

RADEoN

iTrader: (12)

it's a balance transfer check, i think they're trying to sucker me into using it again, which i could do.

NeverSatisfied02

iTrader: (12)

If u can get the 0% or 1.9% without any catch... I'd do it. But as others have said... Without being 100% about the agreement, I'd be careful.

rottnrog

A lot of credit cards have a 3% or more cash advance fee which is what that check is considered. You may get hit with that on the full amount

Double check everything !!!!!

RADEoN

iTrader: (12)

thanks for the heads up i should probably call them tomorrow... anyone have any idea how much cash i could save?

mike_v

Just search for 'Amortization Calculator' and compare the two options.

JNR_Design

iTrader: (3)

Another thing I forgot to mention is if you're concerned with credit score, I would think an auto loan would weigh more than a credit card, and may also look better to a future application. Banks look at mortgages #1, cars #2 and then the credit cards when making decisions, afaik...

But yeah, if it's a straight 1.9% and you're on time, it could work out alright for ultimate savings, but IMO keep credit cards for emergencies only.

ITSAV

iTrader: (1)

alright man, I am your guy on this lol...I work for Chase credit cards, and know this stuff. My recommendation is to do the 1.9% now look at all the information on the check, there most likely is a transaction fee for writing the check, anywhere from 3-5% of the amount that you write it for.

Now the people that say if you are late once you are screwed are incorrect. There have been a lot of regulation changes over the last 2 years. You have to be 60+ days late before you can have the rate change on a prior balance, and it will go to default rate which is probably 29.99.

If you are late, than they can change your rate for your NEW purchases, but your current balance will stay the same, they can only change your current balance if over the 60 days

if you do the 0% and get it paid off in a year you will save $409.00 total, that is savings - the transaction fee.

if you dont pay it off for 2 years and do the 1.9 it will save you $757.00 over the course of the 2 years. that is assuming your fee is 3%

oh and keep in mind, the credit card may put a lein on your car, not all of them do that, but some will, until you pay it off.

Let me know if you have any questions as I said this is the stuff I do everyday

itsslow98

iTrader: (18)

I wouldnt bother, if you look at the layout of your original car loan, the last year of your payments go 99% towards your principal. The first year you pay on a loan is basically all interest. So by doing this your really not saving any money since your car is almost paid off already.

RADEoN

iTrader: (12)

i see what you're saying. I financed 12,500 in october of 2009, and have been applying quite a few extra payments.

probably wouldn't be a bad idea just to gang up and make double and triple payments.

itsslow98

iTrader: (18)

Id look into it cause i seriously doiubt your paying hardly any interest on the car right now if its almost paid off, what was the length of the loan?

siggyfreud

iTrader: (1)

I'm guessing he did a 5 year loan on the car based on his interest and monthly payment requirement. You got hosed on the interest rate . . . time to up that credit score.

Both credit card debt and auto loan debt are generally considered "bad" debt. Go with whatever gives you the lowest interest and lets you pay it off quicker. Moving it to the credit card will let you put another $70-90 or so a month at the payment during that first no interest year, as you're probably paying 70-90 a month in interest on that loan now. But be sure to look into any origination fees, or general "gotchas". Money isn't free, and banks right now have very little incentive to offer 0% without some type of catch.

CancerJCC

iTrader: (4)

True. Unless he is making "principal only payments". If you just double or triple up you are just paying the next month and the next....

What you need to do OP when paying extra is make the minimum, heavy front loaded interest payment, and then make a "principal only payment" with the rest. This way you are knocking off the amount that the interest is calculated from.

On a related note I have used the 0% apr's on cc's before for school stuff. Charge up throughout the year and then when I went back to working in the summer I would pay them off. The cc companies assume 90% of people won't be able to pay them off and then they have you hooked for the interest. If you are disciplined then you take advantage of their free loan! Credit score aside I say go for it (1.x% option)

aurora40

iTrader: (1)

He owes $7,800 at 8.25%. I don't know what you consider "hardly any", but it sounds like he has about 3 years of payments left if his payment is $255 a month. That's $975 of interest to potentially save.

nikon

iTrader: (2)

If you plan on paying the original note off in a year and there is a fee to use that check, you just have to figure out which is more...the fee for the check or the interest your going to pay in the coming year....You can do it with an amortization calc or your lender may have a calculator on their website...I just stick in a date on my lenders website and it'll tell me what my payments would have to be and the amount of interest I'd pay.....don't waste the money on toys, pay off your debt then go have fun.

itsslow98

iTrader: (18)

I made that post before i realized when he got the loan. When i made that post the weay it sounded to me was that he was on his last year of payments. 3 years is a different story obviously.

BTW 975 dollars over 3 years is 27 dollars a month, yes its a savings, but hes not exactly gonna be able to do more then eat at Mcdonalds two times a month especially since hes not even 100% on the conditions of the transfer.