Any Finance Wizzes Out There?

Would you save on your car loan if you used those “use you credit card as cash” cheques that have a good interest rate for a fixed term? Lets say the cheques have a good rate for a year. Make a year’s worth of payments on the loan with one of the cheques, and then instead of making loan payments you pay the credit card company for a year. You’d be paying less interest on the credit card, and your total car loan repayment amount would be less because the monthly interest would be accuring on a smaller total amount.
Does that make any financial sense or should I stick to being paid in gummy bears?

5 thoughts on “Any Finance Wizzes Out There?”

  1. The key is to start with no credit balance, and NEVER use the card.
    The credit card companies trick is to hope you’ll use the card. You might have no interest on the special “loan” but you’ll be hit at full rate with anything else on the card.
    Any payment you make comes off the special loan instead of the newer charges – so all those other charges stay there at full interest rate, charged from the day they hit!

  2. The fact that you would take out a “loan” to partially pay another loan doesn’t make sense. Unless you can pay off your auto loan completely with the lower interest “one year” loan, it wouldn’t make sense to have two loans on the same time.

    Instead of playing these games which require financial discipline, just send in an extra payment toward your principle if you can every so often. This will save interest on the loan and will amount to a very significant reduction on the number of payments. My last auto loan was a 60 mo. which i paid off in 24 months and the interest saved was about 3 grand!

  3. Financial discipline is no problem but I can’t afford significant extra payments. So it seemed this might be a way to take advantage of a deal without any cost to me. I’m still curious as to whether it works.

  4. Almost all of those credit card checks impose an origination fee, typically 3%. So whatever interest rate they’re quoting, don’t forget to add that when crunching the numbers.

    One other advantage of using a credit card is that the loan is not secured by the car. If you don’t pay your car loan, they’ll take back the car. If you don’t pay your credit card, they’ll huff and they’ll puff, but they won’t be able to get your car.

Comments are closed.