Friday, November 22, 2024

Dear Scott, 
I recently read your article about buying a car with a card. I have a 0% interest card and plenty of available credit so it seems like a good idea. The problem is the seller is a private party. Obviously, I can't use a convenience check or a cash advance or I'll blow the interest strategy. Is there a way to pay a private party so that it appears as a purchase on the card and not an advance? I have checked out PayPal, but I'm not sure the seller is Internet active. Thanks.
--Tracy

Tracy,

Thanks for writing!

Note: Everything I suggest in this response is what I would do. You must carefully analyze your specific situation to be sure that it will work to your benefit.

Glad to hear that you read my article, Consider Financing Your Next Car with a Credit Card! 

It's great that you have a 0% deal on your credit card. I've used these deals in the past to purchase a few vehicles. Actually, it may not be such a problem that the seller is a private party. It's the same problem that you may face at a dealership.

Dealerships say they accept credit card payments. However, many will not let you purchase the entire car with your credit card. They'll allow you to put your down payment on the credit card, but not the entire amount. They do this because they don't want to pay the merchant fees (at least 2%) for accepting the card. Therefore, a dealer would also ask you to use a personal check or bank check so they can avoid giving the bank a percentage of the sale.

You need to find out if your 0% deal is good for cash advances. I'm guessing that this may not be the case or else you wouldn't be asking. Nevertheless, you should give your credit card bank a call and tell them that you'll write yourself a check and deposit it in your account, as long as it's at the 0% rate. Who knows? They may go for it.

If that doesn't work, then ask the bank if they would give you that 0% rate if they did a direct deposit into your checking or savings account. The idea is to get that money into your account at the 0% rate, preferably without any cash advance fees. Then use that money to write a bank-check to the car seller.

Even if they won't do this, they would probably let you do a balance transfer from another credit card. If so, check with your other credit cards to find out if you can get a cash advance with no fees. Then write a check with the second card, deposit it into your account, buy the car, and immediately call the 0% bank and do a balance transfer. When the smoke clears, you'll have that car at 0%.

You just need to do one more thing: mark your calendar for when the 0% deal expires. You must be sure to pay that off before they hike your interest rate. Also, don't be late paying on that 0% deal! Most banks will slap you with a crazy-high interest rate as a penalty. I've seen some as high as 26% for late payers.

Good luck and please let me know what happens!

Regards, 
Scott

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