I'd say it is generally a bad idea. If everything goes perfectly on your end and the CC company's end, then it could work out ok, but if for some reason you're a day late or something else happens, you're screwed, or if the CC company decides it doesn't like your credit or they change their policies, you're screwed. Been there, done that. With a conventional loan or lease, if something happens that you can't pay for a month or so, or you're late with a payment, the worst you'd have to do is pay a late fee. With a CC loan, they will nail you to the wall. Having dealt with numerous CC comapnies over the years, I'v efound they will use any excuse possible to raise your interest rates or hit with you with exhorbitant fees.

I did buy a VW GTI on my credit car about 15 or 16 years ago, but it was only $2000, and I had it paid off rather quickly. The money I saved in not getting a loan and paying for comp and collission insurance more than paid for the interest I paid.

How much equity do you have in your home? Take our a home equity line of credit to pay for some or all of the new Mini. You'll pay interest, but the interest is tax deductible.

-Keith

 

these offers are there to get people to move the money over to a competing company! They are playing an odds game, that is saying 3.99% to us is better than 0% to us, so screw the other company!

All the CC companies are competing to get YOUR money (or debut) to be working towards THEIR bottom line. Using this CC company tactic to move balances around is one way to make sure the competition in the CC marketspace is working towards your interests.

Check the details, set up automatic payments to prevent missed payments, and go to town! Heck, you do it right, you may be able to find a way to get 25,000 frequent flier miles, and your car on a <4% loan, and you'll end up with the title, as it's not a secured loan!

Before my wife and I got married (and after as well), we used my good credit score and some balance transfers to bring down her rate a lot! If you have the time to work the details, it may make very, very good sense to do it.

Matt

 

I totally forgot about that! And I can carry whatever insurance I want on it, as opposed to the maximums finance/lease companies force you to carry.

This is starting to sound interesting. I'm actually not that concerned with getting screwed. At worst, I sell the car (or some stock) to pay off the CC company, close my account and tell them to kiss my behind.

 

I had wanted to charge a big chunk to get the FF miles, but my dealer has a $3K limit for credit cards. Not sure how those convenience checks would change the equation. But I would worry about cash advance fees. Make sure you read all of the fine print.

 

And don't underestimate what this does to your credit score. I have done my homework, having gone through a bankruptcy at one point in my life and recovered in less than 12 months with the help of Stephen Snyder (Life After Bankruptcy). He recommends never having balances on your credit cards over half of their credit limits (so in your example only charging up to 12k max on a 24k limit credit card). I would also not recommend playing the balance transfer game from card to card as this too tends to have a negative effect on your credit score. You may not see the need now, but in the future that credit score is more valuable than anything else you have because it is the primary tool used by all lenders. Just be careful and think it through. I would take a minimum of 1 week to "sleep on it". There may be a better solution.

Best solution in my opinion, is to own your own business and let the incorporated company pay for the car and let the business take the credit hit not your personal credit. Just my .02.

 

Funny you should mention that, since my wife and I were just discussing incorporating her business this weekend. The benefits regarding vehicle ownership came up as a good reason.

I'm not in any hurry, as the car won't be here for a couple of months anyhow.

 

So, I've got the check offer in front of me. Here's what it says:

-- "A fee of 3% (minimum $5; maximum $50) applies to the amount of each transaction from this offer."
-- "You may write the check in any amount, up to the unused portion of your available credit."
-- "If you deposit a check into your bank account, please make sure your bank has made the funds available to you before accessing the funds."

A couple of Gotchas:

-- "Right to Decline. Under certain circumstances (for example, if your account is past due or over limit, or if we reasonably believe that you will be unable or unwilling to repay the balance) we may decline to process your transaction, in which case you will be notified."
-- "Payment Allocation. We may allocate payments to promotional and introductory balances with low APRs before applying payment to higher-APR balances."

Other than that, nothing surprising: the usual disclaimers about late-payments, etc. No big deal. Sounds like a reasonable offer.

 

Late payment could be a big deal, I heard some CCs would collect the regular APRs all the way back to when you make the first transfer.

 

The second disclaimer is straight back to my comment earlier - if you do this make sure the CC is clear of any balance before you start, and NEVER use it till the balance is paid off.
If you do that, you have no worries at all about payment allocation, and the only interest is from the check.

The first point suggests you should try putting the check in the bank about a month before you need it, to make sure there are no issues.

 

Bob,
Carrying less insurance than the bank would make you is a bad idea. Buying a car for any personal use under a corporation is a bad idea. Join a local credit union, get a car loan, close the credit card account, tear up the checks, and close this thread.

 

Exact same deal I got to buy my boat! One thing that I made a mistake on was making payments when I get paid not when they are due. See I get paid every other Thursday so I make a house payment one payday and the boat the other. Well as expected I got ahead and 2 payments went to one month and I got a late fee the next month. I called them and had a laugh with them about getting a fee for paying to much. This did not affect my interest and that gave me a credit.

One nice thing is as the balance drops so does the monthly payment. I still pay what it was the first month so it is dropping very quickly now.

 

It's an excel spread sheet calculation, you do the math and see what's best. What's wrong with using the competition between credit card companies to ones own benefit? Seems to me it's one of the few upsides of having good credit, with regard to CC companies....

Matt

 

[The problem with a multi page thread: if you don't read all the page you find you have duplicated someone elses responce Sorry for that! [edited 03/21/2006]]

Something else to think about: if you "max out" your credit limit on that card/account it will go as a negative on your credit report. I don't remember the figure, but if you carry a balance that is 75-80% (or greater) of your entire allowable limit it decreases your credit score... I don't know by how much. Of course if you keep transfering the balance to a new card that may fix that problem, especially if the new card has a higher limit than the old card. However, the new card would have to have 20% higher limit. Lastly, every time you apply for credit it goes as a negative on your credit report and the more open accounts you have the lower your overall credit score will be.

 

I know this thread is turining into a Credit discussion, so I would, again, just point you to a great book on the subject that has helped countless people including myself. Life After Bankruptcy by Stephen Snyder. It will help answer a lot of the questions being asked and cut through the myriad of well-intended recommendations provided on this thread. Education on the subject is your best tool....many people assume they know but don't take the time to read and educate themselves on this very important subject. There is a lot of misinformation out there so be careful!

Stephen also has another book that may be more apporpriate for some of you called Do You Make These 38 Mistakes With Your Credit.

 

That's for me to decide, not a bank, thank you.

We'll ignore for a moment the fact that my wife has her own business, uses her car for the business, and currently deducts her transportation expenses. As far as I can remember, my dad had a company-provided car, that company was/is a corporation, and he used it almost strictly for personal tasks. Since he was an engineer, and the company was General Motors, and he had to fill out reports on the car he drove when he turned it back in, I'm sure the company had a business need they were fulfilling by him driving it. I'm equally sure my wife and I could show an equally legitimate business need.

Thanks for your advice.

 

Bobdobbs and I agree on something! Yea!!!!!




Matt

 

Don't get used to it, Dr. Science.

 

You are playing with snakes, and you are going to get bit. As many pointed out everything has to go perfect for you to win on this....unless you already have a large amount of cash set aside for emergencies....If one thing goes wrong in your life, one big unexpected expense and the best case will be you paying 22% intrest.....You will never hear a wealthy man say that it was the points/airline miles/cashback bonuses that really got me here.....Start talking to bankrupt people and this sort of scenario will be quite prevalent....

It will always amaze me that people start doing math to do the smart thing with thier money when it comes to creative financing but will not do the math on asset value and completely ignore the huge cost of depreciation. In choosing what is wise with money. Most people have WAY to much of thier money tied up in depreciating assets rather then growing thier wealth, and then seem frustrated that they aren't better off or blame "the man " for keeping them down.

Bottom line....It's called RISK...you are taking a BIG risk just to shave a percent or two in intrest. Worry about the pennies after you master the dollars.

 

Planeguy...well stated. Agree completely!

 

Uh, it's essentially an unsecured loan, folks. The amount of risk is not much greater than financing a vehicle the traditional way. The cost of doing it this way is NO greater, and perhaps less. And guess what: You lose your job with a big car loan over your head, and you can't make the payments, you have two options: sell the car to pay off the loan, and hope you're not upside down, or default. With an unsecured loan, you own the asset. Sell it and you can do whatever you want with the proceeds -- pay off the CC bill (or a large portion thereof) or make the minimum payments while using the proceeds to help pay your mortgage until you find another job.

Enough with the doom and gloom.

 

Well, people are just trying to help. I recently watched a Frontline about credit cards and the rules/laws are about the details of running them and it was scary. Among other things was the way they could change your interest rates on balances you currently have based on other loans, etc you may have (meaning if you are late on your mortgage, for example, the cc company can use that fact to raise the interest on money already spent with them), etc in spite of any prior mentions of a fixed rate, its all in the fine print. The credit card biz is rather consumer unfriendly in certain ways and not subject to the same rules as other types of loans so people here are just trying to warn you of the possible risks.

 

I get that. Like I said, worst case, I sell the car, some stock, one of my three other cars or two Ducatis (all of which I own outright) and pay off the CC bill. My original question was in regards to the financial implications of doing this -- e.g., is it more expensive because the interest is compounded. I'm not looking for a life lesson here -- just whether it's cheaper to do it this way compared to a traditional 6% car loan. I.e., I'm looking for facts, not opinions; particularly those based on assumptions of my finances.

 

you make some good points, but it is also true that not looking for ways to save is stupid too. If you read farther up, bobdobbs made reference to selling stock if he needs liquid assets, so I don't THINK he's living paycheck to paycheck.

The credit card companies are playing the odds, on average, they make more money for thier company by doing this stuff. The check on the payment history of thier customers, and make offers to those that have proven thier abillity to pay so they can get the interest (less, or its not worth it) that is currently being paid to other companies paid to them! Some people play the shell game and win, some screw up and find that they're paying 20%+ in the name of chasing some savings. Overall, it's a win for the company making the offer.

So, for those with discipline, and fall back positions, things like this can work out very nicely.

Now, if one is a flake, regularly missed payments, and is living paycheck to paycheck, then games like this are a bad idea (they have increased risk!).

Only Bobdobbs knows his situation in detail, and only he knows his habits and tendancies. Only he can do the math, and factor in his risk tolerance, inorder to come to a conclusion that is right for him. Most of the advice given is projection from the givers.

My wife was a credit flake before we were married. While I took a hit to my credit score, she benefited greatly (to the tune of 10% reduction in interest rates) by playing the move the money shell game after we were married (Acutally started before we were married, I'm just a sucker!). All because the credit card companies were trying to steal each others business. We "won" in that scenario, the monies moved around, because we were good with the math and had the discipline to pay. Now we have no debut but our mortgage, and saved literally thousands of dollers doing it that way (maybe even tens of thousands of dollers). And we liquidated the debut years before Cheryl would have been able to on her own.

There is no universal answer here, for most people, this would be a mistake, but for SOME people, this is a way to save some money on a purchase that had already been decided on.

Bobdobbs is the guy who gets to figure that out, and we can point out pros and cons, but there is no universal answer that is true for everyone.

Matt

 

Werd.

Real name's "Dan" by the way. I just happen to like this guy.

 

So Dan, you ask and you shall receive. Not sure if our opinons matter but I wish you the best of luck on what ever you decide to do. Let us know how it works out.