You can buy a car with a credit card. It is not the most obvious or popular way to cover the cost of a new car, but in certain situations, it can be a good-value option. You will see lots of different ways to buy a car advertised while you are shopping for your new vehicle, so it is a good idea to consider all possibilities – including using a credit card. In this article, we explore the benefits of buying a car with a credit card and the issues you may encounter along the way. We also explain some alternative funding options that would be worth considering.
How do you buy a car with a credit card?
You can use a credit card to buy a car if the retailer or individual you are buying the car from is willing and able to take a credit card payment. The cost of the car will also need to fall within your existing credit limit and not conflict with any restrictions your card provider may place on single purchases.
In order to have a high enough credit limit to buy a car, you will likely need to have a good credit score. This will also make it more likely that you can access credit cards with long 0% interest periods, allowing you to spread the cost of your car over many months without paying interest. We explain how to check your score in our article ‘The best way to check your credit score for free’.
A credit card also gives you the flexibility to adjust exactly what you are paying each month in order to shorten the period of time it takes to clear your debt or reduce your monthly payments.
This all means that financing a car purchase with a credit card can be one of the cheapest ways to spread the cost. You can also benefit from the purchase protection that comes with credit card payments. We explain more in our article ‘Section 75 of the Consumer Credit Act explained – plus how to claim’.
Do car dealers accept credit cards in the UK?
This is one of the most common obstacles to buying a car with a credit card, though there are car sellers who will take credit card payments. You will likely find that vehicle dealerships are much more likely to be willing to take a credit card payment than an individual seller.
Keep in mind that there may be a processing charge to pay, or the vendor may not allow you to pay the full amount with a credit card.
If you are unable to use a credit card to directly purchase the car, you could consider a money transfer credit card. These cards allow you to build up a balance by transferring money into your current account, which you can then withdraw as cash or spend using your debit card. However, you will usually need to pay a fee of a percentage of the amount transferred. Read our article ‘A complete guide to the best money-transfer credit cards’ to learn more.
How does paying for a car with a credit card work?
Buying a car with a credit card will usually involve paying for the entire car upfront, whether you use a purchase credit card or a money transfer credit card. This means that you will need to have a high enough credit limit to take on the full amount. You can then repay the money through equal monthly repayments or by paying different amounts each month.
It is important to make sure you are paying at least the minimum payment each month. However, it will be cheaper and faster to pay more than the minimum payment, as we explain in our article ‘What is the minimum payment on a credit card?’.
Using a 0% purchase credit card to buy a car
The cheapest option will usually be to use a 0% purchase credit card, as you will have the length of the offer period to clear your balance before any interest charges kick in. With the best 0% purchase credit cards – which you can find in our article ‘Compare the Best 0% purchase credit cards’ – you can split the cost of your car over multiple years. Make sure that you budget to clear the balance of the card before the 0% offer ends, otherwise you will see the interest rate climb sharply and you may end up paying much more for your car than you originally intended.
Keep in mind that many of the best 0% purchase credit cards are only available to applicants with good credit scores. If you do not have a good credit score, you may find that you are offered a shorter interest-free period or rejected altogether. You can see what credit cards you are likely to be accepted for without damaging your credit score by using an eligibility checker. We have more details in our article ‘Check credit card eligibility: What credit cards am I eligible for?’.
If you are unable to get a 0% purchase credit card, or one with a suitably long interest-free period, you may want to consider an alternative purchase option to pay for your car.
How to find out which credit card is best for you
Money to the Masses uses Creditec*, an online comparison service that enables you to find credit card deals tailored to you without affecting your credit score. You will want to compare as many different options as possible before you get a new credit card, so it is a good idea to do a fast online comparison. With only a few basic details, the Creditec tool will build a personalised list of credit cards suited to your needs to help you navigate the huge number of options out there. You can then pick the result that suits you best. None of this will affect your credit score as the eligibility process uses a soft credit check. Click here to start your comparison*.
Pros and cons of buying a car with a credit card
Here is a summary of the key advantages and disadvantages of buying a car with a credit card:
Pros of buying a car with a credit card
- Spread the cost of your car
- Save on interest with a 0% purchase card
- Purchases protected under Section 75 of the Consumer Credit Act
- Flexible repayments
Cons of buying a car with a credit card
- Seller may not accept credit cards
- Your credit limit may be too low to pay the full amount
- You may have to pay an extra fee for using a credit card
- Your credit history may not be good enough to get a credit card with a long 0% interest period (or a high emough credit limit)
- The interest on your card will go up once any 0% period ends
Best credit cards for buying a car
The best option when buying a car with a credit card will likely be a 0% purchase credit card. The important features to look out for will be the length of the 0% purchase period and the credit limit. The credit limit will need to be high enough to cover the price of the car, while the 0% period will need to be long enough for you to clear your balance before it ends. The best way to do this is to divide what you owe by the number of 0% interest months on your card and pay that amount each month.
Our ‘Compare the Best 0% purchase credit cards’ article features the credit card with the longest 0% interest period.
Alternatives to buying a car with a credit card
A credit card is not the only option when it comes to buying a car. If you have the money, you may find that it is easier to pay for your new vehicle upfront. Alternatively, there are a few different potential borrowing options if you want to split the cost into multiple monthly payments, rather than one lump sum.
Our article ‘Buying a car: what are the best finance options?’ covers the alternative payment options that you can explore.
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