Can I use a credit card to buy a car?
Yes, you can purchase a car with a credit card and this is the preferred choice by around 1 out of every 20 motor purchases in the UK. Buying a car in full or in part with a credit card can have its advantages, especially if you can access a 0% interest credit card or can collect points and air miles.
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- 1 year ago
Around 90% of people will purchase a new car on finance, but the rates you pay each month can depend on a number of factors. In many cases, two people going into a car dealership to buy the same car can often come out with two different prices. From negotiating and buying at the right time, Quick Car Finance offers its top 10 tips to save money on car finance.
1. Can You Use a Credit Card to Buy a Car?
Yes, you can purchase a car with a credit card and this is the preferred choice by around 1 out of every 20 motor purchases in the UK.
Buying a car in full or in part with a credit card can have its advantages, especially if you can access a 0% interest credit card or can collect points and air miles.
However, not every dealership will accept a credit card as a form of payment and you may wish to explore other types of finance to keep your options open.
2. The advantages of buying a car with a credit card
0% interest – If you have access to a 0% interest credit card and are able to buy the car outright, you could end up with a very low cost way of buying a car and you will simply only be paying for the vehicle and no finance on top.
0% interest credit cards may be available for new card customers as introductory offers such as 18 to 36 months or as part of a transfer card where you get zero interest for a period of time.
Protection – If you spend up to £30,000 using your credit card, you will be protected via the Consumer Credit Act 1974, which will cover you for any losses. This can give you peace of mind in the dealer goes out of business before delivering your car or if there is something defective with the vehicle.
Cashback and air miles – For people looking to collect air miles or nectar points when they spend through their credit card, a vehicle is a large purchase and will likely translate into good rewards such as free flights, hotel stays and more. Or if you have a credit card that offers cash back, even at just 1%, a £20,000 purchase on a card will offer £200 back into your bank account.
There are credit card products specifically for ‘large purchases’ and there are several perks, such as nectar points, rewards and the ability to spread repayment on low interest.
3. The disadvantages of buying a car with a credit card
Credit limit – One potential issue with buying a car with a credit card is that you may be restricted by your credit limit - since a car purchase may cost £10,000, £20,000, £30,000 and not everyone has access to this each month on their credit limit. Sometimes a very high credit limit is only be available to people with very good credit scores or very high incomes.
Your dealer may provide an option to use multiple credit cards to split the payment, or pay part by credit card and savings, or a combination of credit card and finance – but this might become a lot to manage.
Less Fees - Whilst a 0% interest credit card is first choice, this is not the case with every credit card you get and whilst credit cards are typically free if you pay them off on time (or you have to pay an annual membership fee), the rates of any late repayments can often be high at 16% to 30% APR.
Not accepted by many dealers – Car dealers typically do not encourage purchasing vehicles with credit cards, often preferring to sell you car finance deals. So whilst buying a car with a credit card is possible, you may need to seek out the right dealer to make this happen.
4. Is buying a car with a credit card right for me?
- You have a zero-interest or low interest credit card
- You have a high credit limit
- You can earn rewards and points through your credit card provider
- You want to own the car outright
- If you have a low credit limit and cannot afford the car
- If you want to change cars every few years (PCP or leasing may be better)
- If you think you will struggle to keep up with payments
A key consideration is whether you want to own your vehicle outright. Some motorists prefer to change vehicles every 3 or 4 years, which a PCP deal is perfect for. If you are unsure about the vehicle and want to change quickly, you will have less options if you have used a credit card and purchased the vehicle outright.
5. What other options are available?
Quick Car Finance offers 48 different tiers of car finance including:
Personal Contract Hire (PCP) – Pay a deposit of around 10% to 20% and pay monthly repayments with the option of a balloon payment at the end of the loan term if you wish to own the vehicle outright.
Hire Purchase (HP) – Pay an initial deposit and make monthly payments; and you will own the vehicle outright at the end of the loan term.
Personal Loans – This is an unsecured loan which is transferred to you or the dealership, usually for most or the full loan amount. This is usually the cheapest form of vehicle finance and you will own the motorhome at the end of the contract.
If you are looking to purchase a car with a credit card, this is something that we can assist with at Quick Car Finance. You can check your eligibility in just 5 minutes using this link provided.
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