New Car? Put It On The Credit Card

Why should dealers tell you what you can and can’t charge to your credit card? Cars represent a jackpot of credit rewards that every consumer is entitled to collect. There’s nothing stopping from charging your new car straight to your credit card, if you storm the dealership armed with the right tools…

Dealerships loathe credit cards for two obvious reasons:
Fees: The 2% transaction fees easily costs a dealer several hundred dollars.
Financing: Dealers receive lucrative incentives for arranging financing. They don’t want the credit card companies having all the financial fun.

Just because you can use a credit card doesn’t mean you should. Dealers factor the method of payment into their negotiations, and asking to pay with a credit card could jack up the price and deprive you of leverage. Even worse, financing your car on the back of your credit card could be a risky financial bet. That said, if you can pay off the car relatively quickly, your credit card can provide a windfall of cash back or frequent flier miles.

Convincing the dealer to accept plastic requires a copy of the cardholder agreement and a few shots of tenacity and persistence. First, negotiate the price of the car. Then, calmly explain that you’ll be paying with credit.

Sound outlandish and ridiculous? Fine, don’t trust us. Trust Matt Fadiman, Vice President of Riverbank:

…as per both the MasterCard and Visa merchant agreements, a participating merchant must accept that credit card (assuming it is valid and approved) for all purchases. The merchant cannot, by policy or practice, decide which transactions it will allow and which it will not.

I do agree that in reality many dealerships will attempt to refuse to charge the sale on a credit card, but when pushed they will back down. I have purchased my last 4 cars all on credit cards. To say the least the dealer was not happy, but when presented with both a copy of the merchant agreement, and my declaration to pursue with the credit card company, they quickly reversed their position. My calculation is that between the rewards (cash back) and the zero percent rates on the credit cards, my savings were well in excess of $6,000.

Visa confirms that dealers don’t have a choice:

U.S. merchants must follow basic card acceptance rules for all Visa transactions. Visa’s rules do not allow merchants to impose a maximum transaction amount as a condition for honoring a Visa card. Our rules require merchants to always honor valid Visa cards regardless of purchase amount — large or small.

There are plenty of reasons not to pay with credit, though the thought of charging back a lemon is tempting. Would you ever put a car on your card?

Savvy shoppers may get car with card [Bankrate]
(Photo: Peter Kaminski)

Comments

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  1. gafpromise says:

    We paid our last car with a credit card. Of course it was only $4000…the bonus is the insurance. Technically you are considered to own the car, there is no lender involved, so you don’t have to get full coverage on the insurance. That’s definitely additional savings.

  2. emis says:

    I’ve used a credit card to place the majority of the down payment on my last few cars.

    Each dealer has balked at it, and they’ve all come up with “We only allow $xx max on a credit card” type of statements… each time the “xx” in question has been close enough, I just make up the rest with a personal check.

    My personal favorite… I was buying a used Taurus from a Ford dealer and negotiated using my credit card to put down $2500… F&I guy didn’t think it was as funny as I did when I pulled out my GM Master Card :^)

  3. gjaluvka says:

    yes, great point – the ability to choose no or high-deductible comprehensive insurance can easily offset any credit card interest you do pay.

  4. VeteranMilitaryWife says:

    Just make sure you can pay it back when you get your statement. If you can’t afford to pay the entire amount, some dealers are more “friendly” about it, when you pay part of your purchase with credit card and finance the rest (either with the dealer, if they have a good deal or on your own).

  5. Pro-Pain says:

    I tried to buy a new car in ’04 and put it on my credit card. Sales prick and dealer rip off artist manager laughed at me pretty much and wanted to charge me all sorts of additional “fees”. I went and got a cashiers check. They are SO LUCKY I wanted that car bad…I’d never do business with them again.

  6. kc2idf says:

    What an interesting proposition! I have only once bought a car that was more than $6000, so this may actually be practical for me.

    Obviously, you need to get the dealer to commit to a price first. Finish the negotiation, then drop the bomb on them.

  7. zanthia says:

    My parents found a lady who was selling her car because her company had just given one, but the bank that had financed was asking for all sorts of income statments, cash flow statements (my parents are self employed) in order to change the financing over to my parents. All had to be audited and notarized, even though they have excellent credit. So they paid off the loan with the Visa card and paid off the Visa card the next month. Problem solved, new car.

  8. highmodulus says:

    Paid with a cashiers check last time for my car. But I carry no balance on both of my rewards cards, so this would have been pretty good. Wish I had known.

  9. Rippleeffect says:

    This is an interesting idea. One that didn’t really cross my mind as a good one before, but when he mentioned the 0% deals it makes sense. Plus the since you own it, you can drop your insurance deductible.

    I wouldn’t do it for a new car, but maybe my next used car.

  10. fuzzball21 says:

    My father had the same idea, but it was for my college tuition. I only had to pay a few grand every semester because of the scholarships I had, so he’d charge it, and let me pay him back before the bill came due. (I worked full time and lived at home, so this was EASY for me after my first semester at school, I put all my money in savings) The best part? For his “loaning” me the money, he got 2.5% back on that money when he got his cash back rewards at the end of the year!

  11. Scuba Steve says:

    Half the time, you will get some problems with the card when they go to swipe it in the back.

    They will say “It didn’t go through” or “Our processing machine is down.”

    Usually lies.

  12. Taed says:

    I’ve only paid cash for all of my cars ($1000, $2000, and $5000), so I’m not familiar with the insurance fees you guys are talking about. Are you maybe saying that you’re required to carry comprehensive or something like that?

  13. Titan0 says:

    Hmmm, I wish I knew this. I tried to put $15k on a credit card at a car dealer and was told that they did not accept transactions larger than $5,000 on cards. So I wound up writing a personal check.

    You’d think they’d rather get the added security of a credit card (over a personal check), despite the additional fee.

  14. Scuba Steve says:

    @Taed: If you finance through a lender, a common requirement is that you fully insure the car for the duration of the loan.

  15. Addison says:

    Last month, my partner and I decided my mom needed a different vehicle. She has an ARM on her house and couldn’t afford it, so I found a Chevy Trailblazer with low miles and got it for $9k. When I spoke with the salesman, I told him I would be writing a check out of the investment account for it and please let financing know. He didn’t. The finance guy kept me waiting for 45 minutes to sign paperwork, even though we were the only people on the lot. When I got in, he asked me to go get a cashier’s check. I refused because I had given them the opportunity to ask before while I was sitting there for 45 minutes. I didn’t have any more time to waste. I told him he could take the check, take my AMEX or lose the sale, his choice. He opted for the AMEX, which thrilled me to no end….Reward points galore.

  16. Ragman says:

    We’ve always been told by dealers that there’s a $2000 max per card, and a fee for charging to additional cards. I need to check Discover’s agreement.

  17. bravo369 says:

    I am running into the same thing when booking a venue for my wedding. The places all say cash or check only. The places all say it’s non-refundable too so we figured no credit card because they fear chargebacks if you cancel. 2% fee adds up to a loss for them too for a $25000 bill. maybe i should push back with them and make them take it

  18. BeerFox says:

    Huh. I wonder where ‘convenience checks’ fit into this? I seem to get at least one batch per week from one of my two high-limit, zero-balance cards, usually at around 3%. I’m guessing they count more like a personal check – so the dealer isn’t obligated to take one, under the merchant agreement. However, I’m also guessing that merchant fees don’t apply, which might make them more amenable to taking one. Wish I’d thought of this before buying my current car – would’ve got about the same financing rate, plus a hell of a lot of rewards points!

  19. zarex42 says:

    I think these agreements with the CC companies are not really fair to the dealers; the CC companies have a sort of monopoly/trust going with these cards, to extract around 2% of sales. Why shouldn’t the dealer be able to recover these costs? Why should they have to eat them? It doesn’t sound fair to me at all, even if that’s the agreement in place.

  20. TeraGram says:

    @BeerFox:
    Check your card agreements before you try using those convenience checks. Both of my rewards cards explicitly state that the cash-back/points do NOT count on purchases made with those checks.

  21. RedmondThyestes says:

    @zarex42:
    One way to look at it is:
    1. You have a car accident and have 5k damage to your car. You put
    this on your credit card. They won’t bat an eye at this.
    2. You try to buy a used car that is 5k at the lot. They say they
    can’t do this.
    Both will have the same amount of fees for the dealer, but why is one
    different? The collision repair more than likely generates more profit
    then the sale of the low priced used car. They don’t care about the
    fees there.
    If credit card companies allowed stores to charge fees on certain
    purchases but not on others or not accept cards for certain things,
    the nice parts of having a credit card would be void, and it would be
    no different then any other line of credit that limits to certain
    purchases.

  22. jeffimix says:

    @bravo369: @bravo369:

    That’s somewhat plausible, some places may figure that credit cards are not in their best interest to accept, so they have no merchant deals what so ever. Only places that sign into the deals can take credit cards, not everyone. The only payment a place usually is truly obligated to take no matter what agreements or policies they have is cash.

    This is why my landlord telling me they don’t accept cash was dumb on her part.

  23. rellog says:

    @zarex42: Don’t you think most places have ALREADY built in the cost of using credit cards? Plus, they entered into the agreement to have the ability to accept credit cards. If they don’t like it they can stop accepting credit. But since they cash cow- service and repai- needs to accept this, they’ll never do it.
    Look at it from the other way… for example:
    “look, I will be deducting 12% annual per year from the cost of the new car for 5 years, because that is the interest I will have to pay to own your vehicle.” So are you saying we should be able to do that as well?

  24. Ncinerate says:

    Speaking from over a decade in auto sales, I have never, ever, seen someone purchase a car over 5000$ with nothing but a credit card (the dealership has always imposed limits at 2000$-5000$). That said, I’ve seen tons of cars purchased by credit card that were 5000$ and under.

    I’m not saying it’s impossible, but if the dealership is gleefully accepting a credit card on your 20,000$ car purchase it’s UNDOUBTEDLY because they are making a MONSTER profit on the vehicle (rules get bent when there’s thousands of dollars of profit on the line). I can tell you right now if you work down to a tiny no-profit deal, you will most likely NOT be purchasing that 20,000$ car on a credit card. Pursue it and you will find that said dealership doesn’t -have- to sell you a car at all.

    There is nothing to stop a manager from coming out and flatly declining to do your deal. Thats even if they don’t get creative, we’re talking about car guys here, not exactly the symbol of virtue and righteousness.

  25. thesabre says:

    I’d rather see Visa and Mastercard crack down on these local convenience stores that impose a $5 or $10 minimum purchase to use a credit card. I’ve reported dozens of them in the past 2 years and not a single one changed their policy.

  26. methamp says:

    @zarex42: They don’t have to use Visa, etc. Besides, the cost of doing business with those cards is already built into the price of everything else.

    @thesabre: I’ve been burned by those stores too. I reported a couple of them, but nothing is done. I don’t even bother going to those stores unless I have cash. Those are the types of places where you spend more than $5 anyway. Visa and Mastercard really don’t care about it as far as I can tell. They’ve got bigger fish to fry.

  27. rekoil says:

    @BeerFox: Convenience checks work like cash advances – you pay the processing fees (usually 2-3% and often at a higher interest rate), not the merchant. You might not save any money doing this, but you will have clear title to the vehicle.

  28. bryanoak says:

    I think it is a great idea in lieu of paying cash for a car and not so great an idea as a means to finance a car.

    A few years ago my parents bought a fairly expensive boat ($500K). And, instead if paying cash, they got a limit increase from their CC company, charged it, and paid it off at the end of the month. They fly quite a bit and the frequent flier miles were plentiful.

  29. RetailGuy83 says:

    Would visa double the 3yr/36K to 6yr/72K?

  30. FSP says:

    My father uses his platinum Amex to make large purchases, including his most recent car. He hasn’t had any problems doing so, and his main motivation isn’t the rewards, but the additional protection that the card offers.

  31. jpx72x says:

    @RetailGuy83 This.

  32. Fist-o™ says:

    For some reason this just seems… bad. Maybe because I am brainwashed to hate CC companies.

    There are only two reasons I can think of to use a CC for purchasing a vehicle. First, you don’t have the money to buy the car and you need to borrow it from the CC company. We at consumerist can at least agree that this is extreme foolery.

    The other advantage would be the rewards points, and maybe not having to pay full coverage on insurance. Well, let’s see: if you got a 10,000 car with rewards of 2.5%, that’s $250. But the article clearly states, “Dealers factor in the method of payment into the negotiations”. So, if they end up having to pay the 2% fee for the CC, they will at least try to get that back; which is $200. So, you get $50 bonus on a $10,000 purchase.

    But you’re buying from a dealer. The price is probably still a bit more higher than you’d pay buying the same vehicle from a private person. Oh, well maybe you get a warranty; but that costs money, too.

    I guess, to some, that might be worth it. But to me, who feels that Credit Cards are an accident waiting to happen, I guess I’ll stick with the traditional method of buying cars with cash from now on… and not at a dealer.

    Debt is a marketed product, and the credit card companies have come up with this fabulous idea of giving “Rewards” to you. As if your behavior was somehow “Good” for borrowing money.

    Sorry if I sound like some curmudgeony old nay-sayer, but like I said, I’ve been brainwashed… It kills me to read articles here on Consumerist where you see how some people are screwed over by their Credit Card companies, then on the next page, they’re advocating its use on the second-most largest ticket item in the average American’s household budget: A vehicle. Not right. Consumerist, I am very disappointed in you.

  33. Fist-o™ says:

    @bryanoak: Your parents have a credit card with a $500,000 limit?? GEESH What card is THAT?

  34. HawkWolf says:

    I might put a used car on it, if I knew I had the cash but wanted to reap the rewards on the card. I’d be worried that paying off about 5k of money all at once on a credit card would get it marked as fraud though.

    I would not put a 14k to 20k car on a credit card.

  35. MollySavoie says:

    Clearly the author only wants to highlight the
    superficial reasons behind why car dealers decline
    credit cards. The reasons people typcially don’t get a
    straight answer on this topic because they are working
    with typically ignorant salespeople.

    If you purchase a car by credit card you don’t own the
    car, the credit card company does. This forces the
    dealer to tell the DMV to send the title to the credit
    card company. Most (nearly all) credit card companies
    don’t have a facility for processing titles
    (collecting, storing and relinquishing titles once
    paid off.) DMV can make simple, straightforward
    tranactions into nightmares, can you imagine how they
    handle these scenarios. It’s a nightmare for all
    parties, the consumer, the credit card company and the
    dealership tracking that title as it changes hands.

    Second, many credit card companies require merchandise
    to be returnable if the customer isn’t happy. Makes
    plenty of sense in the retail (clothing, toys, etc…)
    where there’s 200-300% profit, but not for a
    dealership. If a new car is sold and returned, that
    car is no longer new, it’s used. That means the car
    must be sold as used, which can cost the dealer
    thousands, or on soft-market luxury cars, even tens of
    thousands of dollars. Cost to enable returnable cars
    would increase car prices 20-30%.

    Third, the cost of credit transactions are typically
    built into the price of the goods purchased. Your
    freedom of choice is actually raising the price of the
    item, regardless if paying cash instead. You can see
    evidence of this at gas stations (very thin profit
    margins) where the cheapest price for gas in town
    sometimes reflects cash transactions only (Credit
    transactions cost you XX cents a gallon more). On
    smaller ticket items, the difference in price doesn’t
    seem to impact the consumer in the least. On a big
    ticket item like a car it would be a big hit to the
    wallet. So unless you want car prices going up an
    additional 5% just to enable freedom of choice, it’s
    better this never happens.

    Forth and probably the least important reason to
    consumers. Dealer margins are shrinking everyday. It’s
    not uncommon these days to see cars with MSRPs on
    upwards of $50-60K, selling for a mere couple hundred
    dollars profit. Now the customer whips out their
    credit card, which may make this measely 1% profit
    margin either disappear entirely, or even make the
    dealer move a unit at a loss. While this may excite
    some consumers at the prospect of “sticking it to the
    man”, there are lots of hidden repercussions of
    creating such losses.

    Dealerships are closing down at alarming rates.
    Dealers are trimming back services and operating
    hours. Competent and educated salespeople and
    technicians are leaving the industry looking for other
    decent paying work, leaving you to deal with people of
    perhaps lesser qualities to handle your purchase
    costing 10s of thousands. Doesn’t sound like something
    I want.

    Shame on the author for either not doing his homework,
    or intentionally omitting important facts. Shame on
    him for arming a guillable public with incomplete
    information, making the whole car buying process just
    that more difficult for everyone involved.

  36. forgottenpassword says:

    I’d do it if I actually bought from a dealer/dealership. Miserable car salesmen have forever kept me away from buying from a dealer.

    (like I said… I’d do it for the rewards & then pay it off by the end of the month with cash)

  37. thesabre says:

    @Fist-o: Don’t most credit card companies allow you to request an increase in your limit for a major, one-time purchase? That sounds like what this person’s parents did. I don’t think they have a 500K limit at all times.

  38. drdom says:

    My wife bought a new car on her Discover card using a 0% promo rate. The only qualifier was that the first dollar of every payment went first to new purchases within 30 days, and after those were paid, then the rest of the payment went to the outstanding balance. She made 2 small purchases each month, to keep the card account open, but didn’t use it for anything else. She negotiated the price up front first, and then got out the plastic. Although they weren’t thrilled, they didn’t fight over it either. At a time where no one was doing 0% financing, this was a great way to get a better deal. We know of several other people who have done car deals to get points, airline miles etc. If the dealership takes credit cards for parts, service etc., they have to take your card, and cannot impose any conditions or restrictions.

  39. Suttin says:

    @Ragman:

    Lets see him say that when I pull out my AMEX gold card…

  40. mijo_sq says:

    I bought my old car, then transferred the balance to a higher limit card. ..0% interest..and some creditcard rewards from it too….

  41. BigBoat says:

    Similar to this story, I am looking forward to paying some tuition with my credit card this summer.

  42. aishel says:

    I had told my dealership in advance that I would get financing elsewhere (they couldn’t match the rate my credit union was offering), so no problems there. Out of total cluelessness, I had no idea that dealerships don’t like credit cards. Since I was going to be paying $4,000 out of pocket, I gave them my credit card. He looked at me funny and said that they have a $2,000 limit on credit cards, and that I’d have to pay the rest by check. I told the guy, sorry, I had no idea, but my check book is at home, which was over half hour away. I wasn’t about to make the round trip just because of their own rules. After consulting his manager, he came back and let me put the entire thing on credit card.

  43. Me - now with more humidity says:

    fist-o: AMEX Black, perhaps?

  44. bobpence says:

    I don’t look for the Amex sticker when walking into a dealership like I do when walking into most stores, but I do recall seeing it at many parts departments and service entrances, so perhaps some dealerships have already thought of this loophole: The dealership need not be all one company, and thus need not all be the same merchant. Smith Auto Parts & Service may accept plastic, but Smith Auto Sales, a separate company, could tell you “we don’t take credit cards.”

  45. DH405 says:

    Use one of those balance transfer checks. Get a promo rate and the dealer can take it just like a bank check.

  46. Tracy Ham and Eggs says:

    Couple quick pieces of advice on this one.

    Make sure that the dealer is even signed up to take cards. Some have parts/repairs as a separate entity so they can avoid taking cards for purchases.

    Read your loan papers. If you are financing part of the cost most lenders wont let you pay the down payment with a credit card (In effect you are taking out two loans).

    Call the card issuer in advance if you are planning to charge 5k plus unless thats a common amount for you. Many companies will immediately flag it as fraud when they see a large charge like that.

    Make sure that you have extra room on the card. Because taxes/plates are paid directly to the state in some cases they will often turn the purchase into multiple transactions. A couple pre-authorization holds can immediately bind up some extra funds.

    @bravo369: Thats why those places dont take cards. If you decide that you want to back out and call in a chargeback you may win (since the service was never provided). The venues dont accept cards at all usually (so you cant force them to by arguing about the cardholder agreement).

  47. Crazytree says:

    1. dealer will refuse
    2. customer will have a conniption fit
    3. customer will complain to the cc issuer
    4. cc issuer will do nothing

  48. RINO-Marty says:

    Yeah, I tried this recently on an MDX and the dealer laughed in my face.

  49. longtimegeek says:

    We paid all of my son’s university costs that way – tuition, room and board, everything. LOTS of nice rewards points over four years, then took the money out of the college fund to pay the card off after each payment.

  50. Apeweek says:

    I’ve done this, twice – for relatively inexpensive vehicles. The intention, both times, was to pay off the balance within a few months. Much less hassle than getting a loan.

    The last time, I didn’t use the CC, but challenged the financer to match the teaser rate on my card. He did.

  51. PinUp says:

    I have put a large d/p on a car with a credit card. The total owed was around $7k; first the salesman said we had to write a check for the rest because “the machine doesn’t let us put through more than two thousand.” Uh-huh… So we told him that was fine, just run separate transactions for under $2K. We had to really make it clear that any other solution was unacceptable, and would cause us to become a huge pain in the collective ass of the dealership and all involved. Then they acted like they were doing us a favor–oh, please!

    I’m guessing that most people assume that means they can’t pay a total of over $2k and give in, and that’s how dealers con people into charging less. Dirty!

    Of course there’s also the incentive to sell financing; credit card=lost commission.

  52. bryanoak says:

    @Fist-o: No, they don’t. I guess I should have been more clear.

    They had to jump through some hoops to get it done, but they were able to get the CC company to raise their limit for the one purchase. I’m confident that the limit was reduced shortly after the purchase was made but they were able to get the miles.

  53. karmaghost says:

    If they hate credit cards so much, why do they accept them as payment in the first place?

  54. GiselleBeardchen says:

    @TeraGram:

    Charge car with card “A”. Pay off card “A” with convenience check from card “B”.

    This should also double manufacturer’s warranty for free. Anyon know if that applies here?

  55. spoco says:

    Paid for my current car with AMEX Gold. Pissed the dealer off to no end. I negotiated the cash price then told them to ut it on the card. The salesman’s look was priceless. He came back after about 20 minutes and tried to fight it, then the sales manager came and told me that they could not sell me the car at that price if I intended to pay with AMEX. I told them I wasn’t paying anything more than the price we agreed on and I asked for the general manager to tell me personally that they were not going to sell me this car. Five minutes later, he came back and said that they were running the card. I had to sign a few extra pieces of documentation, they needed copies of the card, etc.

    And since I had the cash in the bank, I went home and paid it off that night. About to take a half a vacation with the points.

  56. walterm08 says:

    I have never been so pissed off in my life until I was treated like trash yesterday paying for my new Acura MDX in cash. Once the finance manager found out that they weren’t going to make any financing or leasing money off of me, he walked away for 45 minutes until finally coming back. Had there been another Acura dealer within an hour of me I would have walked out and bought it there.

  57. Car dealers are slimy enough and by now have figured out the Visa limitations. There is a simple why to avoid accepting Visa and it is called the SALES CONTRACT. You know, that written document that you signed agreeing to the price. Somewhere on the sales contract (in ultra fine mouse print no doubt) is the terms of the sales that stipulates the methods of payments that can and will be accepted per the terms of the contract, specifically the transaction is considered a cash transaction or a financed transaction with payment due to the dealer within specified period of time (in other words your Credit Union must pay by check within the days specified). Cash transactions include a discount for paying in cash, which was factored into the selling price agreed upon in the contract. A Visa transaction would violate the terms of the contract as Visa payments are considered a delayed payment AND involve an additional discount from the selling price with regards to the funds received by the dealership. Since Visa allows cash transactions to have a cash discount, the dealership is allowed, per VISA rules, to a have a different (read higher) price for non-cash transactions. A sharp dealership (read slimmy) is going to have their butt covered and will charge appropriately for handling the Visa transaction.

  58. lukobe says:

    I put $3000 of my last (used) car purchase on my credit card, on which I’m getting 1% back. They wouldn’t let me put any more on. Too bad I didn’t know about this. That having been said, I suppose they could have just refused to sell me the car at all, and I didn’t want to go there.

  59. FHJay says:

    So wait. Visa says they can’t refuse a transaction, large or small? Does this mean those places that say they won’t accept credit cards for less than $5 or $10 are breaking the rules of Visa’s merchant agreement?

  60. mike says:

    Does anyone have a “pocket” version of the merchant agreement? It seems like more and more that consumers need to be armed with it to educate merchants.

  61. SayAhh says:

    @aishel: I, too, heard from stories that dealers have a $2k or $5k limit, which I guess is equivalent to the $20 minimum, only on the upper end. Never thought about charging my card anyway, since my credit report will show that I maxed out my credit card on, say May 2006, which might or might not affect your credit score since you might decide to max out all your credit cards.

    A new idea just came to me: what if you negotiated a good price, financed the car at 0% with no pre-payment penalty, then pay off the entire amount with your credit card when you receive your first billing statement? I can’t remember if they’ll let you pay more than one month’s worth of payments or if the your particular automakers’ finance service will accept credit cards as payment without incurring a fee (flat or percentage), but if they did, this might be a way to go around the “salesman said they won’t do it” situation.

  62. SayAhh says:

    @Corporate-Shill: if this is true, then everything, including the article, is moot.

  63. tevetorbes says:

    Here’s an idea:

    You choose to buy your auto at a particular dealer, then decide to use your CC. Dealer balks.

    Oh well, you tell the dealer, you aren’t the only game in town.

    You ALWAYS have to be willing to walk, at any time. ESPECIALLY at this point in recent history, where dealers are clamoring for ANY business.

    Consumers always have the power- if you don’t like the terms, take your business elsewhere, whether it’s an automobile or dishwasher or pair of shoes or pack of gum.

  64. @linus:

    That merchant agreement found on the Visa website is absolutely worthless. It is essentially nothing more than guidelines.

    The real merchant agreement is a contract between the merchant and the merchant bank. THOSE rules are much more complex. For example, a merchant bank can refuse to permit a business to engage in any internet sales. For many years that was a common merchant bank rule and still is found with some merchant banks. Bottom line the merchant bank is free to set their own rules and it is up to the merchant bank to regulate their rules.

    Want some proof?

    Everybody hates on Bank of America. Their website

    [www.bankofamerica.com]

    Allows photo ID to viewed if the transaction is suspicious.

    “Verify signature
    Always verify that the signature on the back of the card is reasonably similar to the signature on the sales draft and that the spelling is identical. If suspicious, ask for an ID and verify the signature on the ID to the signature on the credit card.”

    Pretty simple, a merchant could state that all transactions are suspicious and therefore require photo ID on all transactions… and the merchant would be in full complaince with Bank of America rules.

    MY merchant bank “requires” me to video tape all customer over the counter transactions OR have a manditory check photo ID policy. I chose the video tape policy to comply with the Merchant Bank rules. Since I have the video taping policy, I qualify for a lower rate than other merchants. See, it is in my best interest to comply with the Merchant Bank.

  65. dtremit says:

    @MollySavoie: “If you purchase a car by credit card you don’t own the car, the credit card company does.”

    This is false. Car loans are secured loans; your repayment of the loans is guaranteed by a lien on the item purchased. Credit cards are unsecured; there is no lien placed on anything. It has to do with the type of credit, and nothing at all to do with the item being purchased.

    As such, it’s worth pointing out that doing this doesn’t necessarily preclude financing your car. If you’re buying with a credit card, you’ll get clear title to the car; you can then refinance the car through an auto lender, and use the money you get from that loan to pay off the credit card. (Most auto lenders consider a car within the first few months after purchase to be “new” for loan purposes, so that you can refinance easily.)

  66. jacksbrokenego says:

    @MollySavoie: “Now the customer whips out their credit card, which may make this measely 1% profit margin either disappear entirely, or even make the dealer move a unit at a loss. While this may excite some consumers at the prospect of “sticking it to the man”, there are lots of hidden repercussions of creating such losses.”

    there’s no law that requires a business to accept credit cards at all – if it’s such a detriment to car dealership to let customers pay via that method, then they shouldn’t accept them. Why is it the consumer’s responsibility to watch the dealership’s back by considering how a credit card payment may adversely affect the dealership. And as far as sticking it to the man goes – there are many reasons why that might make people feel good when working to buy a car – it’s not an industry well known for stand up, honest customer service. Do you work in auto sales by chance?

  67. Lucky225 says:

    Putting a car on a credit card is, in my view, a good option, especially if you have a 0% card. And hey, if you can’t pay the card, you still have the title to the vehicle without any liens, good luck trying to get the card back, it’s already paid for as far as the dealership is concerned.

  68. Lucky225 says:

    trying to get the car* back

  69. SayAhh says:

    Your typo just brought up another interesting situation, one in which the salesman LITERALLY ran away with your credit card LOL

  70. slowinthefastlane says:

    @walterm08
    Don’t know about Accura, but I’ve had better experiences dealing with the internet sales person or the fleet manager (usually the same person). Find one online you like, take it for a test drive, and they’ll generally take any form of payment. They’re used to dealing with businesses and municipalities that pay in cash via purchase orders and corporate fleet management companies. I’ve bought 2 cars this way – spent less than an hour in the dealership each time, mostly on the test drive.

  71. hazelwoodfarm says:

    Depending on who you deal with, using a CC will not be a problem. Last year I bought a new $15,000 Kubota Zero turn lawnmower with my AMEX. I was even asked if I wanted to use my CC or write a check, so I went for the rewards points. I paid the amount when the AMEX bill came in later that month. No Problem.

  72. weave says:

    My wife recently had a full mouth of teeth implants. Total cost was $80,000. I put the entire thing on my Amex card. They didn’t balk. Of course, I’m sure the margin is much higher on high-end dental procedures.

    I just recently purchased a new $16k Honda Fit. I put the $500 down payment on my Amex but they wouldn’t allow the full car on it, so I just wrote a check. A real PITA since I had to move the money into that account and then wait until it was available for withdrawal.

    Anyway, if you have a good history with Amex they’ll let you charge outrageous amounts — just gotta pay it off when the bill comes in.

  73. thunder says:

    My wife & I were caught in a vehicular pinch five years ago and bought a used van from a dealer so that we could use the credit card option. They weren’t happy about us using the card, but went ahead with it when we threatened to walk. A week or so later we took out a standard loan through our credit union (at a much lower rate than the dealer had to offer) and paid off the CC when the statement came. Got a good number of points off that one, but that account had a pretty lame points program.

    With our present VISA card (through Countrywide), we get a $50 credit toward our home mortgage for every $2,500 we spend on the card, plus there is no interest or fees on the account. We’re in the market for another car (used), but I hate the idea of going to a dealership again.

  74. MrEvil says:

    I would think the card merchant fees on a NEW vehicle probably would put the dealer at a loss given the razor thin profit margin on new vehicles. HOWEVER, used cars have an insanely high profit margin. Take the price of a used car and divide by 2 and you’ll be within +/-20% of what the dealer gave for it in trade or at auction, the dealer’s cost on that used car might even be less if it was a repo bought at auction.

    There’s a good reason every auto dealer you go to generally has just as many if not more used cars on the lot than new.

  75. reimero says:

    My fiancee put her car on a cash rewards card. She had enough money available that she was able to put the car on the card, then pay off the balance in full when the bill came due. Purchases like cars are very nice when you have cash rewards and don’t accrue interest on your card!

  76. ram0029 says:

    I sold cars for a few years. We would take credit cards for vehicles up to any amount, but the merchant fee was added to the price of the vehicle (it has been awhile but it seems it was 1.5%). The only exception was the GM card since the dealership was reimbursed the merchant fee.

    I have purchased our last three vehicles using our GM card (the only thing I use it for actually hehe). Some people would get upset, they were buying a car cheap, into the holdback money after 3 hours of arguing over the price. Then would whip out the credit card to be told it would add $500 or 600 bucks to the price.

    Most people did not flinch though, the rebate points etc would cover the charge and most of them had 0% for XX months and what not.

    If a dealer is flinching at taking a card, use a courtesy check. It usually works out better. Call your credit card company, tell them you are making a major purchase and see what deal they will make you. They will usually send you 2 or 3 blank checks with different terms (4.9 fixed forever, 2.9 for 36 months, or 0% for 24 months or similar).

    Going that route you can right the check for more then the purchase price and have the dealer give you the difference back for TT&L.

  77. TheBigLewinski says:

    @MollySavoie:

    When I make a purchase on my credit card it is “unsecured” debt. The credit card company is making me a “personal” loan and I typically pay a higher interest rate as a result.

    You don’t have a clue what you are talking about, better to keep your trap shut than to make an ass of yourself.

  78. Fist-o™ says:

    Screw this. Big fat waste of time.

    I’m going to save cash, and buy a good used car from some private person. (Hopefully an old lady).

    You all can keep your 2% rewards…

    As far as my kid’s college goes, isn’t that what 529′s are for? to save taxes on college?

  79. stevegoz says:

    I could try this, but as happens with any transaction of more than 30 bucks or so*, Chase would decline the attempted purchase, then have a computer call me the next day asking if I still wanted to make the buy….

    *Okay, slight exaggeration for attempted comedic effect. Chase usually trusts me on purchases of less than a hundred as long as they’re made within 250 yards of my billing address.

  80. That-Dude says:

    @BeerFox: Generally points dont accrue on convenience checks. Otherwise, I would pay my mortgage with them and would have paid for 100K of grad school with them as well.

  81. ManiacDan says:

    Beware of any artificial maximums on your rewards cards if you try this plan. My parents charged two year’s of school tuition to a credit card in one transaction (a year for me and one for my brother). They were attempting to cash in on double airline miles, but they only received 15% of what they expected. Apparently the card has a hidden cap on bonuses. Check with your card company before you try this, or you’ll be stuck with a higher-interest payment plan and nothing to show for it.

  82. milqtost says:

    @zarex42: Well, if the dealer doesn’t like the agreement, they don’t have to sign it. And the fees they pay are negotiable if they have the business to back it up. It’s pretty much the same for them that it is for the people buying the cars – if the deal doesn’t suit them, they can pass on it.

  83. DenaNotus says:

    Here’s what I did to purchase a $26,000 used car on a credit card in an
    indirect way: I had the cash to buy the car outright, but I wanted to keep
    earning a little interest on that $26,000 which, at the time, was in a 5%
    APR money market account (Countrywide.com). I called up Discovercard from
    one of the many 0% balance transfer offers I had been receiving at the time
    and asked if I could transfer $26,000 to my home mortgage line of credit,
    which I have but have never really used. They allowed this – just wouldn’t
    allow a transfer directly to the Countrywide account or any other checking
    account.

    So, I paid for the car with a check drawn on my money market account,
    initiated a transfer of $26,000 from my line of credit to refund my money
    market account, and finally had Discover do a 0%, no fee balance transfer to
    refund my line of credit. I paid no interest or fees on any of this and in
    the almost two years since, I’ve been earning between 4-5.5% on the $26,000.
    I have had to pay a minimum payment of about $380/month to Discovercard, and
    after the first 11 months or so, I had to make $25 purchases each month on
    the card in order to keep the 0% balance transfer interest, but the interest
    I’ve been charged on those purchases has been tiny compared to the interest
    I’ve earned on the original balance transfer. I actually just paid off the
    card in full as I’m going to be buying a new house in the next few months,
    but I’ve earned at least $1500 in interest since I purchased the car.

  84. Thain says:

    It seems like the smartest thing for dealers to do would be to simply introduce a credit-card pricing plan. The computer company I work for does this for all transactions. We offer a cash-discounted price for payments via wire transfer or direct cash deposit because we don’t have to pay the 3% merchant fee.

    Someone earlier mentioned making sure you negotiate the price first, which is underhanded, but a dealer could simply state that they charge 3-3.5% more for any purchase made with a credit card (3.5 obviously being for American Express). This way, you know going in that you CAN pay with a credit card, and the dealer doesn’t lose anything on the deal in merchant fees.

  85. stinerman says:

    @TeraGram:

    Not to mention many of them are subject to cash advance APRs, which are usually quite a bit higher than purchase APRs.

  86. LUV2CattleCall says:

    @Scuba Steve: Funny you say that! Fields BMW in Orlando tried that crap on me…they told me the machine can’t read the mag. stripe, and they can’t key in a number for a large purchase (in their defense, keyed in transactions are usually an extra 1% in fees)…. No problem, I asked them what the error code was (I used to work for Verifone, a maker of CC readers).

    The moron stared and said “It says it was probably from leaving your card on a security deactivator at a store like Wal-Mart”

    Me: “Hmm..what was the error code?”
    Him: “That’s just what it says on the display”
    Me: (Realizing that he’s full of shit…) “Mind if I take a look?”
    Him: “We don’t allow customers to see our financial processing equipment for privacy reasons”
    Me: “So..for privacy reasons, when I buy a new wiper blade, the clerk disappears with my credit card?”
    Him: “Look, we’re giving you a great deal as it is”
    (we go back and forth on the the fact that he’s changing his reason for not using the CC..etc..)
    Finally, I did what I should have done to start with and walked out. 2 days later, I get a call begging for me to come back in….told them to either knock another 1% off the price or to pound sand. I ended up saving an extra 1%, and used the rewards miles to upgrade to J on the flight to Europe (BMW knocks off 5-7% from the price if you do European delivery)!

    So basically, they make it a huge PITA so that 99.9% of customers are discouraged from using a CC.

    @Ragman:

    Discover basically says if you don’t charge users of the other CCs that you take for using their card, you can’t charge our clients…so if the place takes Visa/Mastercard, the same rules apply.

    @MollySavoie:
    WTF are you talking about? By your logic…if I buy a toaster at Sears, Discover can dictate what types of bread I put in the thing until the 14th of each month, when I pay the bill off…

  87. canuckistani says:

    @BeerFox:

    BE CAREFUL! those “convenience cheques” are usually treated as cash advances and you pay a ridiculous rate on those!