Should I use a credit card to buy a car? | finder.com
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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Compare credit cards

Name Product Filter values Annual Fee APR for Purchases (Purchase Rate) Intro APR for Balance Transfer
$95
14.99% to 25.99% variable
0% for the first 12 months (then 14.99% to 25.99% variable)
Earn $200 bonus cash back after you spend $1,000 on purchases in the first 3 months. Rates & Fees
$0
14.99% to 25.99% variable
0% for the first 15 months (then 14.99% to 25.99% variable)
Earn a $150 bonus statement credit after you spend $1,000 on purchases in the first 3 months. Rates & Fees
$0
14.99% to 25.99% variable
0% for the first 15 months (then 14.99% to 25.99% variable)
Earn up to $250 back. Earn $150 back after you spend $1,000 or more in purchases with your new card within the first 3 months of card membership. Plus, earn an additional $100 back after you spend an additional $6,500 in purchases within your first 12 months. Rates & Fees
$0
16.99% to 25.74% variable
0% for the first 15 months (then 16.99% to 25.74% variable)
0% Intro APR for 15 months from account opening on purchases and balance transfers.
$0
16.99% to 25.74% variable
0% for the first 15 months (then 16.99% to 25.74% variable)
0% intro APR for 15 months from account opening on purchases and balance transfers.
$0 annual fee for the first year ($95 thereafter)
17.99% to 24.99% variable
Earn 50,000 bonus points after you spend $4,000 on purchases in the first 3 months.
$550
None (Charge Card)
Get 5x Membership Rewards® points on flights booked directly with airlines or with American Express Travel and 5x points on eligible hotels booked on amextravel.com. Rates & Fees
$450
17.99% to 24.99% variable
Earn 50,000 bonus points after you spend $4,000 on purchases in the first 3 months.
$0
13.99% variable
0% for the first 15 billing cycles (then 13.99% variable)
A low, variable APR on purchases, balance transfers and cash advances.
$0 annual fee for the first year ($89 thereafter)
17.99%, 21.99% or 24.99% variable
0% for the first 12 months (then 17.99%, 21.99% or 24.99% variable)
Enjoy 70,000 bonus miles after spending $5,000 on purchases in the first 90 days.
$0
14.99%, 18.99% or 24.99% variable
0% for the first 15 months (then 14.99%, 18.99% or 24.99% variable)
Earn unlimited 1.5% cash rewards on purchases. See Rates and Fees.
$0
12.99%, 16.99% or 20.99% variable
0% for the first 18 months (then 12.99%, 16.99% or 20.99% variable)
An 18 months 0%% Intro APR period on both purchases and balance transfers, plus zero foreign transaction fees, makes this is a strong well-rounded card. See Rates and Fees
$0
16.24% to 22.24% variable
1.99% for the first 6 monthly billing cycles (then 16.24% to 22.24% variable)
1% cash back to the nonprofits, K-12 schools, colleges and religious organizations of your choice.
$0
17.74% to 26.74% variable
Earn 10,000 Bonus Miles after spending $500 in purchases on your new card in your first 3 months of Card Membership. Rates & Fees
$0 annual fee for the first year ($95 thereafter)
17.74% to 26.74% variable
30,000 bonus miles after you use your new card to make $1,000 on purchases within the first 3 months. Rates & Fees
$0 annual fee for the first year ($95 thereafter)
17.74% to 26.74% variable
Enjoy a $0 annual fee on the first year and earn up to 2 Starpoints® for every dollar of eligible purchases. Rates & Fees
$95
17.74% to 26.74% variable
Earn 125,000 Hilton Honors™ Bonus Points after you spend $2,000 or more in purchases with your new card within the first 3 months of card membership. Rates & Fees
$0
17.74% to 26.74% variable
Earn 75,000 Hilton Honors™ Bonus Points after you spend $1,000 in purchases on the card within your first 3 months of Card Membership. Rates & Fees
$495
16.99% variable
0% for the first 15 billing cycles (then 16.99% variable)
Mastercard Black Card members receive an annual $100 air travel credit toward flight-related purchases including airline tickets, baggage fees, upgrades and more.
$195
16.99% variable
0% for the first 15 billing cycles (then 16.99% variable)
Enjoy unique excursions, privileged access to exclusive events and insider opportunities.
$995
16.99% variable
0% for the first 15 billing cycles (then 16.99% variable)
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.
$39
24.99% variable
Designed to help build credit history with no deposit required and access to benefits.
$75 annual fee for the first year ($99 thereafter)
23.9% variable
The Indigo® Platinum Mastercard® Credit Card is specifically designed for those with less than perfect credit.
$75 annual fee for the first year ($48 thereafter)
29.99% fixed
The First Access Card is a true VISA® credit card that does not require perfect credit for approval.
Up to
19.99% to 25.99% variable
Get 1% cash back rewards on eligible purchases including gas, groceries, and services such as mobile phone, internet, cable and satellite TV, terms apply.
$0
20.74% variable
Designed for college students to build credit history and earn rewards.
$35
19.39% variable
A secured Visa® credit card that helps you build your credit quickly.

Compare up to 4 providers

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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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Kyle Morgan

Kyle Morgan is a producer 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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Important Information*
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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

16.74
variable

Annual fee

995 For the first year
More info
First Access Visa Card®
First Access Visa 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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