The ability to buy a car with a credit card comes with a really a big ‘if.’ Some dealers are willing to let you charge a certain amount on a credit card, but most have a max limit because they have to pay the credit card company a percentage of the amount charged. It doesn’t hurt to ask, and if they allow it, you may be able to benefit from using a credit card toward your car purchase.
When Can You Use a Credit Card to Pay for a Car?
You can’t use a credit card for a down payment on an auto loan, but you may be able to pay for part of the purchase price – up to a certain limit. It all depends on the dealership and the amount they’re willing to allow. If a dealer lets you, there are three instances where paying for a vehicle with a credit card, whether partially or in full, can benefit you:
- You Have the Cash to Pay for the Car – If you want to earn rewards and points, such as a sign up bonus, you could purchase a vehicle with your credit card. But, you have to be able to pay off the balance right away. If you carry any balance, you could end up paying more in interest charges than you would have with an auto loan. For example, let's say you charge $12,000 to your credit card that has an annual interest rate of 13 percent and a minimum balance payment of two percent ($240, in this case). You can expect to pay over $13,631 in interest charges alone if you only make the minimum payment, which would also end up taking you a little over 31 years to pay it off. The bottom line: pay the balance in full right away or in short order if you charge it to your card. Otherwise, you could end up paying a lot more more in interest charges.
- You Get Cash-back or Travel Rewards – As long as you have the cash to pay off the balance, if you can earn cash-back or travel rewards, go for it. Not only do you avoid interest charges by paying off the loan balance, you can reap the benefits your card offers.
- You’re Using a Zero Percent Interest Offer – If you plan on having the cash to pay off the car within a set time frame, you could apply for a credit card that offers a zero percent APR introductory period. However, you need to make sure you can pay off the vehicle within the zero percent APR offer timeline, or else you could end up paying more in interest charges than you would have with a traditional car loan.
The Bottom Line
It’s possible to pay for part or all of a vehicle with a credit card in some cases, but it comes down to whether or not the dealer allows it – and most don’t. Make sure you understand the dealership’s policies regarding credit card payments before you move forward in the car financing process.
On the other hand, if you’re looking for a dealer to work with, but worry your credit might get in the way of financing, let The Car Connection help. We work with a nationwide network of special finance dealerships that have the lending resources to help people in unique credit situations. Get started today by filling out our free and easy auto loan request form, and we’ll get to work matching you with a local dealer.