Is it possible to buy a car with a credit card?
There are a few things to understand if you’re looking to buy a car with your credit card, as our guide explains...
Key takeaways
It can be possible to buy a car on a credit card, but you will need a high enough credit limit and it will depend on the policies of both the card issuer and the dealership
As well as a high credit limit, the best credit card for buying a car will ideally give you a low or 0% interest rate for a given period and rewards, such as loyalty points
There might be better options than using a credit card, including a personal loan or car finance, such as Personal Contract Purchase (PCP) or Hire Purchase (HP)
Is it possible to buy a car with a credit card?
Yes, it can be possible to buy a car with a credit card, but there are a number of factors to take into consideration:
Considerations for buying a car on a credit card
Your credit limit
Many cars will cost more than the amount you’re allowed to spend on your credit card – also known as your credit limit. It might be possible to part pay the purchase on your credit card and make up the shortfall from your bank account, for example.
Alternatively, you’ll need to make a special arrangement with your credit provider to raise the existing limit.
Your credit card issuer
Some issuers have rules against using credit for high-value transactions, such as car purchases.
The car dealership
The acceptance of credit cards at dealerships varies. Not all car dealerships accept credit cards for full payment due to the fees they incur. Those that do might limit the amount you can charge to your card.
Which type of credit card should I use to buy a car with?
Choosing the right type of credit card to buy a car is key. As well as needing an appropriate credit limit, a rewards credit card can give you the additional advantage of earning points, air miles, or cashback on your purchase, which can be substantial for such a big purchase.
It's also vital to seek out cards with low interest rates or ideally a 0% introductory rate on purchases because interest can quickly accumulate on large amounts.
If you’ll need an extended grace period to pay off the car purchase, a 0% purchase credit card could be your best option. You could find a card with no interest to pay for up to 22 months.
How does buying a car with a credit card work?
Purchasing a vehicle using a credit card involves a series of steps, starting from obtaining pre-approval to the final transaction. Here’s a breakdown of the process:
How to buy a car with a credit card
Pre-approval
Initially, secure pre-approval from your credit card provider. This step ensures you know your spending limit and the interest rates applicable.
Selecting a dealership
Choose a car dealership that accepts credit card payments. Not all dealerships do, so it’s crucial to confirm beforehand.
Negotiating the purchase
Discuss the car price with the dealership. Remember, paying with a credit card might limit your bargaining power as dealerships often incur fees for credit transactions.
Completing the transaction
Once the price is agreed, you can complete the purchase. The transaction will be processed like any other credit card purchase.
Immediate financial implications
Be prepared for the immediate impact on your credit utilisation and potential interest charges if you don’t pay off the balance by the following month or when the 0% period ends.
Throughout this process, the interaction between your credit card issuer and the car dealership is crucial.
They work together to ensure the transaction is processed smoothly, adhering to credit payment regulations.
Should I buy a car on a credit card?
Even if it’s approved by the dealership and your card issuer, and the cost of the vehicle is within your credit limit, it might not be smart to make a car purchase on your credit card.
The main consideration is whether you can pay it off on time. If you can’t clear the debt by your payment deadline, whether that’s the following month or at the end of a 0% period, high interest rates will likely kick in on an already large balance, turning your credit card purchase into a far more expensive purchase than if you had chosen a different means.
If you are confident you can clear the balance in full and on time, then a credit card might be worth considering. The advantage of using a credit card is that you’ll be able to drive the vehicle off the forecourt on the same day, and if you’re savvy and use the right type of card, you might even pick up some reward points.
Personal Finance Expert
Our expert says...
“Buying a car on a credit card is a relatively unusual step and talking to dealers, they may try to dissuade purchasers from taking this option. However, if you do think it’s a route for you, then be completely sure you will be able to clear the balance promptly. Otherwise, you’ll face the double whammy of high interest rates on thousands of pounds of debt, which could plunge you into financial difficulty.”
What are the alternatives to using a credit card to buy a car?
There are several alternatives to using a credit card to buy a vehicle. These include:
Alternatives to buying a car on a credit card
Personal loan
Taking out a loan allows you to buy the car there and then and pay it off in a set number of monthly instalments. You’ll know the cost you face from the outset and providing you have a good credit score should be able to secure a deal with a lower interest rate than you’ll face with a regular credit card.
Car finance
There are different options such as PCP, HP and even leasing that are specifically designed to help get you behind a wheel in the car of your choosing. There are pros and cons to each.
Save up and buy outright
Typically the least expensive option, but the downside is that you have to wait to make the purchase. If a new car is a necessity because of a work commute, for example, then this might not seem a favourable choice.
Compare credit cards with MoneySuperMarket
If you’re looking for a credit card, it’s quick and easy to compare with MoneySuperMarket.
Our eligibility checker tool shows you the cards you’re most likely to be approved for by doing a ‘soft’ credit search, which won’t affect your credit score.
You'll be shown a range of credit cards, which you'll be able to sort according to features such as interest rate, length of interest-free period and your chances of being approved, before making a final decision. That way you can apply with greater confidence.
MoneySuperMarket is a credit broker – this means we’ll show you products offered by lenders. We never take a fee from customers for this broking service. Instead, we are usually paid a fee by the lenders – though the size of that payment doesn’t affect how we show products to customers.
Author
Tim Heming
Personal Finance Expert
Tim Heming is a journalist and editor who has written about personal finance for national newspapers and consumer websites for 15 years. Tim enjoys providing no-nonsense information to help consumers...
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Collette Shackleton
Content Writer
Collette Shackleton is a highly skilled Content Writer who has over nine years’ experience creating helpful and engaging personal finance content for consumers. Collette shares her experience as a...
