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Monday, May 20, 2024

3 Do’s & Don’ts: Buying a Car with a Credit Card (May 2024)

Can You Buy A Car With A Credit Card
Brittney Mayer

Written by: Brittney Mayer

Brittney Mayer
Brittney Mayer

Brittney is a Credit Strategist and Finance Expert who has spent years honing her knowledge of the credit industry both personally and professionally. Brittney applies her more than a decade of research experience to crafting in-depth consumer guides designed to help CardRates readers make better, more informed financial decisions.

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Edited by: Lillian Guevara-Castro

Lillian Guevara-Castro
Lillian Guevara-Castro

Lillian Guevara-Castro brings more than 30 years of editing and journalism experience to the CardRates team. She has written and edited for major news organizations, including The Atlanta Journal-Constitution and the New York Times, and she previously served as an adjunct journalism instructor at the University of Florida. Today, Lillian edits all CardRates content for clarity, accuracy, and reader engagement.

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Advertiser Disclosure

Though credit cards have been around for decades, they have, as things do, changed and evolved during that time. So, it’s only natural that some of the most common questions people ask when it comes to credit cards revolve around what, exactly, can be purchased with one. For example, one popular question people ask is, “Can you buy a car with a credit card?”

At the end of the day, the answer to that question is (un)simply: maybe. The ability to purchase a new or used car with a credit card will actually depend on a number of factors. These can include the rules of the particular dealer or seller, as well as the price of the vehicle. Let’s dive into the do’s and don’t’s of purchasing a vehicle with a credit card, including conducting thorough research and learning how to avoid paying high interest rates.

1. Do Research Ahead of Time

Before ever venturing into the dealership with your plastic, do some research. You should research the vehicle you are interested in to determine the price you will likely pay, checking to ensure the price will be below the credit limit of the card you want to use. You will also need to contact the dealership you plan to use to determine how much of the purchase, if any, you will be able to charge.

Whenever you make a purchase with your credit card, the merchant must pay the issuer and/or bank a processing fee to receive the funds. Because those processing fees can be as much as 1% to 4% of the purchase price of the car, they can quickly eat into profit margins that may only be less than 5% to begin with. Therefore, many dealers will not allow you to use a credit card to buy a vehicle or will limit the portion of the purchase price that can be charged.

Amount of Purchase Price Charged Credit Card Issuer Processing Fee Dealer Cost to Accept Credit Card Payment
$10,000 1% $100
$10,000 2% $200
$10,000 3% $300
$10,000 4% $400

Even if you are using an auto loan to purchase your vehicle and only wish to use a credit card for the down payment, you may run into limitations on the portion of the down payment that can be charged. Avoid wasting time at the dealership by doing your research ahead of time.

2. Don’t Get Stuck Paying High Interest Rates

When it comes to any large purchase, automobiles included, your best bet is always going to be to save up the cash before buying. If you have the money on hand (or, rather, in the bank) before making the purchase, it won’t matter which method you use — you won’t ever get stuck paying absurd interest rates because you’ll be able to pay the bill before you get charged interest.

That said, if you are confident you can quickly gather the funds to pay off your new car and are determined to use a credit card, there is another way to avoid high interest payments, at least for a while. Many credit card issuers have at least one card that comes with an introductory 0% APR on purchases made within a certain time after opening a new credit account. Using one of these offers, you could potentially go 12 or even 15 months before needing to pay a penny of interest.

Bank of America® Customized Cash Rewards credit card Review

at Bank Of America'ssecure website

0% INTRO APR RATING

★★★★★
4.8

OVERALL RATING

  • $200 online cash rewards bonus after you make at least $1,000 in purchases in the first 90 days of account opening.
  • Earn 3% cash back in the category of your choice, automatic 2% at grocery stores and wholesale clubs (up to $2,500 in combined choice category/grocery store/wholesale club quarterly purchases) and unlimited 1% on all other purchases.
  • Choose 3% cash back on gas and EV charging station, online shopping/cable/internet/phone plan/streaming, dining, travel, drug store/pharmacy or home improvement/furnishings purchases.
  • If you're a Bank of America Preferred Rewards® member, you can earn 25%-75% more cash back on every purchase. That means you could earn 3.75%-5.25% cash back on purchases in your choice category.
  • No annual fee and cash rewards don’t expire as long as your account remains open.
  • 0% Intro APR for 15 billing cycles for purchases, and for any balance transfers made in the first 60 days. After the Intro APR offer ends, a Variable APR that’s currently 19.24% - 29.24% will apply. A 3% Intro balance transfer fee will apply for the first 60 days your account is open. After the Intro balance transfer fee offer ends, the fee for future balance transfers is 4%.
  • Contactless Cards - The security of a chip card, with the convenience of a tap.
  • This online only offer may not be available if you leave this page or if you visit a Bank of America financial center. You can take advantage of this offer when you apply now.
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% Intro APR for 15 billing cycles for purchases
0% Intro APR for 15 billing cycles for any balance transfers made in the first 60 days (Balance Transfer Fee 3% for 60 days from account opening, then 4%)
19.24% - 29.24% Variable APR on purchases and balance transfers
$0
Excellent/Good

Additional Disclosure: Bank of America is a CardRates advertiser.

Bank of America® Unlimited Cash Rewards credit card Review

at Bank Of America'ssecure website

0% INTRO APR RATING

★★★★★
4.8

OVERALL RATING

  • $200 online cash rewards bonus after you make at least $1,000 in purchases in the first 90 days of account opening.
  • Earn unlimited 1.5% cash back on all purchases.
  • If you're a Bank of America Preferred Rewards® member, you can earn 25%-75% more cash back on every purchase. That means you could earn 1.87%-2.62% cash back on every purchase with Preferred Rewards.
  • No annual fee.
  • No limit to the amount of cash back you can earn and cash rewards don’t expire as long as your account remains open.
  • 0% Intro APR for 15 billing cycles for purchases, and for any balance transfers made in the first 60 days. After the Intro APR offer ends, a Variable APR that’s currently 19.24% - 29.24% will apply. A 3% Intro balance transfer fee will apply for the first 60 days your account is open. After the Intro balance transfer fee offer ends, the fee for future balance transfers is 4%.
  • Contactless Cards - The security of a chip card, with the convenience of a tap.
  • This online only offer may not be available if you leave this page or if you visit a Bank of America financial center. You can take advantage of this offer when you apply now.
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% Intro APR for 15 billing cycles for purchases
0% Intro APR for 15 billing cycles for any balance transfers made in the first 60 days (Balance Transfer Fee 3% for 60 days from account opening, then 4%)
19.24% - 29.24% Variable APR on purchases and balance transfers
$0
Excellent/Good

Additional Disclosure: Bank of America is a CardRates advertiser.

Bank of America® Travel Rewards credit card Review

at Bank Of America'ssecure website

0% INTRO APR RATING

★★★★★
4.8

OVERALL RATING

  • Earn unlimited 1.5 points per $1 spent on all purchases, with no annual fee and no foreign transaction fees and your points don't expire as long as your account remains open.
  • 25,000 online bonus points after you make at least $1,000 in purchases in the first 90 days of account opening - that can be a $250 statement credit toward travel purchases.
  • Use your card to book your trip how and where you want - you're not limited to specific websites with blackout dates or restrictions.
  • Redeem points for a statement credit to pay for travel or dining purchases, such as flights, hotel stays, car and vacation rentals, baggage fees, and also at restaurants including takeout.
  • 0% Intro APR for 15 billing cycles for purchases, and for any balance transfers made in the first 60 days. After the Intro APR offer ends, a Variable APR that’s currently 19.24% - 29.24% will apply. A 3% Intro balance transfer fee will apply for the first 60 days your account is open. After the Intro balance transfer fee offer ends, the fee for future balance transfers is 4%.
  • If you're a Bank of America Preferred Rewards® member, you can earn 25%-75% more points on every purchase. That means instead of earning an unlimited 1.5 points for every $1, you could earn 1.87-2.62 points for every $1 you spend on purchases.
  • Contactless Cards - The security of a chip card, with the convenience of a tap.
  • This online only offer may not be available if you leave this page or if you visit a Bank of America financial center. You can take advantage of this offer when you apply now.
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% Intro APR for 15 billing cycles for purchases
0% Intro APR for 15 billing cycles for any balance transfers made in the first 60 days (Balance Transfer Fee 3% for 60 days from account opening, then 4%)
19.24% - 29.24% Variable APR on purchases and balance transfers
$0
Excellent/Good

Additional Disclosure: Bank of America is a CardRates advertiser.

+See More 0% APR Offers

Of course, the important thing to note is that the 0% APR offers are introductory; once you hit the end of the offer term, you will be charged interest. And, often, the new interest rate will be well into the double digits, which can get expensive fast; plan to pay off your balance before the terms expire.

3. Do Capitalize on Available Credit Card Rewards

Let’s say you’ve diligently saved your money and have the cash on hand to buy a new (or new-to-you) vehicle. You’ve checked that the dealer you wish to use accepts credit cards and you know exactly which car you want to buy. Now, all that’s left is deciding which card to use — no easy task, given all the options.

The key to making the most of any large credit card purchase is to take advantage of the giant signup bonuses being offered by many issuers these days. For some of the best signup bonus deals, look at cards offering travel rewards. Whether you get points or miles, these hefty rewards packages can be worth hundreds, especially when redeemed for airline or hotel purchases.

Bank of America® Travel Rewards credit card Review

at Bank Of America'ssecure website

TRAVEL RATING

★★★★★
4.9

OVERALL RATING

  • Earn unlimited 1.5 points per $1 spent on all purchases, with no annual fee and no foreign transaction fees and your points don't expire as long as your account remains open.
  • 25,000 online bonus points after you make at least $1,000 in purchases in the first 90 days of account opening - that can be a $250 statement credit toward travel purchases.
  • Use your card to book your trip how and where you want - you're not limited to specific websites with blackout dates or restrictions.
  • Redeem points for a statement credit to pay for travel or dining purchases, such as flights, hotel stays, car and vacation rentals, baggage fees, and also at restaurants including takeout.
  • 0% Intro APR for 15 billing cycles for purchases, and for any balance transfers made in the first 60 days. After the Intro APR offer ends, a Variable APR that’s currently 19.24% - 29.24% will apply. A 3% Intro balance transfer fee will apply for the first 60 days your account is open. After the Intro balance transfer fee offer ends, the fee for future balance transfers is 4%.
  • If you're a Bank of America Preferred Rewards® member, you can earn 25%-75% more points on every purchase. That means instead of earning an unlimited 1.5 points for every $1, you could earn 1.87-2.62 points for every $1 you spend on purchases.
  • Contactless Cards - The security of a chip card, with the convenience of a tap.
  • This online only offer may not be available if you leave this page or if you visit a Bank of America financial center. You can take advantage of this offer when you apply now.
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% Intro APR for 15 billing cycles for purchases
0% Intro APR for 15 billing cycles for any balance transfers made in the first 60 days (Balance Transfer Fee 3% for 60 days from account opening, then 4%)
19.24% - 29.24% Variable APR on purchases and balance transfers
$0
Excellent/Good

Additional Disclosure: Bank of America is a CardRates advertiser.

TRAVEL RATING

★★★★★
4.9

OVERALL RATING

  • $0 annual fee and no foreign transaction fees
  • Earn a bonus of 20,000 miles once you spend $500 on purchases within 3 months from account opening, equal to $200 in travel
  • Earn unlimited 1.25X miles on every purchase, every day
  • Miles won't expire for the life of the account and there's no limit to how many you can earn
  • Earn 5X miles on hotels and rental cars booked through Capital One Travel, where you'll get Capital One's best prices on thousands of trip options
  • Use your miles to get reimbursed for any travel purchase—or redeem by booking a trip through Capital One Travel
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% for 15 months
0% for 15 months
19.99% - 29.99% (Variable)
$0
Excellent, Good

TRAVEL RATING

★★★★★
4.9

OVERALL RATING

  • Earn 75,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's over $900 when you redeem through Chase Travel℠.
  • Enjoy benefits such as 5x on travel purchased through Chase Travel℠, 3x on dining, select streaming services and online groceries, 2x on all other travel purchases, 1x on all other purchases, $50 Annual Chase Travel Hotel Credit, plus more.
  • Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Travel℠. For example, 75,000 points are worth $937.50 toward travel.
  • Count on Trip Cancellation/Interruption Insurance, Auto Rental Collision Damage Waiver, Lost Luggage Insurance and more.
  • Get complimentary access to DashPass which unlocks $0 delivery fees and lower service fees for a minimum of one year when you activate by December 31, 2024.
  • Member FDIC
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
N/A
21.49%-28.49% Variable
$95
Good/Excellent

+See More Travel Rewards Cards

Most signup bonuses require hitting a certain spending limit in a given time period, so choose a card with a spending requirement less than the amount you intend to charge when purchasing your vehicle.

Always Use Credit Cards Responsibly

While credit cards may have evolved a lot in the decades they’ve been around, one thing about them has never changed: they need to be used responsibly. You shouldn’t charge more than you can afford to pay back in a timely manner and you should never make purchases you can’t cover just to meet a spending requirement. Interest charges can quickly negate any bonus earnings and make your purchase significantly more expensive than it would have been otherwise.

So, if you’re eyeing a new ride and want to pay with plastic, be sure to contact the dealership first, and understand the terms and conditions of your card of choice before speeding off the lot with your new wheels.

Advertiser Disclosure

CardRates.com is a free online resource that offers valuable content and comparison services to users. To keep this resource 100% free, we receive compensation for referrals for many of the offers listed on the site. Along with key review factors, this compensation may impact how and where products appear across CardRates.com (including, for example, the order in which they appear). CardRates.com does not include the entire universe of available offers. Editorial opinions expressed on the site are strictly our own and are not provided, endorsed, or approved by advertisers.