Using a credit card for a $6,000 car can cost $570 more than a car loan over two years.
Expect surcharges of 1-2% for card payments plus higher interest rates than typical car loans.
Always confirm if the seller accepts credit cards and compare financing with car or personal loans.
You can buy a car with a credit card in Australia, as long as the seller takes credit cards. It could be easier than getting a car loan, but also more expensive once you factor in card interest and surcharges.
How to buy a car with a credit card
Make sure the seller is set up for card payments. If you're buying from a private seller they probably aren't set up for this, but dealers should be fine.
Check what kind of surcharge you'll have to pay. Card surcharges can go as high as 2% of the purchase, which could cost hundreds of dollars.
Check your card's credit limit and make sure you have enough for the purchase. You may need to apply for a higher credit limit first.
Figure out how long you have to repay the card balance (and how much interest will cost you).
What are the pros and cons of buying a car with a credit card?
Pros
Pre-approved credit. If you use your credit card (and you have a high enough credit limit), you don't have to go through the hassle of applying for another loan.
Instant buy. You don't have to wait until your loan is processed and settled. If you want that car now, using your credit could help you get the car straight away.
Split costs. You could have cash ready for your new car, but you're a little short. You could use your credit card to cover the difference without applying for other finance.
Interest-free periods. You could use a credit card with an introductory 0% purchase rate and not pay interest for a set amount of time. If you manage your repayments well, you could avoid paying interest entirely.
Cons
Higher interest and fees. If you don't pay off the card balance in full you'll get charged a high interest rate. Even low rate credit cards have higher rates than most car loans.
Revolving credit with no set end date. With credit cards, you can pay just the minimum amount due. This could lead to debt you could carry for a while, with no definite end date in sight.
Surcharges and annual fees. Credit cards come with annual fees. You may also have to pay a surcharge for car transactions. These add to the cost of the loan.
Could use up your entire credit limit. A car is a big ticket item and it's likely you'll use up your entire credit limit. This means that you won't be able to use your card for other purchases, or it won't be enough.
Not all sellers accept credit cards
A private seller is unlikely to have the facilities to process a credit card payment. But if you're buying from a dealer, it's possible they'll accept credit card payments. Check with the dealer before buying, as some may only want a bank transfer or bank cheque.
Watch out for credit card transaction fees
Many merchants charge a credit card surcharge. You probably don't notice this on small purchases but when buying a car it's a big charge.
Surcharges range from 1% to 1.5% for Visa and Mastercard, and 1.5% to 2% for American Express.
Example
You buy a $10,000 car using your credit card. There's a 2% card surcharge. This costs you an extra $200.
What kind of credit card should I use to buy a car?
Our expert says: What kind of credit card should I use to buy a car?
"If you're not going to be able to pay the purchase off quickly, buying a car on a credit car means interest charges. In this scenario you want a low rate credit card or one with a 0% introductory offer. If you can afford to repay the whole purchase fast and want to earn points, then you probably already have a poinst-earning card you can use. Just check that the transaction is eligible for points. "
Savings. It may take a while to save for the car, but this can be the cheapest option. There's no interest, no fees, and you could earn interest on your money by parking it in a high interest savings account.
Car loan. With a car loan, you get the benefit of low interest rates and longer loan terms. Securing the loan with your car will get you a lower rate than an unsecured loan. Some car loans come with interest rates below 5%.
Personal loan. Personal loans offer lower interest rates than credit cards. The loan can be either secured or unsecured and comes with longer loan terms. Another advantage is that you have a set loan term. Debt with a definite end date can be easier to handle than rolling debt.
With both car and personal loans, the repayments will likely have a lower impact on your finances. However, with a longer term, you'll be paying interest for the duration of the loan. Be sure to account for interest costs and any monthly or establishment fees in your calculations.
How does buying a car with a credit card compare to a car loan?
As an example, let's say we're looking at a used car that costs $6,000 and you want to pay it off over 2 years.
We've assumed there's an application fee for the car loan and a 2% surcharge for the credit card. Here are some typical interest rates.
Based on a 2-year repayment period, paying for the car with a credit card costs $570 more than getting a car loan.
A lot of the cost depends on the interest rate that you get and, in this example, we have used the average standard credit card interest rate according to the Reserve Bank of Australia. As rates vary a lot, you can read more about car loans and personal loans to find the loan that works best for you.
Finder survey: Which personal finance products do Australians have?
Response
Gen Z
Gen Y
Gen X
Baby Boomers
Credit card
56.18%
74.18%
73.36%
73.86%
Buy now pay later account
38.2%
40.76%
36.84%
11.36%
None of the above
22.47%
8.15%
7.89%
19.89%
Car loan
19.1%
17.12%
11.51%
2.27%
Personal loan
17.98%
15.76%
13.49%
2.27%
Mortgage
14.61%
57.61%
54.61%
20.17%
Charge card
8.99%
8.7%
7.24%
6.25%
Source: Finder survey by Pure Profile of 1113 Australians, December 2023
Bottom line
Buying a car with your credit card may not always work in your favour. The cost of interest builds up over time and can add to the cost of your car. You may be better off using your credit card only to pay for insurance and rego instead. It may make more financial sense to either save up for the car or find more affordable credit options.
Frequently Asked Questions
In Australia, some dealerships allow car purchases with a credit card. Generally, transaction fees will apply of 1-2% which can add a significant premium to the cost. You will also pay relatively high interest rates.
Paying a mortgage with a credit card is generally not allowed by most lenders in Australia. If this is your only option, you could take out a cash advance on your credit card and use that cash to pay your mortgage. However. you will pay very high interest, generally 20% or more per annum, from the day that you withdraw the funds, so this is a very expensive payment option.
Plenty of car dealers sell used cars and might accept credit cards. But if you're buying from a private seller via a site like Gumtree or Marketplace you won't have the option.
Amy is an experienced journalist with over 16 years of experience, contributing to major publications like Money Magazine, The Sydney Morning Herald, and ABC News Australia. Specialising in personal finance, she frequently appeared in media outlets and on radio. Amy holds a Bachelor of Arts in Journalism and Drama from Griffith University and earned RG146 certifications in Tier 1 Generic Knowledge and Tier 2 General Advice Deposit Products, ensuring her expertise is grounded in current financial regulations. Amy was Finder's Senior Writer for Credit Cards from 2016 to 2024.
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