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?