Author Topic: Trick to pay off loan for 0% APR  (Read 7674 times)

VladTheImpaler

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Trick to pay off loan for 0% APR
« on: April 08, 2016, 05:24:01 PM »
Hey,
I've got a question for my amazing fellow Mustachians:

I have a car loan for about $7860 @ 3.29% interest.
I paid $325.16 in interest on this loan in 2015.

I also have a student loan for $16,671.41 @ 3.125% interest.
I paid $404 in interest on this student loan in 2015.

For both loans that's a total of $730 I paid in interest last year.

I have 2 credit cards (Chase Slate and Citi) with 0% APR for 15 months with about a $12,500 limit.
Should I transfer the balance of the car loan onto the credit card to save on interest?
I Googled it and found some info on people using No interest or low interest credit cards to pay down higher interest rate loans.
I understand there is some risk involved, but it could save a few hundred bucks.

Have you done this?
Did it work for you?

Thank you

prognastat

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Re: Trick to pay off loan for 0% APR
« Reply #1 on: April 08, 2016, 05:28:05 PM »
I would say if you can pay it off within the 0% APR period. There is some risk though since CC rates are far higher and it could end up costing you a lot more.

I would say it depends on how stable your financial situation is likely to be until you have it paid off.

If there is a chance you might not be able to pay it off before you get hit by the credit card rates I would avoid it.

Also I would be honest with yourself how disciplined you are with getting things paid off and if you have any doubts you might let it slip then I would also avoid it.

roadtrippers

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Re: Trick to pay off loan for 0% APR
« Reply #2 on: April 08, 2016, 05:30:26 PM »
Do it. You can move the remainder to a new 0% cc when the term runs out. Just be vigilant about the expiration date and make sure to transfer any remaining balance before that. Good luck!

VladTheImpaler

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Re: Trick to pay off loan for 0% APR
« Reply #3 on: April 08, 2016, 06:41:13 PM »
Thanks for the advice.
I'm gonna do it.
All a person has to do is add a reminder with an alarm to their Outlook calendar or whatever they use to stay organized.
There is a $15 fee to pay the car loan with a credit card, but I'll still save about $250 in interest over the year.

Now, has anyone heard of these people who use 0% CC's to do sports betting and gambling?!
Talk about HIGH risk taking. I'm crazy but even I don't think I can beat odds like that! lol
Any fellow Mustachians ever done this and came out with a net gain?

forummm

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Re: Trick to pay off loan for 0% APR
« Reply #4 on: April 08, 2016, 06:46:19 PM »
Usually there's a cash advance or balance transfer fee. Typically 4 or 5%. In that case, you're perhaps spending more by doing this transfer. I wouldn't do it. Just pay off the loans normally.

JLee

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Re: Trick to pay off loan for 0% APR
« Reply #5 on: April 08, 2016, 06:51:24 PM »
I would check and see if that would count as a cash advance, which wouldn't be covered under the no fee / 0% balance transfer policy.

VladTheImpaler

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Re: Trick to pay off loan for 0% APR
« Reply #6 on: April 08, 2016, 06:55:13 PM »
Both CC's are without balance transfer fees.

forummm

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Re: Trick to pay off loan for 0% APR
« Reply #7 on: April 08, 2016, 07:06:50 PM »
Are you for sure going to have the cash on hand to pay off the CCs in full before the 0% period ends?

JLee

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Re: Trick to pay off loan for 0% APR
« Reply #8 on: April 08, 2016, 07:07:58 PM »
Both CC's are without balance transfer fees.

http://www.csmonitor.com/Business/Saving-Money/2013/0310/How-credit-cards-can-save-you-money-on-car-loans-and-other-debt

According to the above link, Chase won't accept an auto loan as a balance transfer, so you'd have to run it as a cash advance. I'm not sure if Citi will.

SwordGuy

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Re: Trick to pay off loan for 0% APR
« Reply #9 on: April 08, 2016, 07:16:27 PM »
You can always go bankrupt over credit card debt, but not student loan debt.

Not that I'm recommending that, but it's interesting to know.

VladTheImpaler

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Re: Trick to pay off loan for 0% APR
« Reply #10 on: April 08, 2016, 08:25:10 PM »
The Chase Slate card has 0% intro APR for 15 months on purchases and balance transfers.
The car loan payment is considered a purchase.

No I won't have every penny paid off on the CC by the time the 15 pay cycles expires.
When the intro rate ends, I plan to transfer the remaining balance to a new 0% APR CC and finish paying it off.
Now if they stop releasing new 0% CC's in the next year and a half, I might get bit, but it's not likely. Risk is low.

slugline

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Re: Trick to pay off loan for 0% APR
« Reply #11 on: April 08, 2016, 11:04:14 PM »
This seems like a good strategy . . . except most lenders won't accept credit cards for loan payments. Yours does?

dess1313

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Re: Trick to pay off loan for 0% APR
« Reply #12 on: April 08, 2016, 11:52:42 PM »
The Chase Slate card has 0% intro APR for 15 months on purchases and balance transfers.
The car loan payment is considered a purchase.

No I won't have every penny paid off on the CC by the time the 15 pay cycles expires.
When the intro rate ends, I plan to transfer the remaining balance to a new 0% APR CC and finish paying it off.
Now if they stop releasing new 0% CC's in the next year and a half, I might get bit, but it's not likely. Risk is low.

Be very careful of this.  if you miss the deadlines by one day, or anything goes wrong, then there are lots of loans that kick back in retroactive interest.  depends on the exact terms they offer you, each company is different.  Even if you plan on paying off the credit card near the 15 months with another credit card, you don't know if you for sure can do that without a transfer fee at this time.

they offer these great deals hoping you will mess up and they will reap the rewards in massive interest.  also think, how secure is your job, because what if near the 15 months you got laid off or had other issues crop up, could you deal with both problems at once?

If you do this, yes it will save you interest, but i would only do it for the smaller of the two balances.  once that smaller balance is paid off, put all the payments you were using on that to snow ball your student loan away quicker. 

Playing with Fire UK

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Re: Trick to pay off loan for 0% APR
« Reply #13 on: April 09, 2016, 05:37:03 AM »
Now, has anyone heard of these people who use 0% CC's to do sports betting and gambling?!
Talk about HIGH risk taking. I'm crazy but even I don't think I can beat odds like that! lol
Any fellow Mustachians ever done this and came out with a net gain?

I routinely have several 0% offers on the go  - I have around 20,000 at the moment. It does require a spreadsheet and calendar reminder to make sure you don't go beyond the interest free date, but not hard to do. I make sure that I can pay the cc's back if I need to, but I'd rather the money was working for me rather than someone else.

I know people who do matched betting (betting on both sides of the outcome at different bookies so you win at one if all goes to plan) using a credit card advance as a float. A friend at college used their student loan as a float to play online poker and did well out of it. They've all done well but I wouldn't recommend either to someone who didn't know what they were doing or had a hint of a gambling problem.

forummm

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Re: Trick to pay off loan for 0% APR
« Reply #14 on: April 09, 2016, 06:29:55 AM »
The car loan payment is considered a purchase.

No I won't have every penny paid off on the CC by the time the 15 pay cycles expires.
When the intro rate ends, I plan to transfer the remaining balance to a new 0% APR CC and finish paying it off.
Now if they stop releasing new 0% CC's in the next year and a half, I might get bit, but it's not likely. Risk is low.

I've never seen a balance transfer treated as a purchase. But I haven't seen everything.

I definitely wouldn't count on getting a new offer of credit to keep yourself from getting screwed. You have a nice safe 3% interest rate. Why monkey around with maybe getting stuck with 30%? Secured and installment loans (like what you have now) are much more attractive to have on your credit than massive credit card loans. Perhaps new credit card issuers will be less interested in lending you money when you have huge CC balances already.

And I would never do gambling with a credit card balance.

JLee

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Re: Trick to pay off loan for 0% APR
« Reply #15 on: April 09, 2016, 03:27:50 PM »
The car loan payment is considered a purchase.

No I won't have every penny paid off on the CC by the time the 15 pay cycles expires.
When the intro rate ends, I plan to transfer the remaining balance to a new 0% APR CC and finish paying it off.
Now if they stop releasing new 0% CC's in the next year and a half, I might get bit, but it's not likely. Risk is low.

I've never seen a balance transfer treated as a purchase. But I haven't seen everything.


I definitely wouldn't count on getting a new offer of credit to keep yourself from getting screwed. You have a nice safe 3% interest rate. Why monkey around with maybe getting stuck with 30%? Secured and installment loans (like what you have now) are much more attractive to have on your credit than massive credit card loans. Perhaps new credit card issuers will be less interested in lending you money when you have huge CC balances already.

And I would never do gambling with a credit card balance.

This.