WalletHub, Financial Company
Yes, you can buy a car with a credit card, but it’s not common. Most of the time, dealers won’t let you because it costs them extra fees and adds more risk due to potential chargebacks. And since cars tend to be pretty expensive, you’ll need a lot of available credit (and a stellar credit history), for it to even work with a dealer that takes cards. But if you can pay with a card that has low interest rates and good rewards, it could make sense.
On that note, some car companies – including GM, Cadillac, Buick and Chevy – have co-branded credit cards like the My GM Rewards Card™, the Cadillac Credit Card, the Buick Credit Card and the Chevrolet Credit Card. These cards allow you to earn and redeem rewards for vehicle payments.
Here’s what you should know about buying a car with a credit card:
- Most dealers won’t allow it. That’s because they have to pay a percentage of the sale price to the credit card networks for every transaction, which can be a lot of money when the purchase is a car.
- You’ll need a high credit limit. You’ll need to have a total credit limit that’s higher than the car’s price, which could be tens of thousands of dollars. You can split the car price among multiple cards. But it will still likely lead to high credit utilization and possible credit score damage.
- Quick repayment is key. The average credit card APR is over 14%. You don’t want to be carrying a big balance at that rate. And considering the average APR for a 36-month car loan is less than 3%, you’re probably better off not using a credit card. If you charge a car to your card, you’ll want to pay it off right away or use a card with a long 0% intro APR.
- Your credit should be good. That’s usually what it takes to get a 0% credit card.
- Credit card debt is unsecured. This means you own the title to your car right away, and the vehicle probably can’t be repossessed, even if you don’t pay. The exception is if your credit card agreement has a clause that allows unpaid purchases to be repossessed, but few cards have that.
- You can reap rewards. You could get a ton of cash back, points, or miles by using a credit card to buy a car. But you have to weigh this benefit against the potential cost of interest and high credit utilization.
- Some cards allow car loan balance transfers: Many credit card issuers allow balance transfers from auto loans to their cards. Balance transfers allow you to get a lower APR on existing debts.
The ideal circumstance to buy a car with a credit card is if you have enough money in the bank to pay it off right away. Then you can get a good rewards card, find a dealer that takes credit cards, pay your balance in full by the due date, and rake in the savings. You could even use a 0% credit card with rewards to get the best of both worlds. But if you can’t pay before regular rates take effect, you should go for a traditional auto loan instead.
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Travis Sharee, Member
It is possible, and it’s a great way to earn rewards. However, it’s not advisable if you won’t be able to pay your bill every month. Also, please be sure to check with the dealer, as not all of them allow credit card payments, and those that do, don’t always accept all credit cards. And, of course, you can only pay by credit card if you have a high enough credit limit.
Claire Pellet, Member
In theory, yes, because it's just another purchase.
The reality is that it's not exactly a cup of coffee; you'd need to have a huge credit limit to encompass the price of the car.
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