There are a lot of things you’ll need to think about when you’re planning to buy a car, from the down payment and finding a good deal to financing. If you’re wondering, “Can I buy a car with a credit card?” the short answer is yes.

However, there are many things you’ll have to consider, such as the dealership’s policies, your credit limit, and extra fees you may have to pay. Read on to learn more about the pros and cons of buying a car with a credit card and alternatives to consider, such as trading in your vehicle and getting a car loan.

Do Car Dealerships Accept Credit Cards?

So, can you buy a car with a credit card at a car dealership? Car dealerships may accept credit cards, but their policies may vary.

Can you use a credit card for a down payment on a car? It’s more likely that a dealership will accept a credit card for the down payment but not for the entire price of the car.

Merchants have to pay a fee to the credit card company each time a customer uses a card. This is an additional expense for dealerships, which is usually 1.5% to 3% of the transaction

If a dealership does accept a credit card, it's likely that you’ll have to pay an additional credit card “convenience” or “transaction” fee, on top of your down payment amount, to reimburse the dealership for the cost of the fee they’re charged by the credit card issuer (e.g. BofA, Wells Fargo, Chase, etc) and/or the credit card payment processing network (e.g. AmEx, Discover, Mastercard, or Visa) when they run your card through.

Should You Buy a Car Using a Credit Card?

Brad Reichert, a debt expert and the founder and managing director of Reichert Asset Management LLC, offers some advice for consumers hoping to buy a car on credit. ”When attempting to use a credit card as part of any vehicle purchase, it’s always a good idea to ensure you have an adequate “cushion” of available credit ahead of time, just in case the dealership tells you a larger down payment is required,” he says.  

“For instance, if you expect you will need to make a down payment of $5,000 on a car, it’s best to have at least $7,500 of available credit, just in case you may need to put more down (e.g., $6,500). This will also help keep your credit utilization ratio lower versus maxing out your card to make the down payment,” Reichert explains. 

Before you buy a car with a credit card, here are several things you should consider:

Credit Limits and Credit Utilization

If you have a low credit limit, you may not be able to charge the car purchase on it without going over the card’s limit. Even if you have a high credit limit, you should think twice before doing so.

Charging a big purchase like a new car on your credit card will push your card balance higher towards the card’s limit, which in turn pushes your credit utilization ratio higher, which in turn, has a negative effect on your FICO score. Your credit card utilization ratio measures how much of your credit you’re using compared to the total credit you have available. 

A higher credit utilization ratio can lower your credit score because most lenders view a high credit utilization rate as a sign of financial stress because you need to use such a substantial portion of your credit resources in order to: 1) maintain a lifestyle that may be well above your income; or 2) perhaps you’re resorting to using credit just to maintain your basic living expenses–all signs of financial stress that are not the norm for most consumers.

Credit Card Interest Rates

Car loan interest is significantly lower than credit cards because the loan is a secured loan, in that the car is used as collateral for repayment on the loan. Buying a car with your credit card can be a bad idea if you’re not planning to clear the entire balance in full immediately.

The average car loan interest rate for new cars is 7.03%, and for used cars, it is 11.35%. In contrast, the average credit card interest rate is currently 24.59%.  The additional 1.5%-3.5% credit card processing fee only adds to this cost for using your credit card. 

Even if you’re getting a car loan with bad credit, you’ll pay a lower interest rate on an auto loan than on your credit card.

Credit Card Rewards

If you have a rewards credit card, buying a car may be a good way to accumulate more points and meet the spending requirements for point bonuses or additional cash back. However, this will only make sense if you plan to pay off the balance right away.

If you carry the balance forward, the interest charges and fees will be substantially more than any rewards or additional cash-back bonuses you earn.

Terms and Conditions

Before you buy a car with a credit card, learn more about the terms and conditions of the dealership. Many auto dealers don’t accept credit cards, while others will accept them with certain limits.

If the dealership accepts credit cards, you’ll likely pay a fee to cover the processing fees. Often, this is charged as a “convenience fee” and can range from as little as 1.5% to as high as 4.0%.   

Pros and Cons of Buying a Car With a Credit Card

Can you buy a car with a credit card? You may be able to, but that doesn’t mean you should. Consider the pros and cons we’ve listed below to make an informed decision.


  • You may be able to earn credit card rewards
  • You may be able to meet the spending requirements for bonuses
  • You may be able to avoid paying interest for a limited time with a 0% intro APR


  • Much higher interest rates compared to auto loans (often 2-3 times the interest rate)
  • Increased credit utilization may lower your credit score
  • There may be additional fees
  • Not all dealers accept credit cards

Alternatives To Buying a Car with a Credit Card

There are many other alternatives, which may be cheaper, to consider instead of buying a car with a credit card.

Financing Options

One of the easiest ways to finance a car is by getting an auto loan. The interest rates are lower than credit cards, and on-time car loan payments can help you improve your credit score.

If you don’t have a good credit score for a car loan (661 or higher), you may still be able to find loan options, but they may be more expensive. Compare your loan offers carefully before making a decision.

Personal Loans

In some cases, it may make sense to use a personal loan to buy a car instead of a car loan. If you’re buying a non-traditional car on which it’s difficult to secure financing, you may have to use a personal loan.

You can also use a personal loan if you’re purchasing from a private lender. Keep in mind that personal loan rates can be higher than auto loans, especially if you don’t have good credit. If you’re borrowing a bad credit personal loan, compare the loan rates carefully.

Debit Card

If you have funds in your bank account, you can use your debit card to pay for the car. Unlike a credit card, you don’t have to worry about interest charges. If you pay for the car upfront, you’ll be able to save a considerable amount of money in interest each year that you’d otherwise pay if you took out a loan.

Use Cash

If you’re buying a used car that doesn’t cost much, you can always use cash to pay for it. Cash, in this case, means you’d simply write a paper check, out of a checking or investment account, rather than a debit card or old-school cold, hard cash. 

Due to certain bank money laundering regulations that most automobile dealerships must abide by, you can’t walk in with a briefcase full of 100’s and 50’s and buy a vehicle.  Putting aside enough money in your savings or checking account to buy a car is always a better option than buying a car with a credit card that you can’t afford.

Find a Cosigner

If you’re buying a car with no credit or can’t secure a good rate on the vehicle purchase, consider applying for a car loan with a cosigner (or two). Ask a family member or friend with good credit to help you qualify for a lower rate by co-signing the loan with you.

Be sure to make the car payments on time because otherwise, your co-signer(s) will be legally responsible for payments, which can damage your relationship with them.

Do a Trade-In

If you currently have a car you can trade in, you may be able to apply your current car’s value towards the total cost of the new car. This will reduce the amount of money you need to borrow and will keep your monthly payments affordable.

See if Your Dealership Accepts Credit Cards as a Way To Buy a Car

Weigh the pros and cons carefully before you buy a car with a credit card. If you want to take advantage of your card’s rewards points, have a 0% APR credit card, and have a plan to pay off the entire balance during the promotional period, check with your car dealer to see if they accept this payment option.

Be sure to ask about any additional fees you may have to pay. If this option is too expensive, there are many other alternatives to consider, such as car financing and trading in your current vehicle.