Funding a new car purchase can be a bit of a conundrum for those who don’t have the luxury of the extra cash just hanging around our bank accounts. But there are lots of different ways to go about funding a car purchase meaning even those with bad credit may have car finance options.

And maybe too many! Do you get a loan? Borrow from friends? Head to a car finance company?

Or should you use a credit card?

Should I buy a car on a credit card?

So there are certain limitations with using a credit card to buy a car:

  • Credit limit! Your car might not fall within the limit
  • Some dealerships may opt not to accept credit cards altogether (check beforehand when doing your test drive if you know this is how you’ll pay)

But let’s assume you’ve got the limit, you’ve picked a car and the dealership you’ve chosen is happy to accept credit card as a payment method. High five!

The only question now is whether or not buying a car on credit card is even a good idea.

Here’s our brief roundup of the pros and cons:

Pros Cons
If you've already got one with sufficient limit, there's no lengthy application process to go through If you don't have enough limit or even have the card yet, a credit card application can be as time consuming as a car finance once
If you're in an interest free period and you can pay the car off before that ends, you have the potential of actually paying no interest on the purchase (or could even potentially consider a balance transfer to benefit from another interest free period at the end if you end up taking longer than you expected) Be aware of your credit limit. Many credit companies entice customers in with interest free periods but then ultimately the interest rises. It's possible that you could be paying very high interest
Your credit isn't secured against your car as it often is when you make the purchase through a car finance company

The main appeal

In our view, the main benefit of buying on credit card would be the potential for an interest free purchase. But buyer beware! Interest free periods normally last for a relatively short period of time (for example, a year) and interest can shoot right up at the end. So do be sure that you will pay the car off in the window through which your interest free period is in effect.

If you really want to play the game, you could continue to take advantage of interest free periods by transferring your balance to other providers once your current one is over. You can find out more about that here.

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