How to buy a Car with a Credit Card?
Purchasing a car may be one of the biggest decisions you take in your life. Due to this very reason, you should put invest a lot of your time in deciding on the best way to finance it. Unless you have the exact amount needed to pay for the car (which isn’t very likely), you will have to depend on a personal loan or even a credit card.
Purchasing a new car on your credit card can either make a ton of sense, or none at all. Before opting for this risky route, its better to understand all its little details.
Is This Even Possible?
In the majority of cases, purchasing a car with your credit card entirely depends on whether your dealer accepts it as a means of payment or not. Chances are that your dealer will allow this if your credit card limit looks appealing to them. Certain dealerships may also allow partial payment with credit, but only to a specific extent.
Before deciding on whether to pay for your new car with a credit card, confirm from the dealership if this process is acceptable for them. It is also helpful to verify your credit card limit or possibly increase it to be enough to cover all or part of your car cost.
Why Use a Credit Card?
Simply put, this is probably the cheapest way to buy a car while you also receive extra protection. The ideal situation is that you use a long 0% credit card to buy the car initially and each month from then, pay off a set amount which is designed to clear all dues within a set time limit.
At the end of the 0% period, the debt will be cleared – relieving you from any extra interest and credit costs.
When to Pay with a Credit Card?
- If you’re using a card with 0% interest
With this specific credit card, you’re not entitled to pay interest on a purchase between 12 to 21 months. Portions of car loans can be paid easily through this card as it saves a lot of interest charges that you would normally have to pay.
However, make sure that you can afford to pay off the debt quickly. In case you’re unable to repay the loan within the time limit, you could end up paying a far higher rate of interest on your credit card than the rate you would have received on a good car loan.
- If you’re looking for rewards
If the car you’re purchasing isn’t very expensive and you have the cash to pay for it immediately, you can opt to pay for it with a rewards credit card. Most of these cards are likely to offer kickbacks worth between 1-5% of a purchase, meaning you could save some money and benefit easily with this small trick.
- If your credit is good
Dealerships are more likely to trust people with good credit history. By making sure you have good credit, you can easily apply for a specific credit card that makes your car purchase less burdening. For example, 0% credit cards are an excellent method to avoid interest costs and reward credit cards can save some of your valuable cash. However, in most cases, these cards are only provided to people with a FICO score of 720 or higher.