
Get exclusive money-saving offers and guides
Straight to your inbox
We’re reader-supported and may be paid when you visit links to partner sites. We don’t compare all products in the market, but we’re working on it!
A car probably isn’t at the top of your list of things to purchase with a credit card. But it could be tempting to pay with plastic as a way to rack up more points on a rewards card, or convenient if you don’t want to apply for yet another loan.
Whatever your reasons for considering a credit card for car finance, there are several important factors and limitations to consider. This guide will outline what you need to know about using your credit card to buy a car, and offer some other options so you can find a payment method that suits your circumstances and needs.
There are several reasons why you might wish to buy a car with your credit card. These circumstances include:
While there can be benefits to paying for a car with your credit card, here’s what you need to weigh up before pulling out the plastic:
Apart from using your credit card, you may also want to consider the following options:
Product | Interest rate | Term | Monthly repayments | Surcharge/ Loan application fee | Total cost |
---|---|---|---|---|---|
Car loan | 10% p.a. | 2 years | $277 | $195 | $6,840 |
Credit card | 13% p.a. | N/A but planned for repayments over 2 years | $282 | $180 (3%) | $6,953 |
Based on a two-year repayment period, paying for his new car with a credit card costs only $113 more than the car loan option. Jonathan decides to use his credit card because his credit limit is $10,000 and this purchase will not drastically affect his cash flow. Also, since he has a frequent flyer credit card that offers 1 point per $1 spent, he will earn 6,000 points for this purchase that could help offset the cost of financing.
Paying for a car with your credit card may or may not be the wise thing to do – it really depends on your circumstances. When weighing up your options, remember that interest fees can snowball over time and you should try as much as possible to avoid getting caught in the debt trap. It may sometimes be better to defer gratification than to end up paying way too much for a car because of interest fees and surcharges.
Images: Shutterstock
Back to topToday's best Finder Daily deals include: $1,250 off electric bikes, $70 off Nintendo Switch, $30 off Logitech G PRO X Lightspeed headsets.
Binance and Coinbase are two titans of cryptocurrency – let's see how the two stack up and find out which suits your needs.
First home buyers are getting practical with different tactics to enter the property market, according to new research by Finder, Australia’s most visited comparison website. A new survey has revealed that 1 in 5 (22%) first home buyers plan to renovate immediately after purchasing. Finder shares tips for sticking to your renovation budget.
More than two-thirds of Australians are at risk of getting ripped off when buying a new car, according to startling new research from Finder, Australia’s most visited comparison site.
Did you know that the average Australian has $29,091 in savings? Learn about this and more in our savings stats report.
Aspiring homeowners now need a six-figure house deposit to purchase a property, according to staggering new research by Finder, Australia’s most visited comparison site.
Enjoy 10,000 bonus points and 12 months interest-free on balance transfers and purchases. Plus, an ongoing $0 annual fee.
Here's how you can get your hands on this season's must-have platform boots without breaking the bank.
Credit cards are being used less and experts say Buy Now Pay Later services such as Afterpay and Zip are to blame, according to new research from Finder. In this month's Finder RBA Cash Rate Surveyâ„¢, 39 experts and economists weighed in on future cash rate moves and other issues related to the state of the Australian economy.
PayPal announced that it will allow users to facilitate their online purchases using various crypto assets across its 29 million-strong merchant network.