Are you tired of applying for auto loans with different lenders? Do you think using your credit card will help you in getting a car of your choice? Do all dealers accept credit cards for such a big amount? Learn everything about making a car purchase with your credit card. Let’s make an informed decision.
The usage of plastic money has become an inevitable part of life. The moment you get an increase in your credit limit, you find new ways to spend more money. What if someone told you that buying your next car can be as easy as swiping your credit card? The most common method of buying a car is paying check or cash to the dealer. But, there are situations in which you can use your credit card to make the purchase. Financing an automobile through credit cards gives you the opportunity of earning huge reward points. But, if you wish to purchase your next car with the card, there are numerous things that you should keep in mind.
Car on Credit Card: Can I purchase a Car with Plastic Money?
As paying for your car through a credit card is an unconventional and uncommon way, you will have to put the all the pieces in order before you set out to make your purchase. The following key pointers will help you to make the decision:
1. Talk to the Dealer
Does your dealer allow making payment via credit cards? Usually, they allow payment up to $5000 through credit cards. And, it is possible that you may have to pay the remaining amount in cash or check. If the dealer agrees to full payment through your card, confirm whether your credit card is accepted at his dealership lot. If he doesn’t allow for complete payment in credit card, you must be ready to shop around and find a reliable dealer who can agree to your terms.
2. What’s your Credit Limit?
In case you are splitting the auto loan amount against various credit cards, you should have knowledge about how to divide the amount according to the credit limits. Also, if you are thinking of increasing your credit limit, you should do it prior to walking into the dealership. For instance, give a call to Chase or American Express to ask for a credit limit increase a week before purchasing your car.
3. Intimate your Bank
Prior to making a huge purchase on your credit card, it is always a safe option to notify your bank of the potential purchase. Usually, banks see large purchases on credit cards as probable frauds and decline the transaction. Once you explain your purchase to the bank, there is less probability of a decline or failure of the transaction. As soon as your bank gives you the green signal, you are good to swipe your credit card.
Is it really Wise to buy a Car with Credit Card?
As long as you have a credit limit that justifies your auto loan amount, you may feel that you are making the right decision. But, you need to consider other options available in the market and then make the choice. Here are a few things to keep in mind before buying a car with your credit card:
1. Rewards Points and Cashbacks
Many credit card companies and banks offer big reward points for making a large purchase. If you are getting a financial benefit, it makes sense to use it. Otherwise, it is best to find an auto lender who can offer you affordable financing options. If you have bad credit history, you can seek a subprime lender to help you improve credit score.
2. Do you have Cash with You?
If you are using your credit card, you must be ready to make the payment as and when you receive the bill. Remember that when you buy a car with your card, the entire cost of the car will become due next month. And, unless you are expecting a big cash flow in the next couple of days, you can be in a big trouble.
3. The Interest Rate Comparison
You may believe that you are in possession of a 0% credit card. But, remember most credit cards offer the benefit as an introductory offer only. The average APR on credit cards can be around 15% and the same thing on auto loans can be as low as 4% for a car buyer with a decent credit score. The number can increase if your credit score is bad.
Thus, there are multiple financial benefits of applying for an auto loan than opting for a credit card to buy your next car. Remember that every financial transaction has repercussions for several years and if you take a wrong step, it can hurt you for a very long time. So, create a viable plan for buying a vehicle and make sure that you are able to make regular payments.
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