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Is it possible to buy a car with a credit card?

Victoria Russell
Written by  Victoria Russell
5 min read
Updated: 30 May 2024

Key takeaways

  • Buying a car with a credit card involves understanding credit limits, issuer policies on high-value transactions, and dealership acceptance, which may include additional fees

  • Choosing the right credit card for car purchases should focus on rewards, low interest rates, high credit limits, and specific automotive benefits to minimise costs and maximise rewards

  • The process of buying a car with a credit card includes obtaining pre-approval, selecting a dealership that accepts credit payments, negotiating terms, understanding transaction fees, and managing immediate financial impacts on credit utilisation

Is it possible to buy a car with a credit card?

Exploring the feasibility of using a credit card to purchase a vehicle involves several considerations. Initially, understanding credit limits is crucial.

These limits impact large purchases like cars. Most credit cards have a limit that might be lower than the car's price.

This can restrict this payment method unless you have a high limit or a special arrangement with your credit provider.

Furthermore, the policies of credit card companies regarding car purchases play a significant role.

Some issuers have rules against using credit for high-value transactions. They might also charge additional fees. These fees could make using a credit card less appealing.

Finally, the acceptance of credit cards at dealerships varies and affects the possibility of using a credit card.

Not all car dealerships accept credit cards for full payment due to the fees they would incur.

Those that do might limit the amount you can charge to your card. Therefore, checking with the dealership about their payment policies is essential before deciding on the payment method.

Which type of credit card should I use to buy a car with?

When considering buying a vehicle with a credit card, selecting the appropriate type is key.

A rewards credit card is beneficial. It allows you to earn points, miles, or cashback on your purchase. This can lead to significant savings or rewards for future expenses.

It's also vital to seek out cards with low interest rates and high credit limits. These features minimise borrowing costs while covering the car's price. This is crucial as interest can quickly accumulate on large amounts.

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:

  1. Pre-approval: Initially, secure pre-approval from your credit card provider. This step ensures you know your spending limit and the interest rates applicable

  2. Selecting a dealership: Choose a car dealership that accepts credit card payments. Not all dealerships do, so it’s crucial to confirm beforehand

  3. 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

  4. Understanding fees: Be aware of any additional fees for credit card transactions. Dealerships might charge a premium to cover the cost of credit payment processing

  5. Completing the transaction: Once the price is agreed upon, you can complete the purchase. The transaction will be processed like any other credit card purchase, but for a significantly higher amount

  6. 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 immediately

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.

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.

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