Down payment on car via credit card?

I have this idea, it sounds good to me, but I wanted to get some advice first.

I have a 15k limit credit card, and I am looking to buy a 20k+ 02' Honda S2000

Can I put like $10k+ down via credit card then do a balance transfer to another card which has 0% on the life of the balance transfer (but 3% fee, up to $75)

So I will be paying 0% on 10k and around 6-7% on the other 10k. Smart idea or is there something I am missing here?

Bad idea waiting to happen.
Please don't do it.
Check with your credit union or bank at the nearest major branch to find out the *TRUE* loan value for the vehicle you are looking to get.
Whatever you are planning to pay above that is the down payment required in order to get it financed.
The less, the better the deal you got.
Go ahead and be a tough customer.
The dealer with the most patience for your poo is the one most likely to get your business.
It's that simple if you stick to it.
With a good credit union, you can get it under %6 easy for a 60-72 month loan with half donkey good credit.
And don't be shy, there are many of them in most cities wanting your business with minimal requirements at most to join.

What happens if you make a late payment? What happens if you loose your income? Do you need this truck? What about a couple years older and k's less?
My suggestion is live within your means.

You're gonna pay for it.

What?

The dealer will not give you as good of a price when they find you're paying with plastic, and they may even refuse it. Credit card surcharhe costs them 1.75% to 2.5% generally. I can assure you that they are going to pass this along to you.

Also, your credit score will take a hit. This is because you will be so close to maximum limits on 1 or more cards.

Try an online bank for the loan.

Enjoy the s2000. I know I did.

Most will only let you put a small amount on acredit card 1000 or 2000.
I recently did this just to get the airline mileage & they would omly let me put 2000 on the card.

I am living within my means, I just wanted to save as much money as possible. Thanks for the replies guys. I knew it wasn't as simple as that, or else many people would be doing it.

S2000's depreciate so little, almost makes me want to go get a new one. But then the new ones don't have the 9k redline..

V8TOYTRUCK said:

I am living within my means

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Not if you are borrowing money.

best regards

If you make downpayment using credit card, you can repay it quickly using the bank line of credit.

The line of credit has much lower interest than credit card. I used this method before. YOu can apply for line of credit with ING bank in the US. You only need to deposit 10 bucks to open a savings account with ING then you can apply for line of credit.

Well I can pass around a little experience on this matter.
Back in March I bought a Chevy Avalanche. I live in Rochester NY and the truck I wanted was in Pittsburgh PA, 300 miles away. No biggie, road trip! I had one day, blah blah blah (boring details omitted) I planned on using my American Express for the down payment so I could get the points. I pay it off every month blah blah blah. So I call up the dealer whom I had been making arangements with via e-mail. He says "Yea, everything is in order, all set, ready to go. Just show up". I mentioned my plan with the AMEX card. He says PA wont let you use a CC for any kind of a down payment on an automobile. Good thing I called!!! I had to make a trip to my bank before going.
YMMV.
Not all states are the same.
If you are not going to pay it off right away, dont risk it.

imfrogman said:

Most will only let you put a small amount on acredit card 1000 or 2000.
I recently did this just to get the airline mileage & they would omly let me put 2000 on the card.

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Also, when you try to do the balance transfer, they won't let you transfer 10k - maybe only 2k. They'd have to give you a huge limit on the new card, and they're not going to do that when you already have a card near the already high limit, so you'll be stuck with 2k at 0% APR and the other 8k (or whatever) at your CC's high rate. You can keep trying to transfer it in chunks to different low APR offers, but that will wreck your credit score and you'll have to open up like 6 or 10 more accounts.

Trust me - the less you mess with them, the better off you'll be.

Keep in mind also that most of the credit cards now have an insidious clause that lets them bump the intrest rate to over 20% if you are late on even one payment. The late payment does not have to be your fault. You are then stuck with a $10,000 loan at about 20% . That's 170 a month just to pay the intrest.

Yuck,


Often, the dealer will say that they will not accept a card for payment. I bought a $5,000 car for my son and charged it. When they balked, I simply said "Ok, bye". They decided it was OK after all. I paid off the credit card the next day. I'd used the CC because I'd forgotten to grab the check book.

Daniel

9k revline. Maybe they lowered it for reliablity? I know a kid that had one and went through 3 motors in it.. But he was a kid... I've gone agaisnt these in my stock mid-size v6 chevy and smoked them up to 45 repeatadly. On the high way I bet they would fly. They just don't have any low-mid end... Just thought I'd share the info. Have you test drove one yet? Oh yeah the CC idea is bad idea.... I agree with what others have said.

I would thoroughly check the fine print on the balance transfer of that CC. I have seen a few that *claimed* 0% and it wasn't forever but perhaps up to 6 months or so, there was a fee also. There is one other thing if the CC gets bought out by another CC company I am not sure they have to honor that 0% rate at all. I had one that was bought out and hiked my 4.1% rate to 7.9% which isn't terrible but still not the same.
The best thing to do is talk to your credit union and get approved for a line of credit, go to the dealer and talk them down by offering cash, talk to another dealer giving him the price of the first one using cash and keep it up till you get a price you want then go to the credit union and do the paperwork and have them cut you a cashiers check to the car lot for the amount. The amount you can save well makes up for the percentage difference car lots and CC can and will charge if you let them.

As mentioned above, and it may be unpopular to say so, but if you need to borrow money to buy something that will steadily depreciate (i.e. a toy), you're living beyond your means.

Buy a Miata.

And yes, unless you have cash to pay off the credit card in full AT ANY TIME NEEDED, its a bad idea. Effectively using low cost money (0%) to make money in the bank (~3.75%) is good as arbitrage goes, but its not for the faint of heart or people who don't know all the tricks.

Mark

IsaacHayes said:

9k revline. Maybe they lowered it for reliablity? I know a kid that had one and went through 3 motors in it.. But he was a kid... I've gone agaisnt these in my stock mid-size v6 chevy and smoked them up to 45 repeatadly. On the high way I bet they would fly. They just don't have any low-mid end... Just thought I'd share the info. Have you test drove one yet? Oh yeah the CC idea is bad idea.... I agree with what others have said.

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They increased the displacement of the engine and dropped the redline on the newer ones. This was to boost the low end torque. Personally I prefer the 2.0L engine vs the newer 2.2L engine.

I have a good friend that brought his over for me to play with. I loved it. Scared the crap out of him.

Yeah, the CC has been a unanimously bad idea, good thing I consulted you guys vs asking my friends whos answers were ''Hmm..that sounds great!'' Do it!''

My new plan...

Honda is having a special lease rate right now for the S2000. A couple of people on the S2000 forums are paying 350-375/month (12k-15k miles/yr) for 36 months, nothing to pay but first months payment at delivery. Then at the end of 36 months the option to buy at 19-20k. Current 3 year old S2000s are going for 21-24k. I could even sell it and make a little chunk of change. These cars don't depreciate as much as others.

I've been searching autotrader,cars.com, and all the others, looking for a white s2000 with red seats. They are pretty hard to find in good condition. Most of them also have multiple owners, been sold at auctions, and who knows what else.

I test drove one, didn't really take it up to 9k since it wasn't mine, but we switched seats and he took it up to 9k and ever since, I haven't stopped reading about the S2000. They do lack low end tq, but I've seen videos of regeared S2000s with just intake run 13.5s. Which is fast enough for me! The other reason I want a convertible is, ever since making that trip up to Cambria/Hearst Castle/Carmel along the California coastline, I've wanted a convertible to really enjoy it. Plus its a safe car, no blind spots when the top is down!

Now as for a miata.....I rather walk. Well, let me put it this way Miata = Maglite AA S2000 = Surefire Beast.

Powernoodle: :thumbsup: you got me good... Will you let me have my fun! You only live once! Im fresh out of college, found a new job, and now I want to enjoy!

If I don't get this toy I will just get all kinds of other toys like

Canon MKII N (Not really a toy, but a business expense)
HK USP, Remington 700P
(Already got a new Dell with 24'' LCD, just waiting for it to get here)

Minjin said:

Effectively using low cost money (0%) to make money in the bank (~3.75%) is good as arbitrage goes, but its not for the faint of heart or people who don't know all the tricks.

Mark

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Mark, I do this all of the time!! When you say "all the tricks", I assume you mean calculating your after tax NPV upfront, and paying online to even avoid the cost of postage, right? Or do you know other tricks, as well? I'd love to hear them, if you do. Please feel free to start a new thread (CC Arbitrage?) if you wish, or PM me if you don't want to further highjack this thread. Thanks, Mark.

You may actually get a better deal if you finance with the dealership. The finance dept gets a kickback from the bank based on a % of the loan and the rate that they charge you. So.. hypothetically... you could take out a loan for 100% of the car, get a better deal because they think they will get you back on the financing, if you pay off that loan within 90 days of that loan being written, there will be a huge chargeback on their side. But all of the #'s that you guys agreed on, are already in writing, so they can't come back and say "you weren't supposed to pay off the loan, give us more money".

So... i'd say go ahead and finance 100% of it, and then usually they will include your first payment coupon in case you dont receive your billing statements, and then turn around right away and send in the payment or however much you were going to put down. This gets you the better deal if you choose to do it that way.

Interesting points.

Many dealerships can finance you through a larger credit union if you prefer the numbers that way, and they are quite good sometimes.
I did that with my F350.

Just know your credit score and credit union finance rates (from your own credit union) before you go getting drool on a new car at the dealership.

The dealer may go with that one, or a better organized and cheaper one that can kickback a little more to the dealer at the same time.

Just makes for a better win-win for all involved in some cases.