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Can You Buy a Car with a Credit Card?
July 1, 2025

Quick Answer
Yes, you can purchase a car with a credit card, but most dealerships will only allow you to charge the down payment to avoid their own processing fees.
Should You Buy A Car With A Credit Card?
Let's examine the potential upsides and downsides of this approach.
Benefits
- Rewards and Perks: A large car purchase can generate significant credit card rewards, like cash back, points, or airline miles. Some cards also offer purchase protection or extended warranty benefits.
- Simplicity: Using a credit card can streamline the buying process, potentially avoiding the paperwork associated with a traditional auto loan.
- Introductory 0% APR: If you use a card with a 0% introductory APR offer, you can finance the car interest-free for the duration of the promotional period.
Costs
- High Interest Rates: Standard credit card interest rates are typically much higher than auto loan rates. Carrying a balance after any promotional period expires can become very expensive.
- Dealer Limitations: Many dealerships do not accept credit cards for the full vehicle price, or they may cap the amount you can charge.
- Processing Fees: A dealer might charge you a processing fee, often 2-3% of the transaction amount, to cover their own costs for accepting the credit card.
- Credit Limit Constraints: Your available credit limit may not be high enough to cover the entire cost of the vehicle you wish to purchase.
How to Buy A Car With A Credit Card
Buying a car with a credit card can be a savvy move for earning rewards, but it requires careful planning. Here’s how to navigate the process from start to finish.
- Confirm Acceptance and Fees: Before visiting, call the dealership to confirm they accept credit cards for vehicle purchases. Ask if there's a cap on the amount you can charge or if they add a processing fee, which could offset your rewards.
- Check Your Credit Limit: Ensure your credit card’s limit is high enough to cover the intended purchase amount. If it isn't, you may need to split the payment or request a credit line increase from your issuer in advance.
- Select the Best Card: Choose a card that maximizes your return. This could be one with a generous sign-up bonus, high cash-back rate, or a 0% introductory APR. You can use Kudos' explore cards tool to find a card that fits your needs.
- Negotiate the Price First: Finalize the car's price with the salesperson before revealing your payment method. This prevents the dealer from adjusting the price to compensate for potential credit card transaction fees.
- Plan for Immediate Repayment: To make the rewards worthwhile, have the funds ready to pay off the entire credit card balance immediately. Carrying a balance will accrue interest charges that can quickly outweigh any benefits you earned.
Impact On Your Credit Score
Using a credit card for a car purchase can influence your credit score in a few key ways, both positively and negatively. Here are some important factors to consider:
- Credit Utilization Ratio. This large purchase will likely spike your credit utilization, the percentage of your available credit you use. A ratio above 30% can negatively affect your credit score.
- Payment History. You must pay the balance on time, whether in full or in installments. A single late payment can significantly harm your credit history and lower your overall score.
Alternative Ways To Buy A Car
Cash Purchase or Direct Financing
Paying for a vehicle upfront with cash is the most direct method, eliminating interest payments and future debt. Alternatively, securing pre-approved financing from your own bank or credit union can provide a significant advantage. This separates the car purchase from the financing negotiation, often resulting in better loan terms and giving you more leverage at the dealership, as you are essentially a cash buyer in their eyes.
Leasing Instead of Buying
Leasing offers a different approach, providing access to a new vehicle with typically lower monthly payments than a traditional auto loan. While you won't own the car at the end of the term, leasing is ideal for those who enjoy driving newer models and don't want a long-term commitment. It's crucial to consider the terms, such as mileage limits and wear-and-tear policies, which can result in extra fees if exceeded.
Choose the Right Card to Buy A Car
Putting a new car on a credit card can be a savvy move, but only if you have the right plastic in your wallet. A large purchase like this is a prime opportunity to rack up significant rewards, whether it's cash back, travel points, or other valuable perks. With nearly 3,000 cards in its database, the Kudos Explore Tool can help you compare your options side-by-side to find the best card for your needs, ensuring your big purchase works even harder for you.
If you want to get the most from your credit cards, Kudos is the premier free shopping assistant for your online purchases. We are also giving you $20 back after your first eligible transaction—just sign-up for free using code 'GET20' and complete a purchase with a Boost merchant.
Frequently Asked Questions
What are the benefits of buying a car with a credit card?
You can earn significant rewards like points or cashback and may get purchase protection benefits from your card issuer.
Are there any downsides to using a credit card for a car purchase?
Dealers may charge a processing fee, and high interest rates will apply if you don't pay the balance quickly.
Will buying a car with a credit card affect my credit score?
A large purchase increases your credit utilization ratio, which can temporarily lower your score until the balance is paid.
Supercharge Your Credit Cards
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Editorial Disclosure: Opinions expressed here are those of Kudos alone, not those of any bank, credit card issuer, hotel, airline, or other entity. This content has not been reviewed, approved or otherwise endorsed by any of the entities included within the post.