How To Purchase A Car On A Credit Card

John Ganotis

John Ganotis | Blog

Aug 27, 2014 | Updated Oct 25, 2016

This article was written by my sister, Ann Ganotis, who wanted to share her recent experience buying a used car from a dealership with a credit card. Ann is a business analyst in Brooklyn, NY and former insurance underwriter who worked at a car dealership during college.

Making large purchases on a credit card can be a great way to earn rewards. I recently purchased a car and paid with a credit card, rather than take the dealer’s financing plan or a bank loan. The options for payment at most car dealerships are either cash, paying with a cashier’s check (most dealers do not accept personal checks), taking the dealer’s financing, or paying with a credit card.

Paying With a Credit Card

There are multiple reasons it makes sense to pay with a credit card, as long as you will be able to pay the bill in full. Paying with actual cash can be impractical, and you will not get any rewards. If you decide to pay with a cashier’s check, many banks charge a small fee for issuing the check, and as with cash you will not get any rewards. If you pay with a credit card, however, you can earn airline miles, cash back, or other whatever type of reward your card offers. Since a car usually costs a significant amount of money, you’ll probably be earning a substantial reward. For example, if you are purchasing a $20,000 car and your card pays 1% cash back on your credit card, you earn $200 in cash back.

In my circumstance, the price of my car was just over $25,000. I put $10,000 on my Gold Delta Skymiles® American Express and the remainder on my BankAmericard Cash Reward™ card. I ended up earning miles on my Sky Miles card, and got $165 dollars in cash rewards from the BankAmericard, since they give a 10% bonus for redeeming the rewards into a Bank of America checking account, like I did.

There are a few steps I recommend taking if you plan on doing this to make sure it goes smoothly. The most important thing to keep in mind, though, when buying a car on a credit card, is that you have the cash on hand to pay the credit card bill once it becomes due. If you do not, then it probably does not make sense to use a credit card, since it’s one of the more expensive forms of debt. By financing the car with the dealer, or getting a loan from your local credit union or bank, your interest rates would probably be cheaper than the interest rate on your credit card.

Can you buy a car with a credit card?

Yes, it is possible in some cases, but consider these three things first.

1) Check with your dealer

Check with your dealer to make sure they will let you pay on a credit card. Also, check to see what types of credit cards they accept. If you are determined to pay for your car with a credit card, you need to be willing to walk away and find a dealer that will let you use a card.

2) Know your credit limits

Figure out what your credit limit is on each of your credit cards, and decide if you can pay the full amount on one card, or how to split the payment among multiple cards while maintaining a good utilization ratio. If you do not have a high enough limit to pay the full amount with credit cards, you could always put part of the balance on a credit card and then pay the rest with a cashier’s check or other form of payment.

You can also try contacting your credit card companies to ask for an increase on your credit limits.  In my case I had a $12,000 limit on my American Express card and a $10,000 limit on my BankAmericard.  I did not have enough credit to make the full purchase. I first contacted American Express to see if they would increase my credit line.  They would not, because I had just received a credit limit increase within the last 6 months. I then called Bank of America and asked them to increase my credit line to $16,000. They increased it for me on the spot.  They did say sometimes it takes a few days for the credit line increase to be approved, so make sure not to wait until the last minute to try this.

3) Mitigate risk of card denial

Notify your credit card companies that you will be making a large purchase.  There is a chance when you make a large purchase out of your normal spending habits that it could be flagged as possibly fraudulent, and the transaction will be declined.

I first called Bank of America’s fraud department. They told me there was nothing they could do to stop the transaction from being declined, but gave me a number to call in case it was. I then called American Express and they told me it would be no problem, and that I would be able to make my purchase in confidence. I didn’t have any trouble with either card when I got to the dealership, and was able to drive home with a new car while earning cash back and airline miles!

Want to get a rewards credit card now?

Browse rewards credit cards on our partner’s site below.

Rewards Credit Cards

  • Earn rewards with your everyday spend, and get a little closer to your next vacation.
  • Use rewards to book hotels, air travel, gift cards, or to cover travel expenses like Uber.
  • Loyalty pays off — earn additional rewards when you use your card to book a qualifying trip with your favorite hotel or airline.
  • Enjoy additional travel perks like travel insurance, waived foreign transaction fees, and airport lounge access.
  • Terms vary by partner offer. Please see each bank’s application for terms and conditions.
  • Clicking Apply Now will take you to CreditCards.com where you can compare Travel Rewards cards from participating partners.

Apply Now!

Was this helpful?
  • Don Major

    Easy peasy. And most dealers allow it!

    I always put as much possible on my credit card. No matter what, I at least put the down payment on the card.. points, baby! My most recent car (2015 camry) I put $5000 on my card and the rest in cash. My insurance is on my card ($25/month from InsurancePanda), gas is always on my card, tolls always on card, and even registration I was able to put on my card here in MA. Again… points, baby!

    I actually put my wedding on a Marriott credit card….and it was at a Marriott, so points galore. Although lesson learned, they cap out the 3/1 bonus and total points at 25k for banquets and such…..so unfortunately everything you spend over 8kish doesn’t get the bonus (or something along those lines…..I just remember be happy and mad at the same time).

The Insider

John Ganotis
Two free rides from 11 US airports from Uber and American Express
John Ganotis | Nov 16, 2016

Read More
Brendan Harkness
Review of the Best Western® Rewards MasterCard®
Brendan Harkness | Oct 21, 2016

The Best Western Rewards MasterCard provides 13 points for every dollar you spend with Best Western, along with a variety of extra perks and benefits.

Read More
Brendan Harkness
Review of the Upromise® World MasterCard®
Brendan Harkness | Sep 28, 2016

The Upromise World MasterCard offers up to 10% cash back at select retailers, and you can redeem your rewards directly to your college fund or student loan.

Read More

Trusted Credit Information

Putting People First, Always.

We are advocates of the responsible use of credit, building and managing your credit history, and making informed decisions when selecting a credit card.