Can You Charge a Car on Your Credit Card?

I've detailed how the Blue Cash from American Express card earned me almost $500 last year (and that's why I recommend it.) A key part to making the most on this card is to charge as much as you can on it -- and, of course, paying it off every month.

One idea I've wondered about is whether or not I could charge a car on the Blue Cash from American Express card. Bankrate thinks that a dealership probably wouldn't let me do this:

You're far more likely to have trouble finding a dealership willing to let you charge your new car on the credit card. That's because the dealership pays as much as 3 percent to the credit card company on every transaction. That's an additional 3 percent profit they would lose on such a big-ticket sale.

That's kind of what I thought. Though this does bring up a couple other thoughts:

1. I could negotiate a price for my new car using the method that's already saved me a ton of money in the past. Then, once we agreed on the price, I could whip out my credit card. When they balked, I could negotiate an even lower price.

2. I could have them let me charge a portion of the car on the credit card. Bankrate seems to think many dealerships will let people do this.

I'm not in the market for a new car, but I will be in the next few years. I'm going to keep thinking on these alternatives in the meantime -- I'm sure there's something here.

Comments

[Ken]

I used my Blue Cash card last November to make a down payment, but I think there was a limit to what they would let me put on the card, and it certainly would not have covered the price of the car.

[Dan D]

I did this last week, I put 4k on my Blue Cash and the rest on a loan. I made 690 on my Blue cash last year. And now I am 4k towards my 6500 level.

[GeckoGirl]

I was able to put $5K of a recent car purchase on my Amex. As it was explained to me, the reason dealers don't allow you to put a larger portion of the purchase on a CC is because of the warranty offered by a CC.

For example, some CC's double the length of the manufacturer's warranty. Hyundai comes to mind with a 10 yr/100K mile warranty. I doubt if any company wants to provide a 20 yr/200K mile warranty. They would probably soon go out of business...

[Interested]

A Hyundai dealorship let me put 3k on my CC.

[Chris]

Shame, but it makes sense. It would be far easier to just pay it with a credit card instead of carrying around cash or having to draw up a certified check after the negotiations were over. Since they have to pay a % of the cost, I understand why they would refuse.

I would prefer to charge it if I was paying $15k or so. But if I was just paying $3k down so I could have the privilege of taking an auto loan, I know they'll take a personal check.

[guniadi]

When I purchased my card (Odyssey) earlier this year, they let me charge up to $5000 only. My cousin bought another brand (Not Honda) car couple years ago, and they let him charge also up to $5000.

[Jo]

My old boss always talked about how they put their car on a 0% interest CC. But I don't know how much they spent on the car, but I thinking it had to be over $5000. If you have a low to no interest card, and the dealership lets you do it, it sounds like it can be a good thing if your doing payments anyway you might as well try to get the lowest interest.

For me personal, I don't think it would be the best option, but I know it works great for others.

[sarah]

We purchased a car about 18 months ago and the dealership only allowed $2500 on a credit card. But, they did let us write a personal check for the remainder of the downpayment that we'd planned to put on the cc. I think they weren't happy that we'd financed trough our credit union rather than their finance dept.

[Blaine Moore]

I had a friend charge his credit card for his car when we were in college. Granted, it wasn't a new car, but he was able to put (I think, if I remember correctly) about $7000 on the card. He also paid some of it in cash.

[Minimum Wage]

There are inexpensive devices made specifically for the purpose, which can be found at any auto parts store.

[Ciji]

EVERY merchant who accepts credit cards has to pay a percentage on fees, car dealerships aren't special!

It's really simple: they have something for sale, you've got the money. Own that power, threaten to walk, and stick to your guns. I seriously doubt a dealership would rather lose the sale altogether rather than take your credit card.

My father buys cars on his credit cards all the time. I've seen the statements. I've have been with him when a dealrship said he could only put $7500 on a card, and we got up a left. The manager was at our car before we could start it up, ready to make an "exception".

They don't like it (nor do they care for cash purchases) because it gives YOU control over the negations. They can't manipulate someone who's ready to walk out on the deal.

[credit counseling]

When I bought my new Jeep in December 2005, the dealership capped the amount I could charge on my Amex to $3000. I financed the rest, but then paid it off in the first month with a 0% balance transfer from another card.

Looking back, I realize this was "penny wise, pound foolish" since I saved some in interest but paid it all back and then some with the depreciation of a new car! In the future I will always buy used...

John

[kim]

I charged $30K on my American Airlines MC when I bought my Mini Cooper. BMW didn't blink.

[Teri]

I am trying to remember but I think in 2001 when we paid cash for a car they let us put a good $5k on the card (we wanted to put as much as possible on for the rewards).

In 2006 they would only let us put $2k on the card and we financed a good chunk (though we paid far more than $2k in cash).

In both cases they were "1 at this price" cars at a steal so we didn't really care or try to negotiate further. We knew we had great deals. BUT I had always wondered back if I had asked for more or if we had walked away if they would have budged.

Not necessarily. Generally paying cash for cars we found far more dealers who plainly did now want our business than were willing to negotiate with cash buyers. They make their money from loans. I think the same will apply for cards (and like mentioned you pay a fee). You probably lose too much neogitating power. But doesn't hurt to ask/try when shopping around. I always thought $2k was kind of sucky and regretted not pushing it further. I think Ciji has a point.

Then again, like I said, been to too many dealers who did not even want us as cash customers. We walked away and they were happy. It really depends on the particular situation.

[Beachgirl]

When I bought my new car from Kia, I was able to pay for it totally using 2 cards. I used my Discover card for $6,000 of it, and my mom put the rest on her credit card ($7,000). I was closing on my house shortly after so I was going to have the money to pay in full when they were due.

My parents just bought a new car, also from Kia, and did the same thing...paying in full using 2 cards.

[Patrick]

I have a friend who bought his car in a similar manner, but with a slight twist. He negotiated his purchase price, then got it lowered further by negotiating his loan through the dealership using their financing (dealerships make a lot of money from financing). When he left, he immediately used a 0% balance transfer from a rewards card to pay off the loan, get a lot of cash back, and have a 0% loan for 12 months. It worked great for him!

[Chief Family Officer]

My friend who has a car dealership charges extra for people to pay by credit card (and yes, people actually pay the extra, even if they can afford to pay cash!). I'm thinking it might depend on the size of the dealership - we bought our last car at one of the largest dealers in our area and had no trouble charging $4,000 for part of the down payment.

[Terry]

I understand they dont want you to use a credit card, but I thought there were restrictions on merchants. I thought they were not allowed to charge extra for credit card purchases, and if they accepted credit cards at all - they could not cap you or stop you from using a card. I was under the impression they had to sign those agreements with Visa, MC, Amex, etc.

[tank]

i worked as a business manager at a chevrolet/jeep/vw/bmx dealership, we limited credit card transactions on vehicle purchases to $2500. it was the additional discount we paid the credit card company that stopped us from allowing more.

we recommended the customer use the check that the card companies send out periodically - you still get the points, and we don't incur the additional fees.

[Lin]

Then, once we agreed on the price, I could whip out my credit card. When they balked, I could negotiate an even lower price.

Well, good luck with that ... be willing to walk away from the deal.

[Rob]

A friend of mine used to be a car salesman and he said his dealer never let people charge a car on a credit card. I don't remember the specific reason but I think it did have something to do with the fees (on the part of the dealer).

On another note, we bought a car recently, and your suggestion for emailing back and forth worked great! We started a very nice price war and were able to purchase the car under the invoice price. Keep up the good advice!

[Margo]

Terry's right - it's in the Visa/MC merchant agreement that they must accept your credit up to the maximum available on your card. When I got my used Mazda, Dad charged it for the airline miles. The dealer balked, Dad threw down a reminder of the merchant agreement, and we got the full value of the car charged to his MC.

[FMF]

Rob --

Congrats on the savings! I'm glad the process worked for you too!