Updated
Apr 01, 2023 Can you buy a car with a credit card? Most of the time this is not feasible because the price of certain cars is often greater than the limit on a credit card.
However, some charge cards like the Platinum Card offer high monthly limits. Unless you enroll in an option to pay the balance off over time, the entire outstanding balance must be paid each month. As a result, these cards do not have a preset spending limit. So, it may be possible to use your charge card to pay for your new car purchase.
The benefit of doing this is earning an enormous number of membership rewards points that can be used towards travel or other purchases. The drawback would be incurring penalty fees for failing to pay off the balance in time.
Here’s more information on whether you should buy a car with an American Express card—and how to do it if it makes sense.
How to Arrange a Car Purchase With an American Express Card
If you have the Platinum Card and want to use it for a new car purchase, you’ll just need to call American Express ahead of time to let them know your plan. They can put a note on the account about the transaction so it doesn’t get flagged for fraud and declined. The more difficult part is actually finding a car dealership willing to accept a credit card payment for the full price of the car.
Most car dealerships allow buyers to put a maximum of $5,000 on a credit card for the purchase of a car. In some places, state regulations prohibit car dealers from accepting credit card payments because they are an unsecured form of debt. If the credit card transaction did not end up settling as expected, the car dealership would not have the same claim to the car as it would if the buyer paid with a secured form of debt like a car loan.
In addition, the car dealer doesn’t get the full price of the car in a credit card transaction because the merchant fees get subtracted from the total value. This can cause the dealership to lose thousands of dollars in the transaction. As a result, you will not only have to shop around for the right car at the right price, but also a dealer willing to accept the purchase on a credit card.
Consider These Things Before You Buy
Before you decide to make your car purchase, there are a few things you should consider:
- Using the Platinum Card (or other similar cards) is a good strategy if you actually have the cash to make the purchase. You’ll have to pay the bill off at the end of the month, but you won’t pay any interest, and you’ll earn a lot of rewards points.
- All credit cards, however, are not the same. The price of a new car is higher than the credit limit on the ave rage consumer credit card. If you can make a purchase on credit card rather than a charge card, consider the interest rate on the card. Using a card with a zero percent introductory interest rate is nice as long as you get the balance paid off before the introductory period is over. If you are going to have to pay interest, the rewards may not be worth the cost.
- In most cases, it will be difficult to find a dealer willing to let you pay for the entire purchase price on your credit card. Try to talk directly to the manager who will ultimately make the decision about whether or not to allow the purchase.
- Negotiate the price of the car before you talk about paying with a credit card. Since the transaction fees for the dealership will reduce their profit, they will factor that into their bottom line price if they know ahead of time that you want to use a credit card. Try not to talk about financing until you have settled on a price.
- Weigh the credit card benefits against any special financing offers the dealer may have. A dealer’s offer of $5,000 cashback or zero percent financing for five years might end up being a better deal than cashback or rewards points on your credit card.