Credit card vs loan

Anonymous · ‎02-05-2015

I am currently looking to purchase a new lawn mower at a cost of $6,500, the dealer offers O% for 42 months but when I went online to apply it is actually a credit card for that brand. I can get a 36 month loan at 2.9% and can afford that payment.

My queastion is I have been working hard to get my score up, it was terrible after my divorce and after 3 years have it in the 670s and steadily improving. Is there a difference in the way a loan vs credit card impacts my score? One of the hits on my score is use of revolving credit.

Thanks for any advice.

bigblue7722 · ‎02-05-2015

@Anonymous wrote:
I am currently looking to purchase a new lawn mower at a cost of $6,500, the dealer offers O% for 42 months but when I went online to apply it is actually a credit card for that brand. I can get a 36 month loan at 2.9% and can afford that payment.

My queastion is I have been working hard to get my score up, it was terrible after my divorce and after 3 years have it in the 670s and steadily improving. Is there a difference in the way a loan vs credit card impacts my score? One of the hits on my score is use of revolving credit.

Thanks for any advice.

The question is really for you. What do you value more? Paying no interest but hurting your credit score sense they will propably only approve you for 6500 card so it will be maxed out also it depends on how much in credit lines you have if you dont have a lot it will really hurt your score. Or would you rather protect your score and pay some interest? Now my quesiton is where are you getting a loan at 2.9%?

AMEX PRG NPSL,Lowes $17000,Capital One venture card $12,000,Us Airways mastercard $9500,Fidelity Amex $9000, Discover it $8000, Capital One Venture One $7500, BOA 123 rewards $7500 CSP $6000, Capital One Quicksliver $5500, Amazon Store card$5000,Barclay
Card Ring $5000 Chase Marriott $5000,Chase Hyatt $5000, Sallie Mae Mastercard $4400, Paypal smart connect $4000,Chase Freedom $3200, Capital one Quicksliver visa $3000, Chase IHG Rewards $2300, Chase Southwest Premier $2000, Citi Double Cash $1500, AMEX BCE $1000

Last app July 22nd 2015- No apps for two years.

Anonymous · ‎02-05-2015

On the flip side that 6500 dollar card willhelp you with util once you pay it down. oncethe loan is paid off it is doing far less for you. Big blue, 2of my CU's would go that low on an item like that. They are basically writing it like a car loan.

bigblue7722 · ‎02-05-2015

@Anonymous wrote:
On the flip side that 6500 dollar card willhelp you with util once you pay it down. oncethe loan is paid off it is doing far less for you. Big blue, 2of my CU's would go that low on an item like that. They are basically writing it like a car loan.

Thats a crazy good deal on a loan for a lawn mower not a smart move by your CU its kinda hard to repo a lawn mower compared to a car. Im surpised they are not going to do it as unsecured or unsecured rates with a UCC-1

AMEX PRG NPSL,Lowes $17000,Capital One venture card $12,000,Us Airways mastercard $9500,Fidelity Amex $9000, Discover it $8000, Capital One Venture One $7500, BOA 123 rewards $7500 CSP $6000, Capital One Quicksliver $5500, Amazon Store card$5000,Barclay
Card Ring $5000 Chase Marriott $5000,Chase Hyatt $5000, Sallie Mae Mastercard $4400, Paypal smart connect $4000,Chase Freedom $3200, Capital one Quicksliver visa $3000, Chase IHG Rewards $2300, Chase Southwest Premier $2000, Citi Double Cash $1500, AMEX BCE $1000

Last app July 22nd 2015- No apps for two years.

Anonymous · ‎02-05-2015

@bigblue7722 wrote:
@Anonymous wrote:
On the flip side that 6500 dollar card willhelp you with util once you pay it down. oncethe loan is paid off it is doing far less for you. Big blue, 2of my CU's would go that low on an item like that. They are basically writing it like a car loan.
Thats a crazy good deal on a loan for a lawn mower not a smart move by your CU its kinda hard to repo a lawn mower compared to a car. Im surpised they are not going to do it as unsecured or unsecured rates with a UCC-1

Depends. might get a better sale on a 6500 dollar lawn mower than a car where those 2 CU's are located. At 6500 I assume it is more tractor than lawnmower. One of my CUs goes lower on "farm equipment" than they will on an auto laon. And yes I am a member of some seriously obscure CU's. The emails they send out are priceless.

Anonymous · ‎02-06-2015

Avoid significant CC debt when possible. $6500 on a card might be worth 0% financing if you get a limit of over $13k and have around $25k in total credit limits and no other debt. If any of those factors get worse, CC debt is not ideal. Why? High utilization across all your CCs (over 30%) or high utilization on a single card (over 50%) increases the likelihood of AAs by CC issuers. With that said, 0% interest beats 2.9% interest, so it really comes down to your individual circumstances and needs.

If you don't need any other loans anytime soon and if you are okay with facing potential credit card closures or limit decreases on other cards, you can even go with the CC loan if it maxes out the card and puts your overall utilization dangerously high. However, for people who might need good credit for other reasons like apartment rentals, car loans, other credit cards, or even employment, maxing out a card is generally not the best idea when low interest alternate financing is available. The 0% offer beats the 2.9% offer if you can take it safely. If you currently have good credit, decent income, and overall available credit in the 20k range with little to no CC debt, the 0% apr offer might be a better deal. Otherwise, I'd lean towards the 2.9% loan.