Ever think about using a credit card to buy a car? You might now
credit card to buy a car

Ever think about using a credit card to buy a car? You might now

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Find out how to use a credit card to buy a car and what other options you have.

When looking to but a car, you’ve got a few different options. They can include and are not limited to, a personal loan, car loan or lease agreement. There’s also the option to use a credit card — although there are a few ways this should be done to minimize interest.

With low interest rate promotions everywhere in the market, a credit card may be the ideal option for paying off your new car. Credit cards carry risks however, so it is important that you take the time to figure out if a credit card is really the most suitable option for financing that new car.

How to buy a car with a credit card

The main way to pay for a car purchase is to use a low interest rate or 0% offer credit card with a large credit limit.

You can pay off the balance gradually without the hefty charges associated with a regular credit card or personal loan. If you can’t pay the car off within the promotional period, you can either transfer the balance over to a loan or to a card with a low or 0% interest rate.

You could theoretically continue to balance transfer the remaining balance to a new card each time the promotional period ends, but there are a few drawbacks to this method.

When you transfer a balance over to a new card you’ll only be able to transfer a certain percentage of your total approved limit. This is usually around 90% of your approved credit limit.

Did you know?

Every time you apply for a new credit card your potential card provider will check your credit file. These checks or ‘credit inquiries’ are also recorded on your credit file. Too many credit inquiries at any one time may be a red flag to lenders.

Other things to consider when buying a car with a credit card

  • Annual fee
    Many credit cards come with annual fee, so you’ll have to factor this into your equations when working out how much this method of buying a car will cost you.
  • Credit card surcharges
    Some car dealers will charge a surcharge for purchases made using a credit card. A surcharge of even 3% on a purchase of $10,000 is a whopping $300. Also, keep in mind that a loan can come with an application fee, so compare the two costs before coming to a decision.
  • Be aware of promotional periods
    A credit card offer such as a low purchase rate or balance transfer will end after a certain number of months and when this happens the rate will revert to the standard variable purchase rate or the cash advance rate.
  • Rewards points
    If you’re making a big purchase with a credit card, you might be able to earn rewards points on it. Be sure to compare the value of the rewards points with the interest you may pay. Interest charges could seriously reduce the value of any points.
  • Could limit your cash flow
    Because your credit limit will be strained with the car purchase, you may have less credit to go towards paying off your bills and other expenses if that is what you usually use your credit card for.
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How else can you finance a car purchase?

There are many other ways of financing your car purchase and they should all be considered so you can walk off of the car lot feeling like you got the best deal.

Car loan

When you get a car loan, the car that you are planning to buy is actually used as security for the loan. If you can’t meet all of your loan obligations for payments, the lender has the right to seize your car. The interest rates are usually lower on this kind of loan since it has been secured to an asset.

Personal loan

When you take out a personal loan to purchase a car, you have to make regular payments like you would with any other loan. You can spread these repayments out anywhere between one to seven year. You can either get a secured or unsecured personal loan to use as car finance, and this will influence both the interest-rate and how much you are allowed to borrow.

Car lease

Getting a lease for your car finance is a lot like renting, but you will be given an option to buy it when the lease has expired for a residual. A residual is a percentage or value that has already been agreed upon when the car was first purchased.

Do your homework
Even if the credit card option turns out to be the most suitable one, credit cards do not offer much protection in the event that you miss a payment or pay late. In fact, credit cards will often heavily punish you for a missed or late payment. A credit card may save you money on your car purchase, but if not managed correctly, credit cards can also get you into trouble.

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Compare credit cards

Rates last updated June 25th, 2018
Name Product APR for Purchases ( Purchase Rate ) Intro APR for Balance Transfer Annual fee Product Description
Amex EveryDay® Credit Card
14.74% to 25.74% variable
0% Intro APR for 15 months
$0
Earn 15000 Membership Rewards® Points after you use your new Card to make $1,000 in purchases in your first 3 months.
Deserve® Classic Card
24.49% variable
$39
Designed to help build credit history with no deposit required and access to benefits.
Apply now Read review
Bank of America® Cash Rewards Credit Card
14.74% to 24.74% variable
0% Intro APR for 12 statement closing dates (with whichever is greater, $10 or 3% balance transfer fee)
$0
Earn more cash back for the things you buy most.
Blue Cash Everyday® Card from American Express
14.74% to 25.74% variable
0% Intro APR for 15 months (with whichever is greater, $5 or 3% balance transfer fee)
$0
Earn $150 back after you spend $1,000 in purchases on your new Card in your first 3 months. You will receive the $150 back in the form of a statement credit.
Luxury Card Mastercard® Black Card™
16.49% variable
0% Intro APR for first 15 billing cycles (with whichever is greater, $5 or 3% balance transfer fee)
$495
Mastercard Black Card members receive an annual $100 air travel credit toward flight-related purchases including airline tickets, baggage fees, upgrades and more.
Apply now Read review
Chase Sapphire Preferred® credit card
17.49% to 24.49% variable
$0 annual fee for the first year ($95 thereafter)
Earn 50000 points when you spend $4,000 on purchases within the first 3 months of your account opening, and an additional 30,000 points when you spend a total of $30,000 on purchases within the first year of your account opening.
Indigo® Platinum Mastercard® Credit Card
23.9% variable
$75 annual fee for the first year ($0 to $99 thereafter)
With this card you get a 23.9% variable APR.
Apply now Read review
The First Access VISA® Credit Card
29.99% variable
$75 annual fee for the first year ($48 thereafter)
Access credit even if you have poor or limited credit history.
Apply now Read review
Luxury Card Mastercard® Gold Card™
16.49% variable
0% Intro APR for 15 billing cycles (with the amount of each transfer, $5 or 3% balance transfer fee)
$995
Earn points every time you spend. Luxury Card enhances your purchasing power by providing you with one (1) point for every one dollar ($1) you spend. Every purchase gets you closer to the rewards you want.
Apply now Read review
Chase Sapphire Reserve®
17.49% to 24.49% variable
$450
Earn 50000 BONUS POINTS after spending $4,000 on purchases in the first 3 months from account opening* — that's $750 toward travel when you redeem through Chase Ultimate Rewards®.
Credit One Bank® Visa® with Free Credit Score Tracking
17.49% to 25.49% variable
$0 to $75 first year annual fee for the first year ($0 to $99 thereafter)
Get 1% cash back rewards on eligible purchases including gas, groceries, and services such as mobile phone, internet, cable and satellite TV, terms apply.
Apply now Read review
Amex EveryDay® Preferred Credit Card
14.74% to 24.74% variable
0% Intro APR for 12 months (with whichever is greater, $5 or 3% balance transfer fee)
$95
Earn 15000 Membership Rewards Points after you use your new Card to make $1,000 in purchases in your first 3 months.
Chase Freedom Unlimited® credit card
16.49% to 25.24% variable
$0
Earn unlimited 1.5% cash back on every purchase – it's automatic. No minimum to redeem for cash back.
Bank of America® Premium Rewards® Credit Card
17.49% to 24.49% variable
$95
Earn unlimited 2 points for every $1 spent on travel and dining purchases and 1.5 points for every $1 spent on all other purchases.
Quicksilver® from Capital One®
14.49%, 20.49% or 24.49% variable
0% Intro APR for 15 months (with 3% balance transfer fee)
$0
Earn unlimited 1.5% cash back on every purchase, every day
Chase Freedom® credit card
16.49% to 25.24% variable
0% Intro APR for 15 months (with whichever is greater, $5 or 5% balance transfer fee)
$0
Earn 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate and unlimited 1% cash back on all other purchases.
Bank of America® Travel Rewards Credit Card
16.49% to 24.49% variable
$0
20,000 online bonus points offer. Ditch the restrictions of typical airline rewards cards. Any airline, any hotel, anytime. No blackout dates.
Chase Slate® Credit Card
16.49% to 25.24% variable
0% Intro APR for 15 months (with $0 for transfers in first 60 days. Then $5 or 5% balance transfer fee)
$0
Jumpstart your financial fitness! 60 day introductory balance transfer offer, save on interest, and get your free monthly credit score.
Venture® from Capital One®
14.49%, 20.49% or 24.49% variable
$0 annual fee for the first year ($95 thereafter)
Earn 50000 bonus miles once after spending $3,000 on purchases within the first 3 months from account opening.
HSBC Cash Rewards Mastercard® credit card
14.49%, 18.49%, or 24.49% variable
0% Intro APR for 15 months (with whichever is greater: $10 or 4% balance transfer fee)
$0
Earn unlimited 1.5% cash rewards on all purchases. See Rates and Fees
Apply now Read review

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Kyle Morgan

Kyle Morgan is a writer and editor for finder.com who has worked for the USA Today network and Relix magazine, among other publications. He can be found writing about everything from the latest car loan stats to tips on saving money when traveling overseas. He lives in Asbury Park, where he loves exploring new places and sipping on hoppy beer. Oh, and he doesn't discriminate against buffalo wings — grilled or fried are just fine.

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US Credit Card Offers

Important Information*
Deserve® Classic Card
Deserve® Classic Card

APR

24.49
variable

Annual fee

0 For the first year
More info
Luxury Card Mastercard® Gold Card™
Luxury Card Mastercard® Gold Card™

APR

16.49
variable

Annual fee

995 For the first year
More info
The First Access VISA® Credit Card
The First Access VISA® Credit Card

APR

29.99
variable

Annual fee

75 For the first year
More info
Indigo® Platinum Mastercard® Credit Card
Indigo® Platinum Mastercard® Credit Card

APR

23.9
variable

Annual fee

75 For the first year
More info
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