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Should I pay off the remainder of my car loan with a 0% interest credit card?
"I wanted to refinance my car, but because I rolled a previous car loan into my latest car loan, the loan-to-value ratio is too high to refinance.
I currently have an interest rate on my car loan of 11%. However, I found a credit card that offers 0% interest for 18 months, and I think I can pay off the loan within that time frame. Should I do it?"
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
“This might be a great move if you’re sure you can pay off the balance. But before you start making plans, you’ll need to do a bit of research.
First, find out if the lender will actually let you use a credit card to pay off the balance. If they do, make sure they don’t charge you a massive fee to do so.
If your lender allows you to use a credit card and charges zero fees or a small fee, this might work in your favor with the 0% interest rate. Just remember that if you have a balance after 18 months, the credit card will go back to its normal interest rate, which is typically between 16% and 24%.
You might also want to think about contingency plans. If you get laid off or injured, or if you can’t pay your credit card for any other reason, the amount you’ll owe plus interest will create financial duress.
It’s a gamble, but it’s one that just might work out.”
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- Gregory R.
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