How to Use a Credit Card for a Down Payment on a Car

Consumers use credit cards to finance many transactions because they do not have cash available, or they would rather put it on a card now and pay it off at a later date. However, people may not realize that it is possible to make a down payment for an automobile with a credit card. Car dealers see credit cards as cash when used to fund an initial down payment amount, and buyers who are wise enough to use a credit card with a rate of 0 percent interest can end up not paying any interest at all on the transaction.

Instructions

1

Look for a card that has excellent terms. Attractive features include: low interest rates; no or low annual card fees; and cash back from purchases made with the card.

2

Contact the customer service department of your credit card you select. Ask if they offer any deals for car buyers who use cards to pay for a down payment. Consider asking them to raise your credit limit if you need extra money to come up with the down payment. Ask to speak to a supervisor if the first person you speak to does not have enough authority to authorize such a deal.

3

Ask car dealers if they have a maximum down payment amount. Understand that some companies choose to limit the amount of money they will accept for a down payment because of the credit card merchant fees they are charged. Keep in mind that some car dealers may not accept cards because they do not like to pay these fees, which can sometimes be as high as 3 percent.

4

Speak to the salesperson working with you at the dealership about the total cost of the car, rather than just the monthly payment amount. Ensure the dealer does not attempt to make you pay for any hidden fees which result from the credit card transaction and increase the total cost of the automobile. Remain firm on the price you will pay.