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Balance Transfer to pay off Car loan…was this a good move?
Ok in 2003 I purchased my car for $21,900 at 7.25%. Payments were approx 380 a month. I have $5000 left on the loan and decided to xfer the balance to my credit card. They offered me a 0% on Bal xfers for one year and about a 3% fee to xfer. (I have a 0 balance on this card)
it looks like a good idea because I do not want to give the bank more free money…let alone the amount I already gave up until this point.
What do you think?
And for future references – is it better or worse for your Credit Score to have a car loan and just pay is off….or transfer the bal to a 0% CC and pay that off with the interest?
Thanks
I plan of paying the $5k in the next 5 months
I plan on paying the $5k in the next 5 months
If you pay $429 per month to pay off this balance, you have made a good deal. This should pay off your car in 12 months without incurring any additional charges.
If you pay less than this amount, you will find that the charges will negate your “good deal.” You may pay as much as 24% interest rate instead of the 7.25% rate on the auto loan.
As loans go, you had already paid the highest interest rates for the first through the 4th years, the fifth year was mostly principal.
It doesn’t make any difference in your credit score if you owe auto loans or credit card balances. Both are balanced against your annual income.
The biggest lesson here is: don’t buy a new car that you have to pay over a five year period. You lose so much in depreciation in the first two years that you never recover. Look for a good used 2 year old auto and pay for it over 24 or 36 months – you get a lot more for your money and don’t lose a huge amount in the form of depreciation.
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