I have a big car repair bill coming up but I’m going to save money by using this financing trick

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The silver lining on a very dark cloud.


Key points

  • Credit cards with 0% APR introductory offers can allow you to pay off a large purchase over time without racking up interest charges.
  • Many cards offer both introductory APR offers and sign-up bonuses.
  • Avoid financing offers that use deferred interest unless you’re sure you can pay off the balance during the promotional period.

It’s weird how terrifying a tiny light can be. But when that little light illuminates the words “Check Engine,” it brings with it an immediate, overwhelming sense of dread.

The only thing worse? The voicemail “We need to talk” from your mechanic the next day. As any rom-com watcher knows, nothing good ever comes from these conversations.

And I should know. I just had this conversation last week. Now I’m looking at the barrel of a four-figure car repair.

I am fortunate to have a modest emergency fund. Even so, this repair is expensive enough to take a large chunk out of my savings account. To avoid draining my fund amid record inflation, I looked for other ways to fund the King’s Ransom in my future.

After some research, I found a solution that will not only allow me to spread the payments over the next 18 months, but will actually help me recoup about 9% of my costs.

Financing at 0% interest

My very first thought when I got my repair quote was a personal loan. This would allow me to spread the payments out over a few years so I wouldn’t hurt my monthly budget too much or drain my savings.

Then I started looking at the APRs. Even with good credit, personal loans can have quite high interest rates. Was it worth hundreds of dollars in interest charges to keep my emergency fund intact?

When I started really crunching the numbers, I realized I didn’t really need the three to five years that a personal loan would provide. In reality, I could probably manage to pay for the repair sooner – without killing my budget – if I was willing to make a few small cuts here and there.

This realization has opened up a new option: 0% APR credit card introduction. Cards with 0% APR introductory offers charge no interest on purchases during the introductory period. You still have to make your minimum monthly payments, but you don’t accrue interest charges.

After some research, I settled on a card with an introductory offer of 0% interest on purchases for the first 18 months. Although the monthly payments are higher than what I would pay with a personal loan, it will all go towards paying off my balance instead of wasting money on interest charges.

The main disadvantage of using an introductory APR credit card offer to fund a large purchase is that introductory offers are, by nature, temporary. Once the introductory period is over, any remaining balance will start earning interest at the benchmark APR – which is double digits. This means that I will have to make sure to pay off my entire balance before the end of the introductory period in order to avoid accruing interest on what is left.

Rewards and sign-up bonuses

Using a credit card to finance my repair will also have another benefit: rewards. The card I chose earns me cash back on every purchase. Although auto repairs do not fall into any of its bonus categories, I will still get 1% cash back. For such a large purchase, that’s a decent saving.

But there is more. In addition to the introductory APR offer, the card also comes with a sign-up bonus for new cardholders. Considering the cost of fixing my car, I could easily meet the spend requirement in this one transaction, earning me another cash back lump sum without any extra effort.

To make things equal After rewarding, the card I chose happens to be the one my partner already has. This meant they could send me a referral link. As a thank you for referring me, the issuer will give my partner a referral bonus, which will bring us even more cash back.

All in all, we’ll end up with hundreds of shopping rewards and bonuses for spending money we’d have to spend anyway. While that’s certainly not close to what we’re packing for repair, it does look like a pretty big discount.

Do not delay your interest

One thing I really want to make clear is that I will be using a regular introductory 0% APR card from a major issuer, not a card from my mechanic with “special financing” or some other type of deferred interest offer.

What is the difference? Regular introductory APR cards earn no interest during your introductory period. If you still have a balance at the end of the intro period, you will only accrue interest on your remaining balance.

Deferred interest offers, on the other hand, always earn interest – they just don’t charge you right away. If you pay off the entire balance before the end of the promotional period, you will never be charged for this interest. However, if you have any remaining balance after the promotion ends, you will be charged interest on the full amount.

When used correctly, APR introductory offers can be a fantastic funding tool. Just be sure to read the fine print. Avoid deferred interest offers unless you are absolutely sure you can pay off the full balance before the end of the promotional period.

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