The Ultimate Guide to Credit Cards
Thursday, September 24, 2020

3 Do’s & Don’ts — “Can You Buy a Car with a Credit Card?” (New & Used)

Can You Buy A Car With A Credit Card

credit card advice

Brittney Mayer
By: Brittney Mayer
Updated: June 2, 2020
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 ChargedCredit Card Issuer Processing FeeDealer Cost to Accept Credit Card Payment
$10,0001%$100
$10,0002%$200
$10,0003%$300
$10,0004%$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.

0% INTRO APR RATING

★★★★★
4.9

OVERALL RATING

5.0/5.0
  • Earn a $200 Bonus after you spend $500 on purchases in your first 3 months from account opening.
  • Earn 5% cash back on grocery store purchases (not including Target® or Walmart® purchases) on up to $12,000 spent in the first year.
  • Earn unlimited 1.5% cash back on all other purchases.
  • Earn 5% on travel purchased through Chase, 3% on dining at restaurants and drugstores, and 1.5% on all other purchases.
  • No annual fee.
  • 0% Intro APR for 15 months from account opening on purchases, then a variable APR of 14.99 - 23.74%.
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% Intro APR on Purchases 15 months
N/A
14.99% - 23.74% Variable
$0
Good/Excellent

0% INTRO APR RATING

★★★★★
4.9

OVERALL RATING

4.8/5.0
  • Earn a one-time $150 cash bonus after you spend $500 on purchases within the first 3 months from account opening
  • Earn unlimited 3% cash back on dining and entertainment, 2% at grocery stores and 1% on all other purchases
  • No rotating categories or sign-ups needed to earn cash rewards; plus cash back won't expire for the life of the account and there's no limit to how much you can earn
  • 0% intro APR on purchases for 15 months; 15.49% - 25.49% variable APR after that
  • No foreign transaction fee
  • No annual fee
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% for 15 months
N/A
15.49% - 25.49% (Variable)
$0
Excellent, Good

0% INTRO APR RATING

★★★★★
4.9

OVERALL RATING

4.8/5.0
  • One-time $150 cash bonus after you spend $500 on purchases within 3 months from account opening
  • Earn unlimited 1.5% cash back on every purchase, every day
  • No rotating categories or sign-ups needed to earn cash rewards; plus, cash back won't expire for the life of the account and there's no limit to how much you can earn
  • 0% intro APR on purchases for 15 months; 15.49%-25.49% variable APR after that
  • Pay no annual fee or foreign transaction fees
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% for 15 months
N/A
15.49% - 25.49% (Variable)
$0
Excellent, Good

+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.

AIR MILES RATING

★★★★★
5.0

OVERALL RATING

4.9/5.0
  • Earn 100,000 bonus miles when you spend $20,000 on purchases in the first 12 months from account opening, or still earn 50,000 miles if you spend $3000 on purchases in the first 3 months
  • Earn unlimited 2X 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
  • Receive up to $100 application fee credit for Global Entry or TSA Pre✔®
  • Redeem on travel—from vacation rentals to car rentals and more. Plus transfer your miles to over 10+ travel loyalty programs
  • No foreign transaction fees
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
N/A
17.24% - 24.49% (Variable)
$95
Excellent, Good

AIR MILES RATING

★★★★★
4.9

OVERALL RATING

4.8/5.0
  • Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,000 toward travel when you redeem through Chase Ultimate Rewards®.
  • 2X points on travel and dining at restaurants worldwide, eligible delivery services, takeout and dining out & 1 point per dollar spent on all other purchases.
  • Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards. For example, 80,000 points are worth $1,000 toward travel.
  • Get unlimited deliveries with a $0 delivery fee and reduced service fees on orders over $12 for a minimum of one year on qualifying food purchases with DashPass, DoorDash's subscription service. Activate by 12/31/21.
  • Earn 5X points on Lyft rides through March 2022. That's 3X points in addition to the 2X points you already earn on travel.
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
N/A
15.99% - 22.99% Variable
$95
Good/Excellent

AIR MILES RATING

★★★★★
4.9

OVERALL RATING

4.8/5.0
  • $0 annual fee and no foreign transaction fees
  • Earn a bonus of 20,000 miles once you spend $1,000 on purchases within 3 months from account opening, equal to $200 in travel
  • Earn unlimited 1.25X miles on every purchase, every day
  • Travel when you want with no blackout dates and fly any airline, stay at any hotel, anytime
  • Miles won't expire for the life of the account and there's no limit to how many you can earn
  • Transfer your miles to over 10+ travel loyalty programs
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% for 12 months
N/A
15.49% - 25.49% (Variable)
$0
Excellent, Good

+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

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