I searched and wasn't able to find a thread on this. Perhaps because the notion is preposterous?

I can pull almost ten thousand on a credit card at 2.99% for life with a 3% upfront fee. So,...

on the surface, this appears to match some of the better offers from credit unions on auto loans.

I understand that, if I am late, or mess up any other payment, my interest rate on the card, and all my other cards, could get bumped dramatically.

However, missing auto payments to the credit union/bank would result in a repo and a destroyed credit rating? Right? Or am I missing something.

It seems that the safer way of keeping an auto is through the credit card, because there would be no threat of a re-possesion.

Thanks in advance for any help. I expect to get flamed for the stupidity of this.

Repossession is expensive.

Unless you buy from one of those "buy here pay here" lots that deliberately sell calls to people who can't afford them and intend to repossess them in order to recycle them to another sap, you have to be significantly late before you get your car repossessed. On the other hand, your credit card interest rates will shoot up immediately if you are even one day late (though many banks will look the other way one time).

I'm not saying that getting a lower interest rate by using a credit card isn't a good idea, but if your situation is such that repossession is a major concern to you, perhaps you should be reconsidering the whole idea of borrowing to buy a car.

walletLess said:zilch said:I understand that, if I am late, or mess up any other payment, my interest rate on the card, and all my other cards, could get bumped dramatically
Correct, but don't forget that there are other things to be careful about. You cannot use the credit card for anything else, since most likely, the credit card company will count your payments towards the higher interest balance after the lower interest ones. In other words, if your balance transfer APR is 2.99% and your purchase APR is (say) 9.99%, then the payments you make each month will first go towards the balance transfer APR, and THEN towards the purchase APR.

So, in other words, you will have to keep the credit card aside for all uses until you pay off the loan.
Otherwise, if you are really hell bent on buying a car with monthly payments, this is generally a better option then taking the loan from dealership or bank which charges higher APR.

Thanks! And I do understand that the card would be solely devoted to the auto purchase.

First off in some cases in today environment it could be cheaper to buy a new than slightly used car as some new car models currently have special finance deals between 0%-2.99% offers for between 36-60 months depending on the car and model vs used car loan rates are about 5%+/-.

For example a new car might cost $20k and a 3 year old car might cost $15K except you might save more than $5k in interest over 60 months.

Even Toyota and Honda have some models currently with 0%, 0.99%, 1.99% and 2.99% deals with terms varying between 36 to 60 months.

Now if you plan to buy another rust buck that is 5-6 years old then that is another story but it sounds like you are lucking at cars in $10-15k range so if your looking for newer model car might want to look at the special which will only get better from here I think. As Toyota and Honda both are reporting slower sales, and build up in inventory as even they are felling the pain currently. So it not only American Car companies do crazy fiance deals this time around.

Ok, perhaps this is the deal breaker?

Credit card payments, I've noticed, start out higher and progressively (or gradually) work their way lower.

An auto payment, I think, would stay the same for the life of the loan, right?

So, if the initial card payments are far TOO high, this isn't a valid option.

LosDeus said:Credit cards generally have a minimum payment of 2% of the current balance. So 10K works out to be about 200 a month.

So this would be something to check with them in advance? And perhaps lock-in if at all possible?

I know they can can change terms on one faster than the wind changes direction.

i think using credit card is more flexible. you can transfer your balance to other credit card that's has lower than 2.99% apr (for example 0% BT).

You sound like the kind of guy who has is finances in order and doesn't have to worry about missing a payment and all that jazz. With that said, put it on the Credit Card. It's a much better deal and you'll thank yourself later.

one more thing. CC companies have a right to cancel the BT offer for any reason. Even if you are paying on time, some credit card companies have an explicit "poison pill" in the T&C that they may up your APR if you have too many open accounts, too much balance, etc. So, in that sense, the balance transfer money is not a guaranteed loan. If they UP your rates, you have to pay them the full balance, or pay higher interest on remaining balance.

Penfed is offering 4.25% on used and new car loans right now. That's much better than dancing with the devil at 5.99% (2.99% + 3% fee).

Use the 4.25% loan to buy a slightly used car. The used car market is flooded with clean cars right now. Bargains are everywhere, if you're not afraid to haggle. Offer 20% off Edmunds/Kelly Blue Book/NADA prices. If the dealer says no, find another dealer.

Don't pay the $299-$499 "processing fee" that the dealer insists is mandatory. It's not mandatory.

Example: You should be able to get a 2007 Camry, with less than 20,000 miles, for around $13,500. Anything more than that, and the dealer is ripping you off.