Credit card - purchase or balance transfer?

[Garym85]

Hi All, 

 

We have about 18 months left on our car finance and have a final payout figure from them. 
 

can anyone advise if I were to take out a credit card and pay off the car completely with this using a special introduction rate- would this be treated as a purchase or balance transfer? 

The plan is to pay the car off quicker by overpaying and if I can save accruing interest on the existing car finance then even better. Checked and there are no early payment penalties with car finance company. 

[Marisawright]

A balance transfer is from one credit card to another.  Some credit card companies will do a balance transfer from other kinds of loans, but  some don't. You need to ask them.   Some also put limits on how much you can transfer.

Check with the car finance company if they'll allow you to pay off the loan with a credit card. Many don't.   If they don't, then you'd have to take a cash advance on the credit card, and that often means steeper fees and a higher interest rate which would wipe out the benefit.

Be careful too, because (as I'm sure you know) the usual interest on a credit card is very much higher than the interest on a car loan.  If you don't manage to pay the loan off before the special introduction rate expires, you'll end up worse off.  

[Ausvisitor]

In the UK a few (not many at all) credit cards do something called a super balance transfer, this basically allows you to draw the money down to a bank account rather than pay off another credit card.

There are minimum amounts you can do and you can only do it once per card but it goes on as a balance transfer rate not a cash advance.

They are rare though and I don't know if Australia has anything similar

[Ken]

That would be a balance transfer (unless your current finance company has a pay by credit card option - which is very unlikely). The difference is that when you make a credit card purchase the company that you buy from pays a fee to the credit card company (sometimes that fee is charged back to you as a credit card surcharge) so the balance on your card is more than it cost the credit card company.

When you make a balance transfer your new credit card company has to pay the full amount and doesn't receive anything back from your old lender so the balance on your card is the same as it cost the credit card company (and possibly less if you consider the bank fees that the credit card company had to pay).