Can I Buy a Car with a Credit Card?

A new car purchase is one of the largest expenses, aside from your home, that you will have to put money towards. In some instances, though, you need a car before you have managed to save the funds to buy one. This is where loans, quick car finance, and even credit cards become the most viable options. Could you buy a car with a credit card though? After all, car finance is specifically made for the purchase of a car, and cash from a bank loan is lent to you with a specific reason in mind. Well, the answer is that yes, you can buy a car with a credit card. However, there are some caveats, so we took a look.

How can I buy a car with a credit card?

Before handing over plastic, you will first need to check that the dealership you wish to buy the car from will accept credit cards for car payments. Many are reluctant due to the handling and processing fees that are attached to credit card payments. They aren’t allowed to pass this fee on to you, so instead will only take cash or bank transfer. Once you have discovered that your chosen dealer will accept credit cards, you will need to ensure you have a sufficient balance to pay for the car. In many cases, you could part fund with cash and pay the remainder via credit card. You aren’t all clear yet though, the dealership will run a credit check to assess the status of your credit rating. If it isn’t good enough, they may not allow you to pay via credit card, in addition, a high limit is preferred too.

If you don’t tick the boxes of high limit, good credit rating and a dealer that accepts credit cards, you won’t be able to use your credit card for a new car purchase.

Why would I use a credit card to buy a car?

If funds are tight but a new car purchase is imperative, any type of finance will no doubt help you achieve your aim of securing a new vehicle. Why would you choose to use a credit card though? For some, it can be appealing, especially if you have a 0% interest rate. You can then use it to buy your car and, as long as you set aside an amount to pay each month that means the cost of the car is covered before the 0% expires, you’ll not pay any interest on the purchase at all.

However, whilst this sounds like a great way to get a car affordably, the likelihood of you securing a brand-new car is somewhat limited. Many of the dealers that do accept credit cards will only allow for them to be used for part payment on the car, you would then have to find the rest of the cash yourself. At the same time, many credit cards set limits that would not make a brand-new car purchase obtainable. In many cases, limits are set to £2000-£4000 and this may not be enough to fund the car you require.

That being said, if you are buying a used car, the costs will be significantly less and more likely to be within your current credit limit.

Another common reason people turn to credit cards for a car purchase is the added protection they offer. If you have any problems with the vehicle or the dealership, thanks to the Consumer Credit Act, your card provider shares the responsibility with the seller for the car. You can then apply for a refund should it be necessary.

Is buying a car with a credit card a good idea?

This is a common question people ask and with good reason, nobody wants to be stung by high interest but at the same time, the protection offered does give a little peace of mind.

Reasons why you could buy a car with a credit card:

• Benefiting from a 0% interest rate means zero additional costs on your car purchase.
• Protection thanks to the Consumer Credit Act that covers you if something goes wrong.
• Flexible payment options mean you can vary the amount you pay each month if necessary.

Reasons you should not use a credit card to buy a car

• Poor credit will mean less chance of a 0% card, therefore, making the purchase more expensive.
• The limit set may not be enough to cover the cost of the car meaning you may have to source alternative finance.
• Your dealership may not be willing to accept full payment on a credit card.
• The flexible payments could see you paying over a longer period and accruing substantial interest.

Buying a car with a credit card tips

If you do choose to go down this route, firstly look at the 0% interest period. Then divide the cost of the car by the number of months you have an interest-free period for. This will give you the minimum you should pay each month. If this is unaffordable then you may need to look for a different credit card or investigate alternative ways to fund your car purchase.

If the amount is affordable, set up a direct debit right away, this way you will never forget a payment. If come the end of the month, you realise you could pay a little more, look to increase the direct debit to ensure you clear the balance quickly.

Before committing to a certain card, shop around for the best 0% offers, some may run for 12 months but some can run for as long as 36!

At Euphoria we remove the confusion and the questions about the best ways to finance a car purchase. With our status as a direct lender, we can carefully assess every application regardless of credit rating or status. Our used car finance deals are affordable and flexible in nature making the whole process easy. Unlike credit cards, car finance allows you to be in control, you can pick the vehicle you want without worry that the credit limit won’t cover the cost. Not only that, but with used as well as cheap new cars on finance always available, you have great flexibility in what you can afford. We love to say yes to all drivers so get in touch today and drive away tomorrow!