Wednesday, December 4, 2024

How are you buying a car with credit cards?
by Scott Bilker
Scott Bilker is the author of the best-selling books, Talk Your Way Out of Credit Card Debt, Credit Card and Debt Management, and How to be more Credit Card and Debt Smart. He's also the founder of DebtSmart.com. More about and DebtSmart can be found in the online media kit.

Scott Bilker

Scott,

Great web site! I read your article on purchasing a car with credit cards. I couldn't agree with you more! Money is money. And I want to borrow at the lowest possible rate!

Mechanically, how are you completing the transaction? I've heard some dealerships don't accept credit card purchases (because of the CC discount?).

Assuming you used a convenience check, how did you optimize that transaction? Did you quickly transfer the balance to a 0% card?

Thanks,
Jon

Jon,

Thanks for your positive comments about DebtSmart.com!

You are correct in that car dealerships don’t want to accept credit cards for car purchases. Specifically, they will not allow you to purchase the entire car on your credit card because they have to pay the merchant a percentage of that transaction. They will, however, accept some of that payment with your credit card--the down payment, or some other payment say, $1,000 to $2,000.

The way I use my cards to complete the entire transaction is by cash advancing the money and depositing it in my account so it’s available when I purchase the car. This way, I can tell the salesperson, "If we can agree on a price, I’ll stop shopping and write you a check in full right now!"

Of course, you want to make sure that you are careful to take advantage of credit card offers that will give you a good rate for the cash advance. A better rate than you can get from a bank. And that the offer doesn’t charge any cash advance fees (or at least a low cash-advance fee).

Creative financing using your credit cards can save you thousands of dollars in interest charges, which is why you always need to figure out if this option works in your situation.

Regards,
Scott

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