Easterns Blog

Buying a pre-owned vehicle is a large purchase that comes with some important financial decisions. It’s typical for most car shoppers to finance their purchases with auto loans. If you’d rather not go through the car loan process, you might be wondering whether it’s possible to buy a car using a credit card.

The truth is there is nothing that legally prohibits you from doing so, but some dealerships may limit the dollar amount on credit card purchases or may not accept credit cards altogether. If a car dealership does accept a credit card payment, it could be a feasible option for paying some or all of the down payment.

Like any large credit purchase, buying a car with a credit card might allow you to quickly acquire something you need right away. However, it can have a negative financial impact in the long run if you’re not careful.

It may make more sense to inquire about vehicle financing through Easterns Automotive before you resort to purchasing a car with your card.

What Can You Expect from a Car Dealership That Accepts Credit Cards?

Not all car dealerships will accept credit card payments. The ones that do will most likely have restrictions on the use of credit cards and may charge you transaction processing fees. While a credit card might be a necessity or convenience for you, it costs the dealer money to accept credit card payments.

The credit card fees a dealership is charged vary, but it’s usually around three percent of the transaction. For example, if you used a credit card for a $3,000 down payment on a vehicle, the dealership might be charged a $90 processing fee. They will likely pass this fee on to you. 

Things to Consider Before Purchasing a Used Car on a Credit Card

• Credit card interest rates are often much higher than used car auto loans. While each bank uses different interest rates for consumers, it’s no secret that auto loans tend to be cheaper in comparison to the interest rates of most credit cards. If you find a credit card with a zero percent APR promotional period and you’re able to pay off the balance before the period ends, then you can, in theory, pay no interest to finance the vehicle during that time. However, this still doesn’t change the fact that the dealer will most likely charge you the transaction processing fee.
• You will need to have a high credit limit. Whether you are looking to buy the car outright or put a sizeable down payment on a credit card, you must ensure you have a high enough credit limit. You can call your bank to request a credit limit increase and they may approve it if your account is in good standing. Also, be aware of your credit utilization (the percentage of your credit that is currently being used). If it goes too high, your credit could be at risk.
• Always notify your credit card issuer before making any large purchases. It’s good to get in the habit of contacting your credit card company to let them know that you will be making a sizeable purchase. This tells them the charge isn’t fraudulent and you should hopefully avoid any transaction delays.

What Are Your Other Options for Financing a Used Car?

If you will be unable to pay off your credit card balance as soon as it’s due, then it may not be the best financing choice for you. The good news is you have many other pre-owned car financing options:

• Apply for an auto loan (interest rates on auto loans are much lower than credit cards)
• Use a loan co-signer (this is a great option if your personal credit score is too low to qualify for a loan)
• Trade-in your old vehicle and put that money toward a down payment
• Use some (but not all) of your cash savings for the down payment

Let Easterns Automotive Help You Finance Your Used Car Purchase

Searching for a pre-owned vehicle in Washington D.C. or Baltimore can be tough. Easterns Automotive is here to help you find a car you will love — and a reasonable auto loan.

For the last 30 years, car shoppers have relied on Easterns to help them build good credit and finance their used car purchases.

Give Easterns a call at 877-867-0641 or visit one of our eight dealerships for more information on the pre-owned vehicles we have in stock.