Personal Finance
Advertiser Disclosure

Can You Buy a Car With a Credit Card?

buy a car with a credit card
iStock

Our evaluations and opinions are not influenced by our advertising relationships, but we may earn a commission from our partners’ links. This content is created independently from TIME’s editorial staff. Learn more about it.

Updated January 8, 2024

Unless you have a sizable bank account, buying a car usually requires borrowing at least some of the funds you need. Auto loans are by far the most common way to pay for a new set of wheels. But what about simply using a credit card to make your next car purchase?

As unusual as that strategy sounds, it’s one that can actually work to your advantage in some cases. For example, if you’re simply using the card to amass a bunch of rewards and plan to pay down your balance right away, it might be worth a try. But it’s important to understand the potential pitfalls, too. 

Should you decide to use a card for your vehicle purchase, be sure to use one with generous rewards that fit your needs. Below are some of the cards that offer enticing benefits for users.

CardWelcome offerAPRAnnual feeCredit score
bonus_miles_full
reg_apr,reg_apr_type (Rates & Fees)
annual_fees (Rates & Fees)
credit_score_needed
bonus_miles_full
reg_apr,reg_apr_type
annual_fees
credit_score_needed
bonus_miles_full
reg_apr,reg_apr_type
annual_fees
credit_score_needed
bonus_miles_full
reg_apr,reg_apr_type
annual_fees
credit_score_needed
My GM Rewards Card
Earn 15,000 bonus points if you spend $1,000 in your first three months.
19.99% - 29.99% Variable
$0
Good to Excellent
DrivePlus Mastercard
Earn $1,000 bonus certificate toward the purchase of certain Fiat Chrysler models when you spend $7,500 in your first year.
17.24% - 28.24% Variable
$0
Good to Excellent
BMW Card
Earn 5,000 bonus points when they make $500 in purchases within the first 90 days of opening an account.
15.24% - 26.24% Variable
$0
Good to Excellent

Rewards credit cards to buy a car

bonus_miles_full 

card_name

If you have good to excellent credit, the card_name has a lot to offer. You have the ability to earn 60,000 Membership Rewards points when you spend $4,000 on purchases during the first six months. You can use those points to make purchases, cover previous charges, or receive gift cards to your favorite retailers. The annual fee of annual_fees (Rates & Fees) may seem a little high, but the ability to accrue so many points can more than make up for it. 

card_name

card_name

This is another card that rewards shoppers for making a large purchase early on. With the card_name, you bonus_miles_full. That means you get a credit for up to $900 for travel expenses when you redeem through Chase Ultimate Rewards. There’s an annual fee of annual_fees, but the amount of rewards you’re getting can make that a smart investment. 

card_name 

card_name

If travel rewards are what you’re after, the card_name is a good place to start. You can bonus_miles_full. Going forward, the card gives you two miles for every dollar on every purchase, making it easier to cover the cost of hotels, car rentals, and flights. For an annual fee of only annual_fees, it’s a generous list of benefits. 

card_name

card_name

Looking for a solid rewards program with no annual fee? The card_name might be worth a look. You get 1.5% cash back on most purchases—and even higher percentages on dining and drugstore transactions. Plus, Chase gives you a $200 bonus when you make $500 of purchases within your first three months of getting your card. With a 15-month promotional period for purchases and balance transfers, it gives more time than some of its competitors to pay down your balance without interest charges. 

Manufacturer credit cards

Several car makers have their own credit cards with enhanced benefits for those who buy from their product line. Here are some you may want to consider:

My GM Rewards Card

With the GM Rewards Card, you get 15,000 bonus points if you spend $1,000 in your first three months, which amounts to $150 that you can redeem toward a future GM vehicle purchase or GM Certified Service. You also earn 7x points for every dollar spent with GM—and 4x points for every $1 spent elsewhere—which could put you in the driver’s seat the next time you want to buy a Chevrolet, GMC, Buick or Cadillac. Plus, it has no annual fee. 

DrivePlus Mastercard

If you’re partial to Fiat Chrysler brands—a line that includes Jeep, Ram, and Dodge—the DrivePlus Mastercard might be an option to consider for your next car purchase. The card offers a $1,000 bonus certificate toward the purchase of certain Fiat Chrysler models when you spend $7,500 in your first year. You can also rack up 5% cash back on dealership purchases and 2% cash on gas and travel expenditures going forward, plus 1% cash back on all other purchases.

BMW Card

Like some other manufacturer cards, the BMW Card loads some pretty enticing rewards upfront. Users can earn 5,000 bonus points when they make $500 in purchases within the first 90 days of opening an account. But the perks don’t end there. If you use the card on an eligible BMW vehicle, you get 4x points for every $1 you spend. 

Is it a good idea to buy a car with a credit card? 

While using a credit card is certainly a non-conformist way to finance your vehicle purchase, it’s an option you may be able to pursue, depending on where you decide to buy your car. And for certain buyers, it may be advantageous to finance your purchase this way. For others, however, the card approach can be a financial headache in the making. 

Disadvantages of paying with a credit card

Pulling out your credit card to pay for something as big as an automobile purchase has a number of potential drawbacks. For example: 

Not all dealerships accept them 

Some either don’t allow credit cards at all, or only accept them for a down payment. To save time, call the dealership’s finance department ahead of time, so you know their policy. 

Dealerships may transfer costs onto you 

Credit card companies usually charge sellers a 1.5%-3.5% processing fee for every transaction they execute. Even if a dealership accepts plastic, it may end up charging you more for the car to make up for this added expense. Or it may impose a convenience fee to recoup its costs. On a large purchase, that additional fee can be significant. 

Interest rates are much higher 

This is perhaps the most compelling reason to steer clear of credit cards when it comes time to buy your next car. The annual percentage rate (APR) on a card can be more than twice as high as what you’d pay on a traditional auto loan.

There’s a simple reason for that. Auto loans are secured by collateral—in this case, your new car. Because this provides them with a financial safety net, banks and other lenders can offer lower rates. By contrast, credit cards represent an unsecured form of lending. That means issuers charge a much higher APR to account for the added risk they’re taking on. 

Your credit score can take a hit 

Making a large purchase on a credit card—in this case, a very large purchase—can make it harder to borrow in the future. That’s because credit scoring services like FICO put a lot of weight on the amount you owe creditors when determining your score. If your “credit utilization” ratio (that is, your revolving account balance divided by your available credit) is high, your rating can plummet. Potential lenders may look at your dinged FICO score and decide to charge you higher interest rates or deny your application altogether. 

Advantages of paying with a credit card

While buying a car with your Mastercard or Visa comes with substantial risks, it’s a strategy that may make sense in certain cases. Here are some of the situations where you may want to add a vehicle to your credit card tab: 

You’re using the card to earn rewards 

Some cards offer generous perks for racking up a large balance, whether it’s in the form of cash back or airline miles. Putting a vehicle on your card is the perfect way to reap those rewards. You may even consider making your purchase with an automobile manufacturer credit card, which will help you build credits toward the purchase of another vehicle in the future.\ \ There’s a major caveat to this approach: Accumulating a mountain of rewards only makes sense if you have the cash to pay down your balance right away. Otherwise your interest payment will likely dwarf the amount of cash back or other benefits you receive. 

You’re using points from an existing credit card

Some automaker cards, including the GM Card, allow you to redeem your accumulated points toward the purchase of a new vehicle. Using points to get a discount on your vehicle purchase—and covering the rest of the cost with either cash or an auto loan—can be a smart way to pay less for your car. 

You plan to use a new card with 0% interest 

Most card issuers offer a window of several months where new users don’t have to pay interest on purchases. For a potential car buyer, the idea of a 0% APR loan can seem pretty enticing. But it’s a strategy that really only makes sense if you’re confident you can pay back the entire balance by the end of the promotional period—after that, your rate will likely skyrocket.

Why not simply open a new card when the promo period ends, and transfer your balance to a new card with 0% APR? In theory, that seems like a nice safety hatch. But you’ll likely incur a transfer fee, usually around 3%, when you move the balance to a different card. And if your credit utilization is high, there’s no guarantee that you’ll even qualify for the card you want. 

Alternatives to using a credit card to buy a car

Unless the dealer selling the car you want accepts credit cards—and you can pay down your balance in short order—a traditional auto loan is probably your best bet. Car loans typically come with predictable installment payments and much lower interest rates than you’ll find with a credit card.

To get the best rate possible, you’ll want to do some comparison shopping. That means getting pre-approved online with one or more auto lenders, whether it’s a bank or credit union. This is typically a relatively simple process that involves entering some basic personal information, as well as the amount you plan to borrow for your new or used car. 

The lender will review your credit score to determine how much of a risk you pose as a potential borrower. The better your score, the more likely they’ll be to pre-approve your loan at a competitive APR. 

Once you have at least one pre-approval in hand, you can shop online or in person for the exact vehicle you want and negotiate the price. When it comes time to work out the financing, you can compare the rate the dealer is willing to offer to the lender who pre-approved your loan. That way, you know you’re walking away with the best loan you could receive.

For rates and fees of the card_name, please visit this URL.

The information presented here is created independently from the TIME editorial staff. To learn more, see our About page.

1.2055.139+1.64.1