Considering a new car and wondering if it’s possible to rack up a few thousand miles & points using a credit card to buy it?
In short, it is! And that’s great news for folks looking for ways to meet a card’s minimum spending requirements, if you want to earn extra rewards, or qualify for a yearly spending bonus for a purchase you’d make anyway!
I’ll show you how to put some (or all!) of the purchase price of a car on a credit card. And mention a few pitfalls you should look out for!
Can You Buy a Car With a Credit Card?
Buying a car can be stressful and usually requires some serious negotiating skills. Wouldn’t it be nice to earn miles, points, or cash back, for your purchase?
The good news is, in some cases it’s possible to put at least part of the purchase price of a car on a credit card. And some dealerships even allow you to put the entire cost of a car on a card!
This could help with meeting minimum spending requirements, meeting yearly card spending bonuses for elite status, or to simply earn lots of miles, points, or cash back.
That said, there’s a bit of strategy involved using a credit card to buy a car.
Tips for Buying a Car With a Credit Card
The main thing to realize is that the dealership will have to pay a credit card processing fee if they decide to accept a card.
On a $30,000 car, for example, this fee could be ~1% to ~3%, depending on what type of credit card you’re using.
At an average of 2%, that’s $600 in fees ($30,000 X 2%).
Now let’s say the dealership usually only makes a ~$1,500 profit off that $30,000 car. That $600 in credit card fees is nearly half of their profit! So you can see why dealerships are very particular about whether they’ll accept credit cards.
Luckily, lots of dealerships will at least let you pay the down payment with a credit card.
Reddit users have reported being able to put anywhere from $1,000 to $10,000 of the cost of a car on a credit card. And it can work for the down payment on a leased car too. So it’s certainly worth asking!
But folks who have done this before suggest NOT mentioning using a credit card until you’ve agreed on the price of the car. Otherwise, the sales representative will add the credit card processing fee into the price of the car.
And American Express has an auto purchase program. Some dealerships participating in the program will allow you to put the entire cost of a car on an AMEX card!
Downsides to Consider
If you don’t have enough cash to pay in full for the car, I wouldn’t suggest buying the car with a credit card. Because any miles & points you earn will likely be negated by the interest you’ll accrue on the purchase.
But you could use a card with a promotional rate to save on interest. Some cards offer 0% interest on purchases for 18+ months.
Another issue you might run into is not having enough credit. For example, say you want to buy a $10,000 car and only have a $7,000 credit limit. With AMEX cards, there’s a way to check online whether you can spend above your credit limit.
For other cards, you could call the credit card company to see if they’ll raise your credit limit. But be sure to ask whether this will count as a credit inquiry, because a credit inquiry likely isn’t worth it.
Finally, it’s a good idea to set the cash advance limit on the card you’re using to $0. Then you don’t have to worry about being charged cash advance fees that would cancel out the value of any rewards you’d earn!
It IS possible to pay for some (or all!) of a car’s purchase price with a credit card. But you’ll likely have to negotiate with the sales representative. And some folks suggest mentioning you’d like to use a credit card AFTER the price of the car is agreed upon.
Also, if you don’t have enough cash to pay your credit card bill in full after you purchase the car, I would NOT suggest using a credit card. Because the interest you’ll pay will negate the value of any rewards you earn.
Otherwise, being able to charge a few thousand dollars to a credit card for a purchase you already plan on making could be a great way to meet minimum spending requirements, meet yearly card spending bonuses for elite status, or to earn lots of miles!