Guide
Can I buy a car using a credit card?
We look at your options when it comes to buying a new car using a credit card, and whether it's worth considering.
Words by: Andrew Woodhouse
Last updated on 31 July 2024 | 0 min read
Using a credit card to fund the purchase of a new car is less common than taking out a personal loan, or using car finance options like Personal Contract Purchase and Hire Purchase.
That said, it can be worth considering – especially if you can get a 0% APR credit card and pay it off on time. Here, we look at when and where you can use a credit card to buy a car. If you’ve never owned a credit card, we encourage you to properly research the pros and cons, plus any fees associated, before you commit to one.
That said, it can be worth considering – especially if you can get a 0% APR credit card and pay it off on time. Here, we look at when and where you can use a credit card to buy a car. If you’ve never owned a credit card, we encourage you to properly research the pros and cons, plus any fees associated, before you commit to one.
Can you buy a car using a credit card?
It is possible to buy a car using a credit card. Doing so can offer you extra protection and, in some instances, it can prove cheaper than some other finance options.
There are, however, a number of caveats. You probably won’t be able to buy the car outright using just a credit card as there are limits in place. You’ll need a high credit rating and a high limit on your credit card. You’ll also need to check whether your preferred dealership accept credit cards at all. And even if the dealer will let you pay on card, it’s possible your credit card company won’t: some companies have a limit on the value of an individual purchase (usually £5,000), so check the contract before you sign up for a card.
There are, however, a number of caveats. You probably won’t be able to buy the car outright using just a credit card as there are limits in place. You’ll need a high credit rating and a high limit on your credit card. You’ll also need to check whether your preferred dealership accept credit cards at all. And even if the dealer will let you pay on card, it’s possible your credit card company won’t: some companies have a limit on the value of an individual purchase (usually £5,000), so check the contract before you sign up for a card.
Why pay for a car using a credit card?
Paying for a car using a credit card isn’t straightforward, so why do people do it?
In some cases, credit cards allow you to take advantage of special offers and low introductory rates. This relies on you having a limit to cover the whole car and meeting minimum monthly payments, however, so check your limit and monthly budget as you investigate. Credit card payments are typically lower than other finance agreements, though it may mean it takes a lot longer to pay off the debt.
In some cases, credit cards allow you to take advantage of special offers and low introductory rates. This relies on you having a limit to cover the whole car and meeting minimum monthly payments, however, so check your limit and monthly budget as you investigate. Credit card payments are typically lower than other finance agreements, though it may mean it takes a lot longer to pay off the debt.
Credit card protection when buying a car
If you spend between £100 and £30,000 (just remember, it’s rare to get a credit card limit over £5,000), you get extra protection as a consumer through the Consumer Credit Act.
Under Section 75 of the Consumer Credit Act, your card provider should share responsibility with the company you paid for goods or services. This means they could provide you with a refund. There are, however, a number of caveats to this, so make sure you research properly before you commit. You may find that you’re still covered for the full amount even if you just pay the deposit using your credit card. For example, if you buy a car from a company that goes bust before delivering the car, you won’t end up out of pocket.
Under Section 75 of the Consumer Credit Act, your card provider should share responsibility with the company you paid for goods or services. This means they could provide you with a refund. There are, however, a number of caveats to this, so make sure you research properly before you commit. You may find that you’re still covered for the full amount even if you just pay the deposit using your credit card. For example, if you buy a car from a company that goes bust before delivering the car, you won’t end up out of pocket.
Should I pay for a car on a credit card?
As with anything, there are pros and cons to paying for a car with a credit card. Make sure you research properly before you commit. Speak to your bank about repayments, double check your budget and make sure you can afford the repayments. Consider all your options before you commit to one, and always check the small print of a contract before you sign.
Pros of paying for a car using a credit card:
• You may be able to take advantage of special introductory offers like 0% interest for a period of time.
• Some cards may offer rewards. • You may get extra protection through the Consumer Credit Act when buying on credit.
• Some cards may offer rewards. • You may get extra protection through the Consumer Credit Act when buying on credit.
Cons of paying for a car using a credit card:
• Not every dealer is prepared to accept payment on a credit card.
• Even if they do accept cards, they may not let you pay the full amount on one. • Dealers may charge a surcharge for paying using a credit card. • Interest rates can be high, especially after an introductory offer ends. • Not everyone will qualify for a high credit limit, or a 0% card
• Even if they do accept cards, they may not let you pay the full amount on one. • Dealers may charge a surcharge for paying using a credit card. • Interest rates can be high, especially after an introductory offer ends. • Not everyone will qualify for a high credit limit, or a 0% card
Do car dealerships accept credit cards?
Not every dealership will accept credit cards, and even those that do may not let you put the full amount on a card. Dealerships may also charge a card handling fee, which could be up to three percent.
If you’ve seen a car you like, contact the dealership to discuss your options. Contact details are available in the Auto Trader advert.
If you’ve seen a car you like, contact the dealership to discuss your options. Contact details are available in the Auto Trader advert.
What if a car dealer won’t accept credit card?
If the dealership won’t accept credit card as a method of payment, but you’ve got your heart set on the car – investigate a loan or finance deal to make monthly payment.
How paying for a car with a credit card works
Given the size of the purchase, you may need permission from your card provider to buy a car on your credit card.
Once you’ve got permission, speak to the card provider about payment plans that suit you. You’ll have to pay off your credit card debt each month, and make sure you’re covering the minimum monthly payment at least. Consider setting up a direct debit to make the monthly payments. Buying a car on a credit card is the same as buying anything else on a credit card. The credit card company pays the full amount up front, then you pay the credit card company back over the subsequent months. You’ll normally pay interest on the outstanding amount, but you’ll need to check the terms and conditions of your contract to confirm. As mentioned above, many dealers won’t accept a credit card, and those that do may have a limit on how much you can pay by card. You may therefore have to pay some on credit card and some via cash, or another method of payment.
Once you’ve got permission, speak to the card provider about payment plans that suit you. You’ll have to pay off your credit card debt each month, and make sure you’re covering the minimum monthly payment at least. Consider setting up a direct debit to make the monthly payments. Buying a car on a credit card is the same as buying anything else on a credit card. The credit card company pays the full amount up front, then you pay the credit card company back over the subsequent months. You’ll normally pay interest on the outstanding amount, but you’ll need to check the terms and conditions of your contract to confirm. As mentioned above, many dealers won’t accept a credit card, and those that do may have a limit on how much you can pay by card. You may therefore have to pay some on credit card and some via cash, or another method of payment.
0% APR credit card finance
Buying on a credit card could suit people who don’t need credit.
If you’re eligible to a 0% credit card and can afford to pay off the full amount immediately, or make the payments within the period of any 0% special offer you may qualify for, you won’t pay any interest but you’ll still get all the benefits, such as extra consumer protection, as well as any cashbacks or promotions the credit card company are running at the time. Most people won’t qualify for a 0% credit card, and the average credit card APR in the UK is 35.49% (as of July 2024) but can be as high as 50%, which is higher than most loans. So always compare your options before you commit – don’t carry on down the credit card route if it looks like an increasingly expensive option. And if you do qualify and secure a 0% credit card – remember most 0% deals only last a couple of years, so if you can’t transfer or pay off the balance by that point, it could prove expensive in the long term. We cover the risks associated with credit cards below, but you should thoroughly research your options and any pros and cons before you commit.
If you’re eligible to a 0% credit card and can afford to pay off the full amount immediately, or make the payments within the period of any 0% special offer you may qualify for, you won’t pay any interest but you’ll still get all the benefits, such as extra consumer protection, as well as any cashbacks or promotions the credit card company are running at the time. Most people won’t qualify for a 0% credit card, and the average credit card APR in the UK is 35.49% (as of July 2024) but can be as high as 50%, which is higher than most loans. So always compare your options before you commit – don’t carry on down the credit card route if it looks like an increasingly expensive option. And if you do qualify and secure a 0% credit card – remember most 0% deals only last a couple of years, so if you can’t transfer or pay off the balance by that point, it could prove expensive in the long term. We cover the risks associated with credit cards below, but you should thoroughly research your options and any pros and cons before you commit.
Important things to consider for your credit card:
If you’ve never had a credit card before, we encourage you to research the pros and cons before you commit to one.
Some things to keep in mind are: • You need to be at least 18 to apply for a credit card, though some cards are only available to those over 21 years old. • The credit card provider will assess your credit rating when you apply. A higher credit rating could improve your chances of getting a credit card, and you may be offered better interest rates. • Conversely, a lower credit rating may mean you are not eligible, or are offered higher interest rates • You’ll need to make at least the minimum payment each month. Missing payments could damage your credit rating. • If you don’t pay off the monthly balance on time, you’ll have to pay interest on any outstanding debt. The interest rate for credit cards can be much higher than on personal loans, so if you miss payments or fall behind, this can add up quite quickly. • You may also have to pay additional fees or penalties for missing a payment or exceeding your credit limit. There may also be annual or monthly fees for using the card. You can learn more on Money Helper, or other resources available online.
Some things to keep in mind are: • You need to be at least 18 to apply for a credit card, though some cards are only available to those over 21 years old. • The credit card provider will assess your credit rating when you apply. A higher credit rating could improve your chances of getting a credit card, and you may be offered better interest rates. • Conversely, a lower credit rating may mean you are not eligible, or are offered higher interest rates • You’ll need to make at least the minimum payment each month. Missing payments could damage your credit rating. • If you don’t pay off the monthly balance on time, you’ll have to pay interest on any outstanding debt. The interest rate for credit cards can be much higher than on personal loans, so if you miss payments or fall behind, this can add up quite quickly. • You may also have to pay additional fees or penalties for missing a payment or exceeding your credit limit. There may also be annual or monthly fees for using the card. You can learn more on Money Helper, or other resources available online.
