Why Buying A Car With A Credit Card Isn’t A Good Idea
In theory, buying a car with a credit card sounds great to some people. Sometimes you can get a new credit card that has 0% interest for a year, sometimes even two years! That sounds nice in comparison to a car loan, right? With a limited time 0% APR credit card, you could just make monthly payments for a year or two right towards the principal of your loan, but it doesn’t quite work like that. It turns out, buying a car with your credit card is actually a bad idea.
Cons of buying a car with your credit card:
- Credit Limit. Before one could even really consider the idea of buying a car with a credit card, their credit limit might stop them, depending on the car price. But, even if someone had enough credit to make the purchase, maxing out a credit card on a car likely won’t leave most people with enough remaining credit that could be used in case of an emergency.
- Interest Rate. Once the limited time 0% APR deal is up, the remaining credit card balance is going to have a very high interest rate and that loan is going to get very, very expensive. Even if the credit card balance only had a few thousand dollars left to repay, once the high interest rate kicks in, it is going to get much, much harder and more expensive to pay off.
- At the end of the day, it may not even be possible. Most dealerships have policies against putting a car on a credit card. They may also allow it, but only for PART of the car, not the full payment.