The Ultimate Guide to Credit Cards
Monday, July 13, 2020

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

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

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 $150 Bonus after you spend $500 on purchases in your first 3 months from account opening.
  • Earn unlimited 1.5% cash back on all purchases.
  • 0% Intro APR for 15 months from account opening on purchases, then a variable APR of 14.99 - 23.74%.
  • No annual fee
  • No minimum to redeem for cash back
  • Cash Back rewards do not expire as long as your account is open
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% 15 Months
N/A
14.99%–23.74% Variable
$0
Good/Excellent

0% INTRO APR RATING

★★★★★
4.9

OVERALL RATING

5.0/5.0
  • Earn a $150 Bonus after you spend $500 on purchases in your first 3 months from account opening
  • Earn 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate. Enjoy new 5% categories each quarter!
  • Unlimited 1% cash back on all other purchases - it's automatic
  • 0% Intro APR for 15 months from account opening on purchases and balance transfers, then a variable APR of 14.99 - 23.74%.
  • 3% intro balance transfer fee when you transfer a balance during the first 60 days your account is open, with a minimum of $5.
  • No annual fee
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% Intro APR on Purchases 15 months
0% Intro APR on Balance Transfers 15 months
14.99% - 23.74% Variable
$0
Good/Excellent

0% INTRO APR RATING

★★★★★
4.7

OVERALL RATING

4.6/5.0
  • The Citi Rewards+℠ Card - the only credit card that automatically rounds up to the nearest 10 points on every purchase - with no cap.
  • Earn 15,000 bonus points after you spend $1,000 in purchases with your card within 3 months of account opening; redeemable for $150 in gift cards at thankyou.com
  • 0% Intro APR on balance transfers and purchases for 15 months. After that, the variable APR will be 13.49% - 23.49%, based on your creditworthiness. Balance transfer fee — either $5 or 3% of the amount of each transfer, whichever is greater.
  • Earn 2X ThankYou® Points at Supermarkets and Gas Stations for the first $6,000 per year and then 1X Points thereafter. Plus, earn 1X Points on All Other Purchases.
  • The standard variable APR for Citi Flex Plan is 13.49% - 23.49%, based on your creditworthiness. Citi Flex Plan offers are made available at Citi's discretion.
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% for 15 months
0% for 15 months
13.49% - 23.49% (Variable)
$0
Good/Excellent

+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

★★★★★
4.8

OVERALL RATING

4.8/5.0
  • Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $750 toward travel when you redeem through Chase Ultimate Rewards®
  • 2X points on travel and dining at restaurants worldwide & 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, 60,000 points are worth $750 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
Bank of America® Travel Rewards Credit Card Review

at Bank Of America'ssecure website

AIR MILES RATING

★★★★★
4.8

OVERALL RATING

4.7/5.0
  • Earn unlimited 1.5 points for every $1 you spend on all purchases everywhere, every time and no expiration on points
  • Enjoy no annual fee and no foreign transaction fees while earning points to use for a statement credit to pay for flights, hotels, vacation packages, cruises, rental cars or baggage fees
  • Introductory 0%† APR for your first 12 billing cycles for purchases.  After that, a Variable APR that's currently 14.99% to 22.99% will apply.
  • 25,000 online bonus points if you make at least $1,000 in purchases in the first 90 days of your account opening – which can be redeemed for a $250 statement credit toward travel purchases
  • Preferred Rewards members earn 25%-75% more points on every purchase
  • That means you could earn up to 2.62 points for every $1 you spend, everywhere, every time.
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% Intro APR for 12 billing cycles
N/A
14.99% - 22.99% (Variable)
$0
Excellent/Good

AIR MILES RATING

★★★★★
4.8

OVERALL RATING

4.8/5.0
  • New Offer! Earn 100k bonus points after you spend $15,000 on purchases in the first 3 months from account opening. That's $1,250 toward travel when redeemed through Chase Ultimate Rewards®
  • Earn 3 points per $1 on the first $150,000 spent on travel and select business categories each account anniversary year
  • Earn 1 point per $1 on all other purchases - with no limit to the amount you can earn
  • Points are worth 25% more when you redeem for travel through Chase Ultimate Rewards
  • Redeem points for travel, cash back, gift cards and more - your points don't expire as long as your account is open
  • No foreign transaction fees
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
N/A
15.99% - 20.99% 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

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