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Regular Contributor
Posts: 117
Registered: ‎03-04-2012
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balance transfer to pay off car?

so as i pay down my credit cards and my utilization jumps back into an attractive number for lenders, i have seen an incredible increase in credit card offers.  i have had 2 automatic increases with 2 different credit cards.  all of my cards excet one is out of a promo period.  i think i have 8 months left on my cic simplicity with only a 3k balance. 

 

i am facing a family car purchase in the next couple months.  we are looking at a used toyota 4runner.  we found what we like for around 30k.  our approach is to buy for reliability and longevitiy. 

 

my wife has 8k to put down.  i have an old bmw i plan to sell for 4k and i will dip into some savings as well.  all in all we will put down around 12-15k and finance the balance over 5 years.  i know money is cheap now with decent FICOs but i was wondering if anybody has taken advantage of balance transfer offers to pay down some of their note?  i put my honeymoon and part of my wedding on a promo credit card and was able to self amoritize my note paying down almost 8k in 10 months without compromising my lifestyle and i still have free money if i need access. 

 

i have been getting peppered with credit card offers/balance transfers and i was considering using them at some point to pay down the note when we eventually get one.  the car will be in my wifes name because she has more borrowing power than i do.  plus i planed to use my borrowing power to purchase a rental property in the future so i dont want to tie up my lending ability.

 

if i can absorb making the payments on a 15k note over 5 years and my budget allows a more agressive pay schedule, would you take the additional monies and apply to a 0% balance transfer payment or just double up on your car payment??

Established Contributor
Posts: 642
Registered: ‎11-30-2012
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Re: balance transfer to pay off car?

Assuming you could get sub 4% money I would do the auto loan.  Why? 

  1. Family emergency or job loss will lead you to want those lines of credit available for the emergency.
  2. You can earn 4% on your money in conservative investments like KO or AAPL
  3. You tie your debt to the asset that supports it.  Again in an emergency you sell the car and pay off the debt.  You preserve your cash for groceries and house payments in an emergency,
Established Contributor
Posts: 753
Registered: ‎10-25-2011
0

Re: balance transfer to pay off car?

[ Edited ]

SantaMar wrote:

so as i pay down my credit cards and my utilization jumps back into an attractive number for lenders, i have seen an incredible increase in credit card offers.  i have had 2 automatic increases with 2 different credit cards.  all of my cards excet one is out of a promo period.  i think i have 8 months left on my cic simplicity with only a 3k balance. 

 

i am facing a family car purchase in the next couple months.  we are looking at a used toyota 4runner.  we found what we like for around 30k.  our approach is to buy for reliability and longevitiy. 

 

my wife has 8k to put down.  i have an old bmw i plan to sell for 4k and i will dip into some savings as well.  all in all we will put down around 12-15k and finance the balance over 5 years.  i know money is cheap now with decent FICOs but i was wondering if anybody has taken advantage of balance transfer offers to pay down some of their note?  i put my honeymoon and part of my wedding on a promo credit card and was able to self amoritize my note paying down almost 8k in 10 months without compromising my lifestyle and i still have free money if i need access. 

 

i have been getting peppered with credit card offers/balance transfers and i was considering using them at some point to pay down the note when we eventually get one.  the car will be in my wifes name because she has more borrowing power than i do.  plus i planed to use my borrowing power to purchase a rental property in the future so i dont want to tie up my lending ability.

 

if i can absorb making the payments on a 15k note over 5 years and my budget allows a more agressive pay schedule, would you take the additional monies and apply to a 0% balance transfer payment or just double up on your car payment??


I think I'd do the balance transfer and self amoritize. But it really depends on how long you plan to borrow the 15K note. I know the term you will apply for is 5 years, but how long do you really plan to pay off the loan. Also need to consider the balance transfer fee which is usually 3% versus interest cost over the life of the loan.

I'm a personal banker and do a lot of auto loans serving the Houston area.
I suggest first time car buyers to read the sticky guide in the auto loan section.
I try to check these forums often, but if I missed your post, please feel free to message me with a link to it.
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