How to Buy a Car with a Credit Card (and Our Favorite Cards to Use)

The idea of buying a car with a credit card can make sense — it’s simple, it can streamline the car-buying process, and you can potentially earn a ton of points — but it could also be a terrible idea.

Considering how much your credit and finances could be impacted, buying a car with a credit card shouldn’t be something you do on a whim. Instead, there are a handful of things that need to be aligned in order for it to even be a worthy option.

Just because you can buy a car with a credit card doesn’t mean you should, so let’s see when it does and doesn’t make the most sense.

Can you really use a credit card to buy a car?

Yes, it’s possible to use a credit card to buy a car; however, you need a willing dealer and, depending on the amount you plan to charge, a credit limit with enough buying power. It’s not unheard of to use a credit card for some of the costs associated with buying a car — just maybe not the entire purchase price.

“In many dealerships, you can use a credit card for portions of the sale, down payments, and add-ons,” says Laura Gonzalez, the Marketing Manager at Audi Spokane. “I personally have never seen or heard of someone putting an entire purchase amount on a credit card.”

While putting a portion of the sale on a credit card typically isn’t always an issue, charging the entire amount might leave a bad taste in some dealers’ mouths.

“Dealerships are leery about putting payments on credit cards due to the risk of default being higher compared to an average car loan,” Gonzalez says.

Why a car dealer may or may not let you use a credit card

Dealers also want to make sure they’re getting a good deal on their end. Check out these pros and cons for why a dealer may or may not accept a credit credit for the purchase of a vehicle.

Pros:

• Closing a sale: Let’s be honest; one of the only reasons a car dealer would let you use a credit card would be to get the sale and not lose a potential customer.

Cons:

• Credit card transaction fees: Just like any other business, car dealers must pay a credit card processing fee of anywhere between 1.5% to 3.5% of the amount charged.
• Disputing the charge: Chase and Capital One note that customers can dispute a charge if they’re “dissatisfied” with their purchase. Whether or not the dispute is approved, it may not be worth the hassle for the car dealer.
• Losing out on financing opportunities: According to the National Automobile Dealers Association (NADA), roughly 85% of new vehicles and 54% of used vehicles had financing in 2018. Losing this opportunity means dealerships lose money.

If a car dealer is on board with you using a credit card, you may see some limitations on the sale. This could mean the transaction fee is pushed onto you or a cap is placed on the amount you can charge.

Conversely, you’ll find that some dealers are openly on board with the idea of buying a car with a credit card. American Express, for instance, offers cardmembers a car-buying program that connects prospective buyers with over 10,000 dealers who have agreed to accept American Express as payment. All participating dealers will accept the American Express card for at least $2,000 and possibly up to the full purchase price.

When it might be a good idea to buy a car using a credit card

Assuming you’ve found a participating dealer, there are a few instances when it may actually be beneficial to buy a car with a credit card.

You can pay off the amount you’re charging

If you have the cash available to pay your balance in full, you could just buy the car with cash. But why miss out on all those credit card rewards? Use your credit card, pay the balance immediately, avoid interest, and earn a decent amount of rewards in the process.

You’re utilizing a 0% APR offer

Many credit cards offer periods between 12 and 15 months of 0% interest, and taking advantage of this to buy a car could be one of your best options for financing part or all of your new automobile.

If the card you want to use for the purchase doesn’t provide this, a credit card that offers a 0% intro APR (annual percentage rate) on balance transfers could be another option. Make the purchase on the card you want to earn rewards on and then transfer the amount to a card with a balance transfer offer. Check out our list of the best balance transfer cards for more information.

You’re making more in rewards than what it costs

If you’re only earning 1% cash back, putting a $10,000 car on your credit card will only yield you $100. If the fees associated with this transaction are higher, it doesn’t make sense.

But if you apply for a card with a generous welcome offer, the math may work in your favor. You could purchase the car to meet the minimum-spend requirement for the bonus and earn a hefty amount of rewards on the purchase itself.

Cards we recommend to use for buying a car

If everything is aligned and you’ve decided to charge your way to a new car, here are some top choices for credit cards that will provide the most value:

The Platinum Card^® from American Express

The Platinum Card from American Express is designed for large purchases, making it an ideal card for buying a car. There is no predefined spending capacity because, except for certain charges, most balances must be paid in full at the end of every month.

What makes the Amex Platinum especially ideal for car buying is American Express’ vehicle-purchasing program mentioned earlier, which allows cardmembers to find the best car and charge at least $2,000 toward it on an American Express card. You might even be able to charge the full amount.

This card has a great welcome bonus: Earn 80,000 Membership Rewards points after spending $8,000 on eligible purchases on your new card in the first 6 months. The amount you put toward your car might cover this minimum spend by itself. 

This card earns 5X points per dollar spent on eligible airfare (on up to $500,000 per calendar year, after that 1X) and eligible hotel purchases, and 1X points per dollar on all other eligible purchases. So you'll earn 1X points per dollar on your car purchase on top of the welcome bonus.

Since the Amex Platinum is a premium card with luxury travel benefits, such as Uber Cash credits and access to more than 1,400 airport lounges, it does come with an annual fee of $695, so unless you can maximize the travel benefits, it may not make the most sense. (Select benefits require enrollment.)

Check out The Platinum Card from American Express review.

The Business Platinum Card^® from American Express

The Business Platinum Card from American Express could be another great option for buying a car if you’re a business owner, and it comes with a few different business-specific perks than the consumer card mentioned above. 

In addition to the Amex car-buying program, cardmembers can earn 5X points on flights and prepaid hotels on Amextravel.com; 1.5X points on eligible purchases at U.S. suppliers of construction materials and hardware, U.S. retailers of electronic goods, U.S. providers of shipping, software and cloud systems, and eligible purchases of $5,000 or more (up to $2 million per year, then 1X), and 1X points per $1 spent on all other eligible purchases (purchases eligible for multiple additional point bonuses will only receive the highest eligible bonus). 

This card comes with a generous welcome offer also: Earn 150,000 Membership Rewards points after spending $20,000 on eligible purchases in the first 3 months.

The Business Platinum Card from American Express has an annual fee of $695, but like the consumer card, it also comes with a handful of valuable benefits that can help offset this cost.

Check out The Business Platinum Card from American Express review.

Chase Freedom Unlimited^®

If you’re not looking to take on an annual fee just to buy a car, the Chase Freedom Unlimited might be a great option. You can earn 1.5% cash back on the purchase of your vehicle, which isn’t the highest earnings rate possible, but it’s still higher than the 1X earnings you see on many cards. 

Additionally, as a new cardmember, you can earn an extra 1.5% on everything you buy (on up to $20,000 spent in the first year). 

Additionally, if you have also have the Chase Sapphire Preferred^® Card, you can transfer your rewards from your Chase Freedom Unlimited, which are valued at one cent each, and redeem them for a higher 1.25 cents when you book travel through Chase Travel℠.

Couple all of that with the Chase Freedom Unlimited’s 0% introductory APR on purchases for 15 months (then 19.74% - 28.49% Variable) and this just may be a car buyer’s dream card. If you’re able to pay off your car before the 15 months is up, you’ll have found a great way to finance a car while getting a decent amount of cash back in the process.

Methodology

To select our recommended cards for buying a car, we looked for rewards cards that can generally accommodate large purchases or that have vehicle-buying programs. This list is not exhaustive and does not cover all possible 

Things to keep in mind before you buy a car with a credit card

Since buying a car with a credit card is, well, not something you do every day, there are things you should consider before jumping in with both feet. Assuming you found a dealer who’s willing to accept a credit card as a method of payment, ask yourself the following questions to decide if it makes the most sense for you:

Will you be able to pay off the amount? If not, will the APR cost you more than you earn in rewards?

In a perfect world, you’ll either have a credit card with a 0% introductory APR or have the cash to immediately pay off the charge. If you can’t swing either and your credit card’s APR is higher than what you could have gotten through traditional auto financing, you may find yourself in a situation where the cost outweighs the benefits. Earning rewards is great — but not if it’s going to set you back with high interest payments and a large amount of debt.

Are you so focused on rewards that you are passing up a good APR from the dealer?

Buying a new car can be exciting, not to mention the number of points you can earn if you can use one of the best cashback credit cards to pay for it. Setting your sights solely on rewards, however, might force you to look past more-beneficial options.

If you’re able to secure traditional financing with a good APR and you don’t plan on paying the balance in full if you put it on your credit card, the rewards you’ll earn probably won’t be enough to justify using your credit card. Make sure to run the numbers so you’re getting the most bang for your buck.

How will the increase in credit utilization impact your credit score and other goals?

You’re probably aware that having too high of credit utilization can negatively impact your credit score, so where would the purchase of a vehicle land you? Even if you can take advantage of a 0% introductory APR offer, a large purchase like a car may leave your credit utilization higher than you want, which will drag your credit score down.

The bottom line on using a credit card to buy a car

Using a rewards credit card to buy a car can be a great way to earn points, but remember to still follow healthy finance habits — going into debt or damaging your credit score is probably not worth the points.

And just like any time you buy a car, it’s always a good idea to take a step back and view the situation from afar to ensure you’re getting the best deal possible.

If a salesperson is way too eager to get rid of a car, even with you using a credit card, you might wonder what’s wrong with it. Are they adding fees for using a credit card you otherwise wouldn’t pay? Did they raise the asking price after mentioning that you want to use a credit card? These are all important questions to ask so you don’t end up with a sour deal.

Car salespeople may also not be so willing to sell to you or make a deal on the price if they know upfront that you plan on paying with a credit card. It may be worth showing you’re a serious customer and to negotiate before pulling out your credit card to seal the deal.

Unlimited Cash Back

Chase Freedom Unlimited^®

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Chase Freedom Unlimited^®

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Current Offer

Earn an extra 1.5% on everything you buy (on up to $20,000 spent in the first year) — worth up to $300 cash back. That's 6.5% on travel purchased through Chase Travel℠, 4.5% on dining and drugstores, and 3% on all other purchases.

Annual Fee

$0

Rewards Rate

6.5% cash back on travel purchased through Chase Travel℠, 4.5% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service and 3% cash back on all other purchases (on up to $20,000 spent in the first year). After your first year or $20,000 spent, earn 5% cash back on travel purchased through Chase Travel℠, 3% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service and unlimited 1.5% cash back on all other purchases

Benefits and Drawbacks

Benefits

• High base rewards rate of 1.5%
• $0 annual fee
• Valuable welcome bonus for new cardholders
• Intro APR offers for purchases and balance transfers

Drawbacks

• Has a foreign transaction fee of 3% of each transaction in U.S. dollars
• No bonus categories for gas or groceries

Card Details

• INTRO OFFER: Earn an additional 1.5% cash back on everything you buy (on up to $20,000 spent in the first year) - worth up to $300 cash back!
• Enjoy 6.5% cash back on travel purchased through Chase Travel℠, our premier rewards program that lets you redeem rewards for cash back, travel, gift cards and more; 4.5% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service, and 3% on all other purchases (on up to $20,000 spent in the first year).
• After your first year or $20,000 spent, enjoy 5% cash back on travel purchased through Chase Travel℠, 3% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service, and unlimited 1.5% cash back on all other purchases.
• No minimum to redeem for cash back. You can choose to receive a statement credit or direct deposit into most U.S. checking and savings accounts. Cash Back rewards do not expire as long as your account is open!
• Enjoy 0% Intro APR for 15 months from account opening on purchases and balance transfers, then a variable APR of 19.74% - 28.49%.
• No annual fee – You won't have to pay an annual fee for all the great features that come with your Freedom Unlimited® card
• Keep tabs on your credit health, Chase Credit Journey helps you monitor your credit with free access to your latest score, alerts, and more.
• Member FDIC