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Is it smart to buy a car with a credit card

So if the cost of the car is most or all of your credit limit, your credit score could drop. Even if your credit limit is high enough to accommodate the amount you want to charge, you’ll still need to notify your card issuer ahead of time.

Regardless of whether a dealer lets you put the entire purchase or a portion of it on your credit card, you’ll only be able to spend up to your credit limit. With good credit, you can qualify for a credit card that may make charging your car purchase worthwhile. As mentioned above, zero-interest credit cards offer an excellent opportunity to avoid paying interest on at least part of your purchase. If you’re in it for the rewards, on the other hand, the best travel and rewards credit cards are usually only available to individuals with a FICO score of 720 or higher. Let’s say you’re buying a relatively cheap car, to begin with, and you have the cash on hand.

  • If you can’t pay your credit card in full quickly, you might be stuck paying a high interest rate on a significant balance.
  • If you find yourself in a situation where you have access to a credit limit large enough to purchase a car, it is important to have a plan to pay it off before swiping your card.
  • On the other hand, some dealers might even accept car payments paid with credit cards in full.

Otherwise, they may make you responsible for the processing fee by adding it to the total amount that you owe. This means that if you want to put a down payment of $10,000 towards your car on your credit card, the dealer will be charged $300 for that transaction if their processing fee is 3%.

Beyond searching for the best price on the right car for your needs, however, you should also shop around for financing. If neither of those situations apply to you, we recommend exploring these alternative financing strategies instead. Make sure you know exactly when your promotional APR runs out and what the standard variable APR will be so you can work on paying off your balance beforehand. Get advice on achieving your financial goals and stay up to date on the day’s top financial stories. You might be able to use a portion of your home’s value to spruce it up or pay other bills with a Home Equity Line of Credit. To find out if you may be eligible for a HELOC, use our HELOC calculator and other resources before you apply. Even if you can afford the car, you’ll need to answer a few questions.

Can I Make A Car Payment With A Credit Card?

If you apply for a credit card, the lender may use a different credit score when considering your application for credit. Making a large purchase like buying a car with your credit card should be done when you are fully informed and financially secure.

While there is more than one way charging your car to a credit card can leave you ahead, the most intriguing opportunity is the rewards you could earn. You might even want to use a co-branded car credit card (yes, they exist!). This can provide you a hefty discount when you are ready for your next car. This content is not provided or commissioned by the bank, credit card issuer, or other advertiser. Opinions expressed here are author’s alone, not those of the bank, credit card issuer, or other advertiser, and have not been reviewed, approved or otherwise endorsed by the advertiser. This site may be compensated through the bank, credit card issuer, or other advertiser.

You Could Earn Significant Rewards

Click here to read our full review for free and apply in just 2 minutes. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Back in December of 2018, I bought a new car — well, new to me, at least. I was getting ready to write a check for the down payment when the salesman casually mentioned, “You know, if you have a points card, you can use it for up to $5,000 of the down payment.” We believe everyone should be able to make financial decisions with confidence. A dedicated team of editors oversees the automated content production process — from ideation to publication. These editors thoroughly edit and fact-check the content, ensuring that the information is accurate, authoritative and helpful to our audience.

Before buying a car on a credit card, you first have to find out if your dealership even offers that option. Most of the time, they won’t let you charge the entire purchase price of your car — instead, they’ll allow you to put up to $5,000 of the purchase on a credit card. Second, you need to make sure your credit card limit is high enough to cover the amount you want to charge. For example, it’s possible to get an auto loan with an interest rate of 3% or 4%, especially if you have good credit. Even the best low interest credit cards can come with an ongoing APR of 14% to 24%.

This might seem like a risky proposition, but there are real, tangible benefits that can come from using this payment method if you’re careful. It usually isn’t worth the hassle between high interest rates and the several barriers to paying for a car with a credit card. Depending on where you are in your financial life, they may not all be available. Say you want to purchase a car for $10,000 and you sign up for the Chase Freedom Unlimited®. There’s no annual fee, and you get a 0 percent introductory APR on purchases for 15 months (followed by a variable APR of 19.49 percent to 28.24 percent). Paying off $10,000 over that 15 months without interest would cost $666.67 per month. Often, buyers take out an auto loan on a new car purchase, since most people don’t have enough extra cash to pay for a car outright.

This article is for educational purposes only and provides general auto information. The material is not intended to provide legal, tax, or financial advice or to indicate the availability or suitability of any JPMorgan Chase Bank, N.A. Chase is not responsible for, and does not provide or endorse third party products, services or other content.