Is paying off an $11k auto loan with a credit card a bad idea?
This is a BAD bad bad bad idea. Like others have said, work with the ex-gf and SELL the car. If it’s worth more than the $11k left on the loan, then you’re fine. There are PLENTY of reliable, nice used cars to be had for $5k or less. If you don’t have that much money in the bank right now, at least you have a better chance of financing only a few thousand dollars vs. $11k. No 6-year-old car is worth doing what you have described. You are putting yourself in a world of hurt, whether you realize it or not, if you go with your original plan.
Keep in mind that Credit Card rates can, and do, increase. I have solid credit, and all of my cards which have had a zero balance for years, just got jacked from 7% up to 20+% within the last few months just because my the issuers felt like it. You need to ask yourself what happens if you put this $11k loan on your 11.99% rate card, and then the rates get jacked up to 24%? If you’re ok with the answer, then go for it. I would call your credit card company though and make sure there’s no limit on the amount of a single purchase. Also call the loan originator and ask if they’ll accept a credit card payment for the balance without penalty. Your credit card company may change the other bank a 3% processing fee, and therefore the other bank may not accept a bulk credit card purchase for the loan. For example, many car dealers wont allow people to use a card to purchase the entire vehicle due to the 1-3% that they would get charged from the credit card issuer for processing the sale. This ea
Thanks for the follow up. But my response still stands–especially given your stated desire not to have “co-dependencies”. Nothing you said makes me think it is a good idea for you to get financially involved in this in any way. I think the best thing you can do is be supportive and help him devise creative methods on ways to solve the problem on his own. Here are some other options. He can get a second job with all proceeds to go to paying off the car earlier. It will suck for awhile, but desperate times call for desperate measures. He and the ex can check with the lien holder to see if she can sell him the car and let him assume the loan obligations. I doubt the lender will go for this but it might sweeten the deal for the lender if she agrees to stay on as a co-signer. She would be INSANE to do this, but this allows her to get her name off the car. I agree that selling at a loss does not make sense, unless he has (or can find/make) the money for the deficiency. Then he can take publ
The problem with the girlfriend having ownership of the car in her name is that she is then responsible for the insurance and if he has an accident while driving it is her rates that will go up. This is a messy situation. But I think the boyfriend should put on his big boy pants and solve the financial entanglement with his ex-girlfriend by himself with his own resources without involving any more girlfriends. I could understand temporarily paying for the car and transferring the deed into the girlfriend’s name and then immediately selling the car to pay off as much of the loan as possible with a contract from the boyfriend that he will pay the balance ASAP. If the boyfriend needs a car he should be able to lease/purchase another car using his own credit or hard work to obtain it. Really, this is how responsible adults live their lives, not relying on a series of girlfriends to help them live beyond their means.
