Can you buy a car with a credit card in Kitchener?
Can you buy a car with a credit card in Kitchener?
Posted on February 17, 2021
‘Can you buy a car with a credit card?’ This was a question our Kitchener car loan team faced this week. It isn’t one we hear often but seemed interesting enough to make a blog post about it.
So can you?
Yes, you can buy a car with a credit card if the dealership agrees. But more importantly, should you?
Not all dealerships will allow you to pay for the entire car with a credit card. Some will allow a certain amount and then require the rest as cash or a car loan.
Pros of buying a car with a credit card
If the dealership will accept a credit card payment, there are benefits to doing so:
Reward points or incentives – If your credit card offers reward points, travel points or other incentives, they can mount up quickly if you buy a car. Just check the small print and see if there is a maximum single purchase amount or cap on those rewards.
Zero interest credit card – If you have a 0% deal on purchases, you could theoretically buy a car and not pay a dollar in interest. Just make sure you can pay off the amount before that zero percent period ends!
You want the flexibility to overpay or pay off early – If you’re expecting a lump sum bonus, dividend or inheritance, you can get a car now on a credit card while waiting for it to come through.
Cons of buying a car with a credit card
There are significant downsides to buying a car with a credit card:
Not all dealerships will accept full payment – Dealerships have to pay a processing fee for every credit card payment they take. The higher the amount, the higher the fee, so many dealerships won’t accept full payment via credit card.
High interest – Credit cards can charge very high interest rates. If you cannot pay off the amount in time, you could be in for some serious interest fees!
You need a high credit limit – The average Canadian won’t have sufficient credit limit to buy a new car outright on a credit card. Part payment may be okay but the full amount may be harder to come by.
Credit cards vs Kitchener auto loans
There are only a few situations where it makes sense to buy a car using a credit card. For most of us, an auto loan makes much more sense.
There is less risk of paying high interest rates, you don’t need a sky-high credit limit, dealerships are always willing to accept auto loans and a loan provides a more predictable monthly outgoing than a credit card.
Plus, a minimum payment on an average car purchase for a credit card could easily be $400-450 per month. Most car loans will be cheaper than that. The only advantage with a card is if you can pay it off early. Otherwise, an auto loan makes much more sense.
So while you can theoretically buy a car with a credit card if the dealership agrees, we don’t think it’s a good idea.
When you’re ready for a car loan, get in touch with the Kitchener car loan experts at Northway Ford for great deals on auto finance.
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