Could your credit card actually pay for your next car?

Explore whether using a credit card to buy a car is possible, practical, and worth it.

Can you buy a car with a credit card?

In theory, yes — but whether you can actually do it depends on the dealership’s policies and your credit limit.

Not all dealerships accept credit cards for car purchases. Some might allow partial payments, like a deposit, while others could refuse credit card transactions altogether due to processing credit card fees or the risk of payment disputes.

Even if your dealer does accept credit cards, your credit limit may not be high enough to cover the full cost. And even with a generous limit, a car purchase might max it out, which could affect your credit score.

If you’re buying a car from eBay or a private seller, things can get even trickier. Most private sellers won’t be set up to process credit card payments and may worry about fraud or chargebacks.

In This Guide:

How does paying for a car with a credit card work?

There are a few steps to take when paying for a car with a credit card:

  1. Verify dealer acceptance. Check that the dealer accepts credit card payments in the first place — and that they take your specific type of credit card, e.g Visa, Mastercard, American Express, etc.
  2. Check your card limit in advance. Do you have enough available credit to cover the entire purchase? Will this purchase mean you’ve reached your card limit? And, if so, are you able to repay the balance?
  3. Check the transaction terms. Some dealers may apply fees and surcharges to credit card purchases in order to cover processing costs. Make sure that you’re aware of any of these. Also, make sure that your purchase will be classified as a payment rather than a cash advance. Cash advances often incur higher interest rates, and they don’t get the same grace period as standard purchases.
  4. Have a solid repayment plan. Cars can be expensive, so it’s a good idea to work out how you’re going to make the repayments. Remember to factor the interest into your calculations. If you don’t have a 0% credit card, it’s a good idea to repay as much as you possibly can before the interest kicks in. Otherwise, you could end up paying significantly more than the purchase value of your car.
  5. Make the payment. This should be much the same as making any other credit card purchase, just for a higher-than-usual amount. Make sure to keep a detailed receipt and any documentation provided.
  6. Track your credit card statements closely to ensure all charges are correct. Monitor for any unexpected fees, incorrect amounts, or duplicate charges. If you spot any discrepancies, immediately contact your credit card company’s customer service team so you can quickly resolve the issue. 

What are the benefits of buying a car with a credit card?

There are several benefits to buying a car with a credit card. Here are some of the most significant:

Section 75 protection

The UK Consumer Credit Act 1974 exists to protect credit card holders in the event of a breach or misrepresentation of the contract with the supplier. Under Section 75 of the Consumer Credit Act, credit card users who make purchases between £100 and £30,000 get guaranteed protection. In relation to a car purchase, this means that if the dealership fails to deliver your car or misrepresents it in any way, you can claim a refund from your credit card company.

Rewards and cashback

Some credit cards offer perks like cashback, travel points, or other rewards. Using a credit card to buy a car can earn some of these rewards for you. That’s a nice bonus on top of your car purchase.

Cashflow Management

Buying a car with a credit card can help manage your cash flow. If your earnings are inconsistent (for example, if you're a freelancer without a fixed salary), a credit card allows you to spread the cost of the car over time, easing the pressure of large payments during months when your income might be lower.

Convenience

It’s relatively quick and straightforward to make a credit card purchase - you just enter your PIN on the card terminal. When using a credit card, you don’t have to enter your bank details (as you would when doing a balance transfer) or burden yourself with having to make a large cash withdrawal. This is a big advantage if you don’t like a lot of faff and hassle.

Risks and drawbacks

Unfortunately, there are significant risks and drawbacks to buying a car with a credit card. Here are a few of the major risks to consider:

High interest rates

If you don’t pay off the balance in full, your credit card company may charge you interest if you are not on a 0% on purchases deal with your current card provider. This increases the amount that you pay for your car overall, and could ultimately make it difficult to clear the balance completely.

Potential fees

To cover processing costs, dealerships may apply surcharges to credit card payments. If this happens, this will increase the overall cost of your purchase.

Credit score impact

Using a large portion of your credit card limit — especially if you max out your card — can negatively affect your credit score. This could make it harder to borrow money or use your credit card in the future.

Limited acceptance

Not all car dealerships accept credit card payments. For example, some dealerships do not accept payment by American Express, as it has high processing fees.

Tips for using a credit card to buy a car

  • Know your credit limit: Make sure your card limit can cover the full cost, or at least a substantial portion of it. If not, consider arranging part payments with the seller, combining multiple payment methods (e.g., card plus bank transfer), or applying for a short-term loan to cover the difference.
  • Consult the dealer: Discuss payment options and any associated fees with the dealership or seller in advance
  • Aim for full repayment: Plan to pay off the balance as quickly as possible in order to avoid interest charges.
  • Consider 0% or low interest offers: Look for credit cards offering 0% or very low interest on purchases for a set period.
  • Watch your utilisation ratio: Try not to use more than 30% of your total credit limit to maintain a healthy credit score.

Alternatives to credit card payment

If paying for your car by credit card doesn’t sound like the right option for you, there are plenty of alternatives:

Car Finance

HP (Hire Purchase) and PCP (Personal Contract Purchase) are types of car finance agreements arranged through a finance company. They allow you to spread the cost of your car purchase over fixed monthly payments, often with more competitive interest rates compared with credit card purchases. While the agreement may be set up at a car dealership, the finance contract itself is with the finance company, which owns the car until the agreement is completed.

Personal loans

A personal loan, perhaps from a bank, credit union, or trusted friend, could give you the lump sum you need to purchase the car. Personal loans typically get repaid over a fixed term with a fixed rate of interest.

0% dealer finance

Some dealerships offer interest-free finance deals. These deals may be dependent on your credit score, but if you are eligible, 0% dealer finance can be an attractive alternative to credit cards.

Bank transfers and debit card payments

These methods avoid the potential fees and interest associated with credit cards. However, they may also deplete your capital, and often lack the protections offered by credit cards.

Compare payment methods before you commit

Before you decide how to pay for your car, it's essential to compare all available payment methods — not just in terms of monthly cost, but in how they affect your finances overall. Each option, whether it's a credit card, personal loan, hire purchase (HP), or personal contract purchase (PCP), comes with different fees, interest rates, repayment terms, and levels of consumer protection.

For example:

  • Credit cards may offer rewards and Section 75 protection, but they often carry higher interest rates unless paid off in full quickly.
  • Personal loans usually have fixed rates and clear terms but may lack the purchase protections a credit card offers.
  • HP and PCP agreements can provide structured, predictable payments and competitive rates, but you don’t own the car until the end of the agreement — or at all, in the case of PCP.

Take time to assess not just what you can afford monthly, but what’s most cost-effective over the full term. 

Is buying a car with a credit card the right move?

While buying a car with a credit card can offer benefits like protection and rewards, it's crucial to weigh these against potential risks and costs. By thoroughly understanding the implications and exploring all available options, you can make an informed decision that aligns with your financial goals. 

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