Have you ever wondered if you can buy a car using a credit card? Well, you technically can, but it’s not as simple as it might seem. There are some things to think about first before swiping your card. It’s also worth noting that a credit card might seem like a quick and easy way to get a car, but it can be a risky move. The high interest rates and transaction fees will make it more expensive over time. Still, it might work in some situations. Let’s discuss this in more detail so you can decide if using a credit card for a car is a smart move.
How to Buy a Car with a Credit Card the Smart Way
So, can you buy a car with a credit card? The short answer is yes, but it’s not always that simple. Some dealerships allow it, but many limit how much you can charge. Even if you can put the full amount on your card, it might not be the most brilliant move. If you’re set on using a credit card, here’s how to do it the right way:
1. Check Your Credit Limit
Most credit cards don’t have a high enough limit to cover a full car purchase. Even if yours does, charging too much can hurt your credit score by increasing your credit utilization. A high balance makes it look like you’re overextended, which can lower your score and make borrowing harder in the future.
Tip: Keep your credit utilization below 30% of your total credit limit. For example, if you have a $15,000 credit limit, avoid charging more than $4,500.
2. Find a Dealership That Accepts Credit Cards
Not all dealerships let you pay for a car with a credit card. Some cap credit card payments at $5,000 or less to avoid processing fees, while others don’t accept them at all.
Tip: Call ahead to ask about their credit card policy. If they limit card payments, ask if you can put part of the cost on your card and pay the rest with cash, financing, or a trade-in.
3. Use a 0% APR Credit Card If Possible
A credit card with a 0% intro APR on purchases lets you pay off the balance over time without interest. These offers usually last between 15 to 21 months, but once the promo period ends, interest rates can skyrocket.
Tip: Divide the total cost by the number of months in the 0% APR period to see if you can realistically pay it off. If you buy a $10,000 car and have 18 months of no interest, you’d need to pay about $556 per month to clear the balance before interest kicks in. If that’s too much, consider other options.
4. Watch Out for Fees
Even if a dealership allows credit card payments, it might charge a processing fee, usually between 2% and 4%. On a $20,000 car, a 3% fee would cost you an extra $600.
Tip: Ask if the dealership can waive the fee. Some dealers might agree. If they won’t budge, compare the extra cost with other financing options to see which is the better deal.
5. Take Advantage of Rewards
If your credit card offers rewards, you could earn cashback, points, or travel miles on your purchase. A 2% cashback card on a $10,000 charge could give you $200 back—but only if there are no extra fees.
Tip: Don’t focus on rewards alone. If the dealership charges a 3% processing fee and your card only offers 1.5% cashback, you’re losing money. Always check the math before deciding.
Should You Buy a Car With a Credit Card?
Even if you can use a credit card, should you? It depends on your situation.
Reasons to Use a Credit Card
- You have a 0% APR offer and can pay off the balance before interest kicks in.
- The dealership doesn’t charge extra fees for credit card payments.
- You want to earn rewards points or cash back.
Reasons to Avoid It
- You can’t pay off the balance quickly, and high interest will make the car much more expensive.
- The dealership charges a processing fee, adding extra costs.
- Your credit score could take a hit from high credit utilization.
You Can Buy a Car With a Credit Card, But…
Using a credit card to buy a car might seem like an easy option, but I wouldn’t recommend it unless you’re really sure it’s the right choice. Personally, I’d go with an auto loan or a personal loan instead. They tend to have lower interest rates, and you won’t risk racking up debt that’s harder to pay off. If you do decide to use your credit card, just make sure you have a plan to pay it off quickly, or it might cost you more than you bargained for.