Can You Buy a Car with a Credit Card?


WRITTEN BY: Julia Matseikovich

UPDATED: NOVEMBER 02, 2022 | 3 MIN READ

Buying a car involves looking at many elements. How you’re going to pay for it, is one of the most important things. Most dealerships offer their in-house car finance packages, however, you may want to purchase it on your credit card.

Having a large enough credit card limit is required to do this along with having a dealership that accepts this payment option.

Read on to discover what you need to know about buying a car on your credit card, what to look out for, and other options you can consider with looking for finance.

How can I buy my car on my credit card?

First, you need to check your credit limit and interest rates. Credit cards charge higher interest rates than auto loan providers.

It can be a good idea to charge your car to your card if you have the money to meet it in full elsewhere. You can earn reward points on your card and pay off the balance before you build up interest.

If your card has an introductory interest rate of 0% APR, you could put your car on your card, accrue no interest while paying it off, and gain rewards points simultaneously.

How much can I put on my credit card?

This depends on the available credit limit you have with your credit card issuer. Some credit card companies allow large purchases with limits of up to $20,000.

If you’re limit isn’t enough, you can ask your credit card company for an increase. However, speak with them about possible interest rates, payback periods, any penalties, and transaction fees.

What credit card companies allow me to use my credit card to buy a car?

Having a good credit score can help you make a large purchase on your credit card. Cardholders with late monthly payments and bad credit are unlikely to be able to use it to make a large purchase.

Some credit card companies allow you to use the card to pay a car down. Before you use your card, it’s best to let your credit card issuer know before your make the purchase.

How to find a dealership that accepts credit cards?

Finding a dealer to accept a credit card for the entire cost can be tricky. They are more likely to accept it for a small portion of the cost if you have a means for paying for the rest like cash, a used car for a trade-in, a co-sign or an auto loan.

Some will expect you to pay a charge for using the card. Yet many can refuse and guide you toward their car financing options. The best way to find out is to ask the dealership.

What are the potential drawbacks of using my credit card?

High-interest rates, transactions, and convenience fees are some of the drawbacks of using your credit card to buy a car.

You also have the responsibility of meeting regular payments on time. This can be difficult if you have financial pressures from other areas of your life.

What if I’m late with my payments?

Being late with your payments can significantly impact your credit score. This has a knock-on effect on your ability to get cheaper car insurance. It’s considered one of the top risk factors when shopping for car insurance coverage.

What credit card companies offer the lowest interest rates?

With 247 credit cards to choose from, you have plenty of choices when picking a credit card company. It’s good to look for credit card offers when choosing a new company. These are the top ones to look for when looking for a low-interest rate:

  • Titanium Reward Visa from Andrews Federal Credit Union
  • DCU Visa Platinum Secured Credit Card
  • Capital One Venture One Rewards Credit Credit
  • Wells Fargo Reflect Card

What are merchant transaction fees?

Transaction fees are the cost of using the card for the purchase. The merchant pays processing fees every time you use your credit card to buy something. These can be between 2 and 3%.

Most merchants see this as a cost of doing the transaction. However, the more expensive the purchase, the higher the merchant fees, and it becomes less attractive to the merchant to do business this way. Costly transaction fees can be a downside to using your credit card.

What other ways can you consider paying for your car?

If paying for your car with a credit card is not open to you, consider looking at other options like paying with cash, getting a co-sign, an auto loan or seeking partial car financing.

What is car financing?

An auto loan helps you buy a car when you don’t have the money to pay for any or all of the upfront cost. These loans normally have fixed rates and you may be able to get much lesser interest rates on these than with a credit card.

A good credit score is necessary to secure car financing. However, some lenders work with drivers with bad credit.

Cheapest rates for car financing

These two financial institutions offer some of the cheapest rates for car financing:

  • Bank of America offers a 3.59% interest rate with a payback period of between 12 to 75 months.
  • Consumers Credit Union offers an interest rate of 2.49% to credit union customers with a payback period of between 0 to 84 months.

What is a co-sign?

If you’re worried about your credit score, you can ask someone to co-sign a loan with you. This person should be someone you know and trust and that has good credit.

This is normally a family member or good friend. Having a co-sign improves your chances of securing a loan. It may also help to reduce interest rates.

Can I ask about a trade-in discount?

Yes. Many drivers seek to get a trade-in discount on their old car. However, some car dealerships can decide not to accept it so check with them in the first instance. Having a trade-in can help you put a down payment on a new car.

FAQs

What advantages does a credit card offer a person who wants to buy a car?

They can use it to meet spending requirements and to increase bonus points and reward points.

What are the advantages of buying a car with a credit card?

You can earn significant rewards and bonus points by using your card and get 0% APR if you put your purchase on a new card that offers this incentive. You also meet the spending requirements put in place by some credit card companies to keep your card active.

What is the minimum amount of money that one can put on a credit card to buy a car?

This depends on the credit card issuer and the credit limit set on your card. Minimum credit amounts are $5,000 to $10,000.

Can you buy a car with a credit card?

Yes, but many dealerships may opt not to accept it for the full vehicle purchase.

What is the name of the company that sells cars with a credit card?

General Motors is one of the companies that offer automakers branded credit cards. It can be used to buy a car from a selected range and also to buy parts. It offers perks and other bonuses. The card is the Buy Power Card from Capital One.

How to Buy a Car with a Credit Card

While buying a car with a credit card is possible, you need to figure out if it’s the best option for you. Weighing up all the options like fees and your ability to pay your installments, are important considerations.

Another factor to consider is whether the dealership you want to buy the car from is willing to accept a credit card for the entire purchase price or a partial amount. Buying a car is a major decision. Get some help with your decision by knowing what your auto insurance rates will be.