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Can you buy a car with a credit card? Here’s what you need to know to drive a hard bargain

Dec. 28, 2019
7 min read
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Using a travel credit card to earn rewards for purchases you'd be making anyway is a great way to defray the cost of your next vacation, as long as you pay off your balance in full every month. It can even make sense to pay an extra fee (using services like Plastiq) to pay rent, mortgage or taxes with a credit card when you're working toward meeting a card's minimum spending requirement.

In the past, TPG readers have asked if you can use a credit card to buy a car. The short answer is, yes, but it's not exactly that simple. There are a handful of factors to consider before you pull out the plastic to pay for your next ride. Before you swipe or tap, make sure it's a good deal because getting a good price on the car is more important than earning rewards for the purchase. However, using credit cards for large purchases is a good way to stack up rewards, so let's look at when it makes sense to do just that.

Can you buy a car with a credit card?

Before you put a five-figure purchase on your credit card, you'll want to have the cash available to pay off your card in full. Otherwise, you'll end up paying an interest rate many times higher than what it would cost to finance the vehicle. The one exception to this is opening a card with a 0% APR offer. Be sure that the 0% offer applies to new purchases because there are usually fees (3%-5%) associated with balance transfers.

Buying a car with a credit card might take some legwork. For example, TPG Loyalty and Engagement editor Richard Kerr paid for a $40,000 car with The Platinum Card® from American Express, but he haggled with five dealerships before he found one willing to play ball and allow him to use his card for the full purchase price. However, if you're charging a smaller amount on your card (to pay for the down payment or a portion of the car), you'll find more dealers willing to accept that deal.

Many dealerships are hesitant accept large credit card payments because of the process fees (up to 3%) they pay when you use a card. This is something to keep in mind when you're working out the purchase price. One strategy is to negotiate a price you'd be willing to pay for the car before you mention paying with a credit card, which, in turn, might invite another round of negotiations.

I'm more comfortable going for the low-hanging fruit (charging a portion of the payment). It can be worth it to pay some extra fees if you're going to earn a big introductory bonus that's worth many times what you'd pay. You might even be able to split a large payment across multiple cards and meet several minimum spending requirements at the same time.

Which credit card to use

If you want to keep it simple, you should take advantage of the American Express Auto Purchasing Program, which connects card members to 10,000+ dealers, who are willing to accept an Amex card for at least $2,000 of the purchase price. Check out this review of the Amex Auto Purchasing Program to learn more about when you should and should not use the program. This is a good choice if you don't want to bother with haggling at the dealership.

Once you have your dream car in sight, you'll want to get the most bang for your buck. Usually that means putting the purchase on a newly-opened card so you can earn its introductory bonus offer. But if you haven't recently been approved for a new card or two, then use a card that either:

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  • Earns bonus points for the purchase


  • Has valuable ongoing rewards for meeting spending requirements

If you want to earn the most value for your purchase, you should earn transferable points, such as Amex Membership Rewards or Chase Ultimate Rewards. The Blue Business® Plus Credit Card from American Express earns 2x Amex points on the first $50,000 in purchases each calendar year, then 1x. So it's a solid choice, but right now, The Business Platinum Card® from American Express has a welcome bonus of 120,000 Membership Rewards® points after you spend $15,000 on eligible purchases with the Business Platinum Card within the first three months of card membership. A large purchase is a great way to not only earn the introductory bonus, but the Business Platinum card also earns a 50% bonus (1.5x Amex points) on eligible U.S. purchases of $5,000 or more (up to 2 million bonus points per calendar year).

With the Chase Freedom Unlimited® or Ink Business Unlimited® Credit Card, you earn an unlimited 1.5% back on purchases. Although these cards are technically cash-back credit cards, the cash back is earned as Chase Ultimate Rewards points, which can be redeemed for various rewards at a rate of one cent each. However, if you move your points from either of the Chase Unlimited cards to the Chase Sapphire Preferred® Card, Chase Sapphire Reserve® or Ink Business Preferred Credit Card, they can be transferred to Chase's 10 airline and three hotel partners.

The other option for maximizing your purchase is to use a card that will earn you valuable perks for hitting spending thresholds. If you're trying to earn Delta elite status, the Delta SkyMiles® Platinum American Express Card and Delta SkyMiles® Reserve American Express Card both earn Medallion® Qualification Miles (MQMs) for hitting high spending thresholds in a calendar year. Or you could pick up a weekend getaway at a luxury Hilton property with The Hilton Honors American Express Business Card. Each calendar year when you spend $15,000 on the card you'll earn a free weekend night and you'll earn a second free weekend night when you spend an additional $45,000 on the card ($60,000 in total) in the same calendar year. Plus, you'll earn Hilton Diamond status after making $40,000 in purchases during any calendar year.

Bottom line

Buying a car with a credit card can be an excellent opportunity to earn tons of bonus points or to hit spending thresholds that unlock rewards, like free-night awards. But not every dealer will accept credit cards and those who do will charge you more to cover their card processing fees. So getting the best deal and earning rewards at the same time can take a good amount of negotiating.

If haggling for a car isn't your thing, make it easy on yourself by taking advantage of the Amex Auto Purchasing Program, which connects Amex cardholders to more than 10,000 dealers who allow you to put at least $2,000 of your car purchase on your Amex card. Some of these dealers will even agree to put the entire purchase price on your card, but again, it's likely they will add the extra card fees into the final price. But paying a bit extra in fees can be worth it if you're earning rewards that are worth much more than the fees.

Editorial disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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