Credit Cards

[Sushi]

Me and my friend were discussing something and wanted to see if this is correct.

Say you are buying a motorcycle for $3000. You put it on a CC that has an APR of 10% and plan to pay $500 a month min on it(CC has 0 balance currently, and will not be used for anything else).

Or if you get a loan for $3k from a lender, say Cap One or CU at 10%, but on longer terms(24/48 months or whatever they do).

Does it wind up being the same? Or are you paying more with the CC with the way APR is calculated?

[Creditaddict]

depends if it's simple interest or whatever kind of interest it's called. (sorry)

and I may have this backwards, someone can correct me.

but cars you pay most of your interest up front, simple interest you pay interest based on your average monthly balance.

so if you took loan for 24 months and paid over 24 months and did same for credit card it should be same interest, but if you took loan and paid over 24 months but paid the same loan on credit card in say 15 months you would save quite a bit of money.

sorry if this didn't come out right.

[creditohio]

personally, if you apply and get motorcycle loan it will cost you an inquiry and new tradeline. if you plan to pay it off over 6 months then i would put it on card. you have to look at your util. short term you may take a small hit on fico score but after 6 months you will be better off w higher fico.

most car loans i believe are simple interest. meaning you pay interest and principal beginning with first payment. no early payoff penalty.

if your loan isnt than your being ripped off

[Sushi]

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creditohio wrote:

personally, if you apply and get motorcycle loan it will cost you an inquiry and new tradeline. if you plan to pay it off over 6 months then i would put it on card. you have to look at your util. short term you may take a small hit on fico score but after 6 months you will be better off w higher fico.

most car loans i believe are simple interest. meaning you pay interest and principal beginning with first payment. no early payoff penalty.

if your loan isnt than your being ripped off

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Correct, since trying to fix credit, I was hoping to avoid a new inquiry. Since I can afford to pay it off in a few months, I figured I would rather my Util takes a hit for now, but then should go back up. I do not care about the FICO score and have no outstanding debt.

I will still wait though, and purchase once scores are over 650 or so. Which might be next year or end of this year I hope.