While a majority of Americans buy second-hand cars by taking out an auto loan, there are several other ways to finance this purchase. With that in mind, can you buy a used car with a credit card?
You can buy a used car with a credit card, but you’ll need to find a dealership that accepts credit cards. While a credit card allows you to purchase a pre-used vehicle without taking out a loan, you will need a higher limit and enough available resources to cover all the costs.
Buying a car with a credit card has its pros and cons, so make sure to carefully consider all your options before deciding how you want to finance your purchase.
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Yes, You Can Buy a Used Car With a Credit Card
You can buy a used car with a credit card as long as the dealership accepts credit card payments. In fact, the process is not that much different from buying a car with cash. The dealership will ask for your card number and billing address and bring out the paperwork for you to sign.
There are many benefits to buying a car with a credit card. For starters, you can purchase a new or used vehicle without providing proof of income, meaning you do not have to go through the hassle of getting an auto loan from the bank.
Once you find a dealership that offers the car you want, you can negotiate with them just as you would on other occasions. Simply choose a payment amount that fits within your budget, and don’t be afraid to negotiate for a lower price if the initial offer isn’t acceptable.
A Few Things to Think About Before Swiping the Card
You will need to make sure your credit card has a high enough limit to cover the sales price of the car plus all taxes and other fees charged by the dealership. If the limit is too low, the credit card company will simply deny your purchase altogether.
Another thing to keep in mind is that the interest rates offered on credit cards vary for each cardholder and are based on their credit history at the time of application. More importantly, these rates can change daily until you pay off your purchase.
If you fail to pay the bill on time, you are subject to whatever credit card rates and fees are offered by that particular lender. This can be anything from a late fee (usually $25-35) all the way up to and including interest charges and rate changes, which can happen after 30 days of failing to pay.
What to Consider When Buying a Used Car With a Credit Card
There are many things to consider before buying a second-hand car with a credit card, so it’s crucial that you do some research beforehand. Most importantly, you need to know exactly what you will be paying and the general terms that come with those payments.
This way, there is no doubt whether or not you can afford the car and how long it’ll take for you to pay it off. To fully understand what sort of payments you’ll be making, think about the following factors:
- The credit card’s interest rate – Although interest charges are typically reasonable, these can still be relatively high on some cards. If you are looking at cars under the $20,000 range, then lower rates may be available at any given time. Check your monthly statement to see what kinds of special offers are available.
- The car loan’s annual percentage rate (APR) – While most dealerships will advertise 5-6% interest rates associated with car loans, it’s important to check what the dealer or lender is actually giving you.
- The length of the loan – The longer the car loan term, the more interest accumulates over time. However, this may vary depending on whether or not you choose an adjustable or fixed rate for your loan. Not all credit cards offer long terms, though, meaning you’ll often come across one-year terms.
- Additional fees – Learn more about other costs that are added to your statement. These charges may all be included in a single number when looking at the total cost of buying a car using a credit card.
- The down payment amount – Some credit cards may not require a down payment, while others might, so it’s crucial that you get this information beforehand.
- The monthly car payment amount – This balance may vary depending on several factors, including how much you can put down for a down payment and who your lender is.
- The card’s grace period – A grace period allows you a certain amount of time without having to make payments on your credit card before interest is added to your account. Depending on the credit card company, this can be anywhere from 21 to 30 days.
If you are unsure of the exact monthly payment you will be making, it’s highly recommended that you call your credit card company and ask for an estimate before actually signing any paperwork at the dealership.
No matter how much you like a particular car, only purchase it once you’re completely sure the monthly payments won’t be too expensive. This way, you can avoid getting into debt over a new car and keep yourself on track financially.
Which Cards to Use When Buying a Used Car?
If you’re looking to finance a used car with a credit card, then you’ll want to use a card with a high credit limit. This will ensure that you have enough room on your card to cover the cost of the car and any other expenses that may come up during the purchase process.
You should also look into cards that have purchase protection deals, such as car rental insurance and extended warranties. Even if you’re planning to buy a used car with cash, these are still valuable features. They can help protect your investment should anything go wrong once you’ve bought it.
Some cards also provide you with special reward points for specific purchases, which can help you cover the money needed for the down payment. Now, let’s take a closer look at some cards that provide the best terms and benefits.
| Credit Card | Terms and benefits |
| U.S. Bank Visa Platinum | 0% Intro APR for 20 months on purchases and balance transfers |
| Capital One Quicksilver Cash Rewards | $100 online cash bonus after spending $500 on purchases within first 3 months after opening an account |
| Chase Freedom Unlimited | $150 bonus after spending $500 on purchases in your first 3 months from account opening |
| Chase Sapphire Preferred | auto rental collision damage waiver |
| Chase Slate | 0% Intro APR for 15 months on purchases and balance transfers |
What Are the Best Ways to Buy a Used Car Besides Using Credit Cards?
If your credit card doesn’t allow you to finance the entire cost of the used car, there are a few different options you can use. For starters, taking out a personal loan will allow you to get a lower interest rate, and you’ll have a fixed monthly payment.
Another option is to use a car loan from a bank or credit union. This will typically have a lower interest rate than a personal loan, and you can often get a longer repayment period. Credit unions, in particular, often focus on providing low-interest loans to members.
You can also consider borrowing from family or use cash or a check to make the purchase. Be sure to discuss all of your options with your financial adviser before deciding what to do.
Consider All the Factors and Make a Decision That Suits You Best
While it is possible to finance a used car with a credit card, there are several things to consider before making this type of purchase. By understanding the pros and cons of using a credit card to buy a car, you can make an informed decision about what is best for your unique situation. Ultimately, the choice to use a credit card or not will depend on the individual’s financial situation and preferences.
