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.

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 :^)

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

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).

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.

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.

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.

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.

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.

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!

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.

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?

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.

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

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.

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.

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

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!

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.

@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.

@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.

@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.

@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?

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.

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.

@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.

@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.

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.

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

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.

@RetailGuy83 This.

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.

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

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.

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.

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)

@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.

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.

@Ragman:

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

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

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

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.

fist-o: AMEX Black, perhaps?

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."

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

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).

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

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

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.