The car you choose should fit your needs. If you live in a city where parking is tight, you probably wouldn’t opt for a truck or full-size SUV. If you need to haul equipment or gear for work, a sports car or sedan won’t serve you well.
Just like the make and model should fit your needs, so should the way you pay for it. It might seem like a no-brainer to put your new car on your credit card and avoid a car loan, but is it the right option for you?
Available Now: 2020 Chevrolet Blazer
Pros of paying with a credit card
Credit cards are easy, and that is why they can be dangerous. If you are considering using a credit card for a car purchase, you should be confident you can pay off the balance in full.
“In this scenario, you’ll have a fast and easy way to purchase your car of choice and, depending upon the credit card you’ll use, you may earn reward points, something you wouldn’t get if you simply used a cashier’s check to buy the car,” explains Mediafeed.org writer Kelly Sagert.
Don’t get complacent, though, if you’re buying time with a credit card that has a limited zero-percent interest rate. If you cannot pay it off before the zero-percent rate expires, you’ll be stuck paying your car off at your card’s regular (and likely much higher) interest rate.
Cons of paying with a credit card
If you can’t pay off your balance in full, you’ll end up paying way more than you would than with other finance options. If you plan to use a credit card to make the purchase but then transfer the amount to a credit card with zero interest, be wary of transfer balance fees.
“These fees can be as high as 5 percent and, on a $20,000 car, that’s $1,000,” notes Sagert.
Available Now: 2020 Chevrolet Trax
If you decide buying a car with a credit card is the option that best fits your budget and needs, you’ll need to check with the car dealership about its policies and limits on credit card purchases and what cards are acceptable.
DeAnn Owens is a Dayton transplant by way of the Windy City, yet considers herself to be a California girl at heart even though she’s only visited there once. To get through the dreaded allergy season unique to the Miami Valley, she reads, writes, complains about the weather, and enjoys spending time with her husband, two sons, and their newest addition, a Boston terrier puppy that is now in charge of all their lives. In the future, she hopes to write a novel and travel through time. See more articles by DeAnn.