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Can you buy a new car with a credit card? Some auto mobile dealers allow buyers to make partial payments with their credit up to a certain limit. For instance, you could pay your initial $7,000 via credit. Let’s look at the bigger picture, shall we?
Is it a Good Idea to Buy a Car with a Credit Card?
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Using the credit to buy a car could be a great idea. Still, it can be your worst financial decision. You need to have a robust decision to want to purchase your car with a credit card. Before you can buy a car with your credit card, hold discussions with your dealer and establish whether or not you can proceed with the plan.
You’ll want to validate your credit card limit as well to ensure you have sufficient credit room to settle part of or the entire bill. Even when your credit limit allows, the big question you should ask yourself is: do I need to purchase a car using a credit card? Let’s look at some of the things that may drive you into going ahead with this decision.
You have sufficient Cash to Settle the Balance Immediately
Do you have sufficient cash to settle your balance immediately? If you do, then you can proceed with your decision with ease. Still, it’s worth mentioning that the idea of using a credit card can generally be a bad idea.
What with the high-interest rates that card can charge? These can easily deny users any possible rewards they may have earned. Assuming you’re using your credit card to leverage on a signup offer and you identify a dealer that allows you to settle the balance using credit, and proceed to sign up for a credit card to get certain bonus points.
Wouldn’t this be a great idea? Yes, it would. However, the amount of interest you end up paying may deny you the points in the end. If you choose to purchase your car using a credit card to gain points, only do so if you’re capable of settling the balance right away.
If you’re Getting Travel Rewards or Cash-back
Imagine a situation where you have sufficient cash to settle off your bill immediately. In such a case, charging a total of $10,000 to your card wouldn’t hurt you financially. This brings us to the question; can you buy a car with credit card to get points?
Yes, in this case, you would earn massive points worth a good amount of cash in travel rewards or cash back for the entire transaction. This strategy can work on different types of cards. Do you have enough cash to settle your car bill immediately and get rewarded? If you do, you may as well proceed with the idea.
If you’re using a No-interest Offer
Are you using a no-interest offer? Are you certain of settling your bill soon enough? If yes, then you can proceed to purchase your car with a credit card. This can be viable when you’re purchasing a cheap car and are sure of settling the balance within a short period. Here, you can apply for a balance transfer card that gives you 0% annual percentage rate that can achieve a short-lived loan with 0% interest.
Before proceeding, however, ensure you make your calculations so you can settle off the balance before the preliminary offer expires by failing to do so, you could end up paying unusually high-interest rates.
Remember, a credit card company can charge you between 16% to 18% interest for each car loan. You need to exercise caution and thoroughly do your calculations before you can finally purchase your car with a credit card.
Can you use a Credit Card to put a Down Payment on a Car?
This would depend on your credit card limit and your car dealer. Car dealerships that allow their customers to use their credit cards to purchase cars often have a minimum spending limit. In many cases, the minimum amount ranges between $5,000 and $8,000. The reason for this is; car dealerships want to still have a big share of profits after settling down the extravagant credit card transaction fees.
If you’re considering using your credit card to put a down payment on your car, do it only after you receive your card. This way, no interest will be charged on your down payment. This is because the 0% interest offer is valid for six months. By delaying, you could end up paying a colossal 16% or 20% interest rate on your down payment.
Can you buy a car at an Auction with a Credit Card?
Yes. you can use your credit card to buy a car at an auction. Credit cards are today some of the popularly used methods of payment. One of the advantages of using your credit card is the rewards and incentives offered by credit card companies for executing the purchase. Further, a car is a costly item that can easily enhance your points.
Are Credit Cards Acceptable by all Car Dealers?
While credit cards are fast becoming an acceptable payment method, only a few car dealers will allow you to use them to purchase a car. This is because they have to pay the credit card companies a transaction fee amounting to between 3% and 5% of the car value.
If the car dealers were to transfer the fee to customers, the cost would be too high for customers to afford. On top of the high transaction fees, any car dealerships dislike credit card purchases.
This is because small disputes are likely to arise which would end up prolonging payments for months. For instance, assuming the customer notices a fault in the engine after purchasing the car, the credit card company would’ve to delay payment until the dealer can sort out the problem.
Can you buy a New Car with a Credit Card Albeit No Credit Score?
No. you can’t purchase a new car using a credit card without a credit score. Car dealers establish potential customer’s risk level by evaluating their payment history, the amount of credit they have utilized, and the type of credit they have.
When stuck in such a situation, you may need to save a big deposit amount which acts as good collateral. Further, you’ll need a cosigner if you’re considering getting an auto loan. This is because car dealers prefer customers with a great credit score because it guarantees their credit financing.
What are the chances of finding a car dealer who can allow you to purchase a car with your credit card? Some dealers in the market are willing to have their customers use credit cards. If you can find one, then you’ll have an easy time paying your car loan installments. This option is perfect for car buyers who have received a 0% credit card.
This is because they don’t have to pay any additional charges. Many car dealerships are against the idea of using credit card payments because of the processing fees involved for every transaction.
Disadvantages of Purchasing a Car with a Credit card
If you decide to use your credit card to pay for your car, you’re likely to face certain setbacks. These include;
- Finding a car dealer willing to accept the credit card payment option can be an arduous task
- The loan payments are only ideal once the promotional offer is still valid
- Skipping payments comes with stringent consequences
Can You Buy a New Car With a Credit Card?
Before you can decide to pay for your car with your credit card, you want to evaluate the advantages and disadvantages of doing so. Remember, using a credit card to purchase a car may not be the best option. However, if you have enough cash to settle down the balance immediately, you could benefit from using this option.