Sunday Reader Question: Is It Possible to Buy a Car Using a Credit Card to Maximize Points?

by on October 7, 2012 · 27 comments

in Credit Cards, Sunday Reader Questions

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TPG reader Rob asks: “Are there any creative ways to pay for a new or used car with a credit card – i.e. say you want to pay cash for that new Volvo SUV, or the new BMW, or Chevy or Audi for that matter, is there a way to pay for the entire purchase on a points-earning credit card (assuming you have the credit limit)?”

In short, most car dealerships accept credit cards and thus it is possible to use a card for a portion or entire purchase. However, dealerships have to pay a fee (usually around 3%) to the credit card issuers for accepting your payment, so expect them to build that into the purchase price. If you negotiate an amazing deal and then ask to put it all on a credit card, expect some major resistance. However, if you are paying top dollar for a car that isn’t being discounted, your leverage point can be that they have to accept a credit card for the entire purchase. If the dealership is making a lot of money off of you (especially with used cars) you can expect them to play along more. Clearly they will want you to pay as much as possible in cash, but if they think you will walk away if you can’t put it on a credit card, they will be much more willing to eat the credit card processing fees.

So I basically recommend going in and negotiating the absolute best price that you are comfortable with – and then let them know you need to put X amount on the credit card. That way, you know you got the price you were comfortable paying cash and anything you can put on credit card is a bonus and not just built into the price of the car.

Feel free to comment about your successes/failures trying to pay for cars with credit cards!

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

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  • LonePalmBJ

    I bought a car recently and pretty much followed the advice above – I let them know during the sales process that a credit card was part of the equation. They didn’t like it of course, but we were able to agree that I could put $5K on the card at close. That, plus an additional $1K reservation deposit I had made originally let me funnel $6K through my Delta Reserve Amex. That’s 20% of the threshold for the $15K MQM bonus right there! My original hope was to put $20K on the card, but I’m pleased with how it worked out.

  • John Yarber

    I purchased two new cars in the past year. Even though I was putting down $10k for both cars, both dealerships had a $5k limit on what could be put on the credit card as far as the car’s purchase price was concerned. However, any other extras I purchased, such as tire hazard protection, could be put on the credit card instead of being rolled into the financing. Both dealerships told me they could not do more than $5k because they were not allowed to let you use credit to buy a car on credit. Perhaps it would be different if you had outside financing instead of financing with the dealer directly.

  • edy4eva

    It’s a similar story in Australia. When I bought my car I was able to charge $3k on the credit card (which was about 10% of the purchase price) but the sales rep (a friend of a friend) said any more than that and he’ll into trouble with his boss.
    Also when buying a Hyundai with a friend I was able to put $5k out of the $14k price. They were pretty strict about it though and made us feel that they’re doing us a big favour.
    I once read someone’s story wanting to buy a BMW (around $80k) and insisted he’d pay out the full amount on his credit card but the dealer refused. The buyer being a lawyer then threatened with legal action. In the end they accepted to put something like $25k on his credit card. Sorry can’t remember the source as this was few years ago.

  • msp2anywhere

    During the small talk, I mention that I’m willing to finance through the dealer, which is to their advantage as most (if not all) dealers receive a kick-back of some sort on financing. I pay off a few days after purchasing.

    I wait to mention the credit card downpayment until we’re in the closing office and the final out the door price has been established. By then, they have arrived very close to their ‘rock bottom’ number, and (hopefully) haven’t padded in an amount to offset the expected cc charge. Last time the limit was $5k.

    For our next car, however, we might just be paying with money orders… :)

  • Timmac

    My wife just bought a Mercedes 250SLK. she got a VERY good deal. The dealership let her put 6K of the purchase price on the card. She had negotiated a price well below dealer cost, so this was the best she could do. (It was their last 2012 and they wanted to get it off the floor.)

  • Tim

    Last year we managed to buy a $26K VW Jetta entirely on a credit card. The first $5K the dealer let us do with no fee, but the remainder they made us pay 3% extra to cover their costs. This was when the chasee AARP visa was offering 5% off on all purchases, so we cleared 2% on the $21K balance. The dealership thouht we were a little crazy and seemed genuinely concerned we ddidnt know what we were doing. but we saved a total of $670.00.

  • RakSiam

    When I bought my first MINI they let me put the deposit on a credit card and then when I picked the car up they let me put a few thousand more on the card but that was the most they would do. I wrote a check for the rest. But since it was an ordered MINI and they basically were getting sticker price for them in those days, they still came out way ahead I am sure.

  • Independent Pea

    I just purchased a new electric Prius and used a broker. The price for the car was pretty standard, as it was an electric and not too many in the dealerships. The broker was able to negotiate (since very little of the transaction was negotiable) $9,000 on my credit card. This was the bomb because I just received my British Airways Visa for which I can earn a free companion tix of any class with a year’s expenditure of $30K on the card. The $9,000 went a long way! They did not charge me a fee for the use of the card and I had shopped around a lot, and felt that they gave me the best deal, sans use of the card, so the 9,000 felt like a great bonus.

    Also, I financed the car through my credit union and have since called them to see if I can pay the car off early using my credit card. They allow monthly payments via credit card and indicated that I could add to the payment by up to $1,000 or so only – all can be put on the card, but there is a $10 service fee for each time I do it. They did not allow full payment of the loan via credit card, just that little work-around. I may do a few for the $10 fee if I am close to my one year mark on the Visa card and need to make it to the $30k expenditure limit.

  • Jim Williams

    I guess I have thought a time or two about putting a car on it, but cars don’t matter much for us….Thus our $5000, 2002 Passat, and a 2002 Dodge minivan. Cool, hardly!

    BUT, as I usually buy equipment for our office, (most of the instruments cost about $30,000 on average, I try to use cards as much as possible. I had a lease payment for a startup loan and an instrument charged to my AMEX (for no extra charge). The total of these payments were about $2500 per month. Thus, I racked up the Membership Rewards points very quickly. I try to run as many business expenses through my AMEX/Chase United cards as I can.

    Unless I get a cash discount for prompt pay, and that’s another story. I try to earn at least 10 – 20K points across the plans per month.

    How else can one afford to take 3-4 kids on holiday!!

  • Esmarts

    My mom bought a Mercedes and the dealership said they had a deal with AMEX where they would allow you to put the entire purchase price on AMEX. I already had the AMEX Platinum (thanks to a deal posted here) which I switched to the MB Platinum (at no extra charge) and I got 5 points per dollar. All in all I racked up 250k points with this purchase. It helped sweeten an already great deal.

  • Lori Gilliar

    Not in the state of California, unLess the dealer doesn’t mind skirting the law. In CA there is no cooling off on auto purchases and paying in full on a CC, where you can file a dispute, would fly in the face of said law.
    Dealers also should maintain a clear policy regarding how much they will allow a consumer charge, lest a buyer who is denied charging as much as another buyer decide to file a discrimination suit.

  • Lively

    My data point: We bought a Prius for our daughter in high school 2 months ago. They were willing to let us put $3K on a credit card.

  • Tom Webster

    I used my American Express when I purchased my VW Passat. The dealer had a cap of $5,000 to the card but I was ok with that.

  • rob

    Just bought a new toyota full amount on AMEX no added fee.

  • Jimgotkp

    Too hard to believe considering the MB Plat doesn’t give you the bonus for leases/purchases only if you do service or purchase items through them.

  • Jimgotkp

    I was able to get $5K at a Lexus dealership (WA) and $4K at a Honda dealership (NJ).

  • Steve

    My Audi dealer allows $5K of the purchase price to paid with plastic. I’ve taken advantage of that twice.

  • guest

    Can someone explain what exactly concierge service means when talking about the Delta Amex Reserve card? I mean, more than just renting a car or getting a dinner reservation for me… right?

  • Liz

    Great idea! Especially paying with a travel rewards card!

  • skdelta

    [My previous detailed message seems to have gotten lost in disqus, so here's a brief version]
    Does anyone have experience using ? E.g., did it work without hassles? Did the dealers on the list (e.g. some Boston-area Honda dealers are on the list, others are not) provide a competitive price to dealers not on the list?

  • thepointsguy

    Yea- its nothing really special

  • Timdrosnes

    We bought a Toyota a few years ago in Oregon and were told that state law limits the amount to $3000 to be put on credit cards for auto purchases. I think different states have different regulations like this.

  • Jerry

    I put the down payment of Mazda (MD) on my credit card.

  • John

    I purchased a car in California over the past weekend and was limited to the $5k limit like so many others. I told them while filling out the final paperwork and the salesman didn’t seem to have a problem with it. It was nice to clear the SPG Amex and AA Visa spending minimums in one night.

  • Brian

    Technically they are in violation of their CC agreement. That agreement essentially states that there is no min or max limit (provided the customer has the available credit). Company policy cannot trump that. Its just one of those things that for the individual is too tough of a fight. As often is the case being right/correct in an arguement doesn’t mean you will win. Ultimately, I’m not sure the CC company would come down on your side as that dealership likely generates in one month more money for them than you do in a year of purchases. Remembering that compensation always dictates behavior which side of the argument do you think they will come down on even if it violates their own rules.

  • anon

    Amex has special relationship with certain dealers and therefore are allowed to buy at those dealers only with an amex ideally mb platinum at no markup.

  • skwok

    I am in the process of buying a used car and the dealer was only willing to do up to $3k on a credit card.

    In some states, there are no early payment penalties when you finance the car so if it is a large payment, you could finance it and then pay it all off on the next month or two on a cc. However, watch out for those finance charges and interest, but it should be minimal only after a month or two.

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