smeakim

I was wondering if anyone could shed some light on this for me. I currently have about 7500 left on a car loan at 5.89% with 46 payments remaining. I have a CC that is offering me a fixed 3.99% fixed life of balance on balance transfers with no fees. There is no prepay penalty on the auto loan. If I am not mistaken I will save almost 2% on the loan pay it off sooner and payoverall less interest by going to the 3.99% correct? I know if I am late they may raise the rate but I am not concerned with that becuase worst case I make the min on the CC if something happens. Thoughts Would Be Great

InfiniteNothing

It may not be worth it. Usually there's an upfront transfer fee of 3%. Also it depends on how you use the credit card (normally). The credit card companies (at least mine does) has the option of applying your payments to what ever loan they want. So if you charge 1000K in a month and pay $1000 that money goes towards the car and you're hosed on the 1000K of intrest at your usual rate.

Other than those two spoilers, it's probably worth it.

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Cubsfan

Pretty much everything that you just said would work. However, there's several dangers here:

- If you just pay the minimum on the credit card, it's going to be FAR more than 46 months.
- If you miss one payment, or are even late by one day, they probably jack up the interest rate, and charge you a bunch of back interest at that rate.
- All of your payments will be applied to that first. So if you buy, say a TV for $200, then you send in a payment for $200, that money will come off of your low-interest car loan, not the high interest TV purchase.
- This will probably hurt your credit a bit. I would guess that having a high credit card balance counts against you as opposed to having a car loan.

smeakim

The offer has no BT fee of any sort to do the transfer. I will be making the same payment as now so I am not cncerned with that. After the transfer the CC card requires no further purchases and is going in the desk until paid off. I make auto payments from their site so I am not concerned with it being late. Also since my billing date is after a payday I always pay it right that day so I am not too concerned. Yeah I also know about apply to lowest rate first which is why it will not be used for anything after the BT. With that being does it seem correct to do it?

adjaw

Usually the balance transfer applies to a transfer of funds to pay off another credit card. To pay off your car loan, you'd need a cash advance, which usually has a 3% fee attached, plus you pay the normal interest rate on the cash advance.
IF you can get a Cash Advance with NO transfer fee and at an annual percentage rate of 3.99%, then it would be a good deal. Of course make sure you get a credit limit that would be at least $7500 and you should be careful about what else you charge on that card. The credit card companies don't always split up your payment evenly between purchases and advances. They always apply less money to the one that charges the most interest. One way of getting around this is to put a note in with your payment stating you want "X" amount put towards purchases, and "Y" amount put towards advances.

Good Luck.

InfiniteNothing

Yeah sounds like a good idea then. You'll save a few hundred bucks over the life of the loan.

Grimm

The risk is too high. You may save a few bucks in the reduced interest, but if something goes wrong with the CC payment, a glitch on your bank's end that locks out your account for example, you will be totaly screwed. Plus, just because they give you a low rate it doesn't mean they can't change it. There are loop holes worked in there for them. The conventional loan is much safer than carrying the balance on a CC.

If you put the money on your CC you save about $6.45 a month ($176.10 vs $182.55/month), but you are risking about $68.35 a month if your credit card goes to a 24% default rate. The risk is roughtly 10x worth the gain. Yes, you could refinance the loan, but you will get stuck with a 12 to 14% loan. With the new loan it only costs you about $20 more a month, but you have to pay finance charges.
$6.45 a month isn't much to pay for the additional security.

zippyjuan

I don't think a car loan can be considered a balance transfer anyways. That usually refers to other credit cards. Be careful of how they credit payments too. They may count your payment to your most recent purchase first so unless you paid more than you charged that month, your transfer amount may not go down at all.

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smeakim

Thanks everyone. I ended up leaving it alone. They gave me a small credit which equates to a months worth of interest to stay with them. I figured it also looks better on my credit report.

attgig

i've done that before, and had no problems with it.
it did save me money in the end...
just made sure i never touched the credit card. and when they guarantee the rate for the life of the loan, they do give u that rate till u pay it off....they've never magically changed it on me to screw me over.

in the end, i came out a few hundred richer... with no real problems.

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