The best credit cards for purchasing a car
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Purchasing a car is a big investment with terrible returns. In nearly all cases, unfortunately, cars are depreciating assets and you won’t see that money again. However, you can help take that sting out by putting your vehicle purchase on a credit card to earn valuable points and camiles. Large purchases such as a new car are a great way to hit minimum spending requirements for a credit card sign-up bonus or airline elite-qualifying waivers.
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If you’re considering purchasing a car with a credit card, here is everything you need to know.
Best cards for buying a car
Annual fee: $550 (see rates and fees)
Rewards when buying a car: 1x
Why it’s a good choice: The Amex Platinum Card is built for large purchases such as a new vehicle in part because it doesn’t come with a preset spending limit. While this doesn’t mean you have unlimited funds available, you’re more likely to be able to charge a larger purchase to the Amex Platinum versus a card with a lower, set credit limit.
Also keep in mind that American Express has a vehicle purchasing program that aggregates dealerships that will accept your American Express card. However, the description of the program says “All participating Certified Dealers on the site accept the American Express Card for at least $2,000 and up to the full purchase price.” So you may not be able to put your entire vehicle purchase on the card. Again, be sure to give the dealership a call ahead of time to maximize your card.
Annual fee: $595 (see rates and fees)
Rewards on car purchases: 1.5x on purchases over $5,000
Why it’s a good choice: The Business Platinum Card from American Express could be an ideal option for a large purchase like a car. For individual purchases more than $5,000, you will earn 1.5x Membership Rewards per dollar spent (up to 1 million additional points per year). On a $5,000 charge, you’d earn 7,500 Membership Rewards points, worth $150 based on TPG’s valuations.
Of course, like the personal Amex Platinum Card, the card doesn’t come with a preset spending limit that helps to make larger purchases more feasible.
Annual fee: $0 (see rates and fees)
Rewards on car purchases: 2x on the first $50,000 spent each calendar year; then 1x
Why it’s a good choice: While the two previous cards both have large annual fees, the Blue Business® Plus Credit Card from American Express does not have an annual fee (see rates and fees). You’ll earn 2x Membership Rewards per dollar on the first $50,000 in purchases each year and 1x per dollar afterward. Membership Rewards points are extremely valuable, as they can be transferred to airline and hotel partners, including Air Canada Aeroplan, ANA MileageClub and more.
Unlike the Amex Platinum cards, you will have a preset credit limit on this card, so make sure you’ll be able to cover the cost without hitting your limit before purchasing.
Annual fee: $0
Rewards on car purchases: 1.5% back on all non-bonus purchases
Why it’s a good choice: The Chase Freedom Unlimited is a great card for earning valuable cash back or Chase points on your new ride. You’ll earn a decent 1.5% back on your purchase, but that becomes more worthwhile if you also have a credit card that earns Chase Ultimate Rewards points, such as the Chase Sapphire Preferred® Card.
TPG values Ultimate Rewards points at 2 cents each, so if your new vehicles were to cost $20,000, that’s $600 worth of points back in your pocket with this card. The Freedom Unlimited also comes with 0% intro APR for 15 months from account opening on purchases, then a variable APR of 14.99% – 23.74%. If you’re able to pay off your car before that 15 months is up, this is a great way to finance it and earn rewards at the same time.
Annual fee: $95
Rewards on car purchases: 2x on all non-bonus purchases
Why it’s a good choice: Besides the fact that unlimited 2x is a great return on a large purchase such as a car, the Capital One Venture is also currently offering a stellar sign-up bonus that comes with a higher spending threshold. If you spend $20,000 on purchases in the first 12 months from account opening, you’ll get 100,000 bonus miles. If you have the credit limit to cover your entire car purchase, this would be a great way to hit the bonus while earning 2x to boot.
FAQs about buying a car with a credit card
What is the maximum amount I can put on a credit card?
The maximum amount you can put on a credit card depends on the car dealership. For example, Tesla allows buyers to charge the $2,500 initial order fee to a credit card. CreditCards.com has reported $3,000-$5,000 as a common threshold for how much a dealership will allow you to put on a credit card. But if you’re lucky (and a solid negotiator) like TPG’s Loyalty and Engagement Editor Richard Kerr, you may be able to put an entire new car purchase on a rewards card such The Platinum Card® from American Express (though it admittedly took a bit of haggling and shopping around before he was able to convince a dealership to allow this).
Do all the dealerships accept credit cards?
If you’re in the market for a vehicle and looking to put the entire purchase on a credit card, be sure to call ahead and speak with the finance manager of the dealership. Some dealerships have a hard rule of not accepting credit cards for vehicle purchases, while others are glad to accept them.
These dealerships have to pay merchant fees on the charge, which range from 1–4% and cuts into their bottom line. If the dealership is willing to reduce the price of the car to get you the value of the points you would have earned through your rewards card, you may want to consider that option, too. In essence, you could use the card to negotiate a lower price.
What dealerships charge fees for using credit cards?
This will differ from dealership to dealership. While some places such as CarMax always charge a fee on credit card purchases, others may not pass along the fees to consumers. And a lot of the time, car dealerships aren’t great about being upfront about the fees they charge.
I reached out to three different dealerships in the Charlotte, N.C., area hoping to confirm whether or not they would allow me to charge at least a portion of a car purchase to a credit card and whether that purchase would come with a fee, but I was unable to get a straight answer without coming in to talk about a specific model I was interested in. That tells me that it’s either up for discussion (a lot about the car-buying process is up for negotiation), or they do charge a fee and hope the vague answer wouldn’t deter me from coming in to look around.
Can I pay only a portion of my car with my credit card?
Whether you can pay a portion of your car with your credit card depends on the dealership. Some dealerships will allow you to charge the down payment or just a small portion of the overall purchase price to your credit card. Others may allow you to charge the entire amount.
Do I need to pay my full balance?
Whether you need to pay your full balance depends on your circumstance. If you charge a car purchase to a credit card offering 0% APR on purchases, you may be able to keep a balance without additional costs. If your credit card charges large interest fees then you will want to pay off your balance in full as soon as possible.
Does buying a car with a credit card impact my credit score?
Using a credit card to buy a car could have a negative impact on your credit if you end up carrying a balance. If the card balance isn’t paid down by the statement closing date, it gets reported to the credit bureaus. Depending on how much available credit you have across the board, a large card balance due to a car purchase could increase your utilization rate, which in turn can negatively impact your credit.
If you plan on paying off your card after charging a car purchase to it, then you can mitigate potential negative impacts on your credit.
Purchasing a car with a credit card is a great way to earn a large sum of points, miles or cash back. However, don’t forget to follow the ten commandments for travel reward credit cards. In all cases including when you’re making a large purchase, the commandment of thou shalt pay thy balance in full is key to maximizing your rewards.
Additional reporting by Ariana Arghandewal and Madison Blancaflor.
Featured photo by Ruslan ShamukovTASS via Getty Images
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