Your 0% balance transfer offer can pay off a car or personal loan if its terms cover balance transfer checks, a deposit to your checking account, or a payment straight to your lender. Move the loan when the fee costs less than the interest you’d otherwise pay and you can clear the new balance before the 0% ends.
A car or personal loan charges interest every month. A 0% transfer charges a one-time fee, usually 3% to 5% of what you move, and no interest until the promotion ends, typically 12 to 21 months later.
Say you owe the last $6,000 on a 9% car loan and pay $400 a month. Like most car loans, it charges interest on the remaining balance. Your offer is 18 months at 0% for a 3% fee. Keep paying the loan, and it charges about $390 in interest before it’s paid off in 16 months. Move it, and the $180 fee is added to the card balance, so $400 a month clears $6,180 in 16 months, two months before the 0% ends. You pay $180 instead of about $390, roughly $210 less.
First, confirm the offer covers a loan. Its 0% rate has to apply to balance transfer checks you write to the lender, a deposit into your checking account, or a payment the issuer sends the lender directly. Issuers also won’t pay off a loan from their own bank.
Next, get the lender’s payoff amount, which includes interest through the day the money arrives. Add the fee, divide by the months left at 0%, and set autopay for at least that amount, $344 in the example. Keep paying the loan until it shows as paid off, since a transfer can take three weeks.
The move raises your credit utilization, the share of your card limits in use, which can lower your score. A payment more than 60 days late lets the issuer end the 0% rate, and any balance left when the promotion ends starts accruing interest at the card’s regular rate, often above 20%. Keep new purchases off the card, too, as with any balance transfer.
A higher fee can wipe out the savings. With a 5% fee, the same move saves only about $90, and on a 6% loan, the $300 fee costs more than the roughly $250 in interest it would replace. If the fee is the bigger number, keep paying the lender.
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