Can I buy a car with a credit card?

Yes, you can buy a car using a credit card, but it’s important to understand how this works. When you charge the full price of the car to your credit card, you'll need to repay the balance over time, with interest accumulating on any unpaid amount. Unlike car loans, credit cards don’t have fixed monthly payments, which gives you some flexibility. You only need to meet the minimum payment each month, but paying more will reduce your interest costs.

Before considering this option, you’ll need a strong credit score and a card with a high limit. Not all dealerships allow large transactions by credit card, so it's worth confirming this with the seller. Some card issuers also place limits on single transactions, often around £5,000. Always review your card’s terms to avoid any unexpected restrictions or fees when making such a significant purchase.

Can you pay your car loan with a credit card?

Yes, you can pay your car loan with a credit card, but it’s not always the best strategy. By using a money transfer from your credit card to cover the loan, you risk paying interest on both the loan and the credit card balance. This can make your debt more expensive over time, especially if you don’t manage your repayments carefully.

If you’re struggling with your loan payments, this option might seem appealing as it offers temporary relief. However, you’ll need to be cautious about how you use this additional credit, as it can lead to higher costs. Ideally, look for a credit card with a 0% interest offer on money transfers, but these are usually available only if you have a good credit score.

Make sure you keep up with at least the minimum payments each month to avoid penalties and fees. Once the 0% period ends, you might consider applying for another 0% card, but there’s no guarantee you’ll be approved. Overall, using a credit card to pay off a car loan is rarely ideal and should be reserved for times when other options are unavailable. If you haven’t bought the car yet, it’s better to avoid this approach entirely.

Do car dealerships accept credit cards?

In the United Kingdom, many car dealerships accept credit card payments, but it’s not a common choice for most buyers. In fact, only around one in 20 car purchases uses this method.

Using a credit card for part or full payment can offer benefits, especially if you have a 0% interest deal or can earn rewards like points or air miles. However, not all dealerships allow credit card payments for large amounts, and those that do may limit how much you can charge. You might also face a processing fee of up to 3%, which could add to the cost.

To keep your options open, consider other financing solutions as well. Always check directly with the dealership to understand their payment terms and choose the best option for your situation.

Why should you pay for a car with a credit card?

Using a credit card to buy a car can be a smart option, especially if you can secure a 0% interest card. Ideally, apply for the longest 0% interest period available, whether it’s a purchase card or a money transfer card. You can then pay off the car in fixed monthly amounts without incurring interest, as long as you clear the balance before the 0% offer ends.

Another key benefit is the added protection you get when paying with a credit card. Under Section 75 of the Consumer Credit Act, you’re protected if something goes wrong with the car or dealership. This law allows you to claim a refund for purchases made between £100 and £30,000, giving you peace of mind if problems arise.

When should you use a credit card to purchase a car?

Using a credit card to buy a car can make sense when you're purchasing a cheaper or used vehicle, especially if you have a 0% APR deal. This approach lets you spread the cost without paying interest, but only if you’re confident you can pay off the balance within the interest-free period.

It’s important to avoid using a credit card if you're likely to face standard APR rates, which are often higher than those offered by car loans. Before committing, compare all your options and ensure you can pay off the car within a reasonable time to avoid high interest charges.

Which factors should you check before purchasing a car using a credit card?

Depending on why you want to buy a car with a credit card, there are various factors to consider before doing so.

Ensure you can afford to pay the bill

While it might seem straightforward, many people charge a car to their credit card without a clear plan to manage the repayments. Credit card interest rates are often much higher than those offered by car loans, meaning the benefits of using a card, like points or rewards, can quickly be cancelled out by interest charges. If you’re unable to pay off the full balance right away, the high interest could make the purchase far more expensive than anticipated. Always make sure you can manage the payments before committing to this option.

Ensure that you have a large credit limit

To buy a car or make a large down payment using your credit card, you’ll need a high credit limit. If your current limit isn’t enough, you can contact your bank or credit card provider to request an increase. If your account is in good standing, they may approve the higher limit, which gives you more flexibility for your purchase.

If you hold multiple cards from the same issuer, they might be able to transfer some of the credit limit from one card to another. This can help you reach the limit you need without applying for new credit. Always check with your provider to see what options are available.

Inform your credit card provider before buying

Whether you’re planning to buy a car outright or make a large down payment, it’s essential to inform your credit card provider first. Let them know you’re about to make a significant purchase so they don’t flag the transaction as suspicious. Without this notice, a charge of that size could trigger a fraud alert, causing delays in your purchase.

Manufacturer credit cards

Another option to consider is using a manufacturer-branded credit card. These cards work like standard credit cards, but you earn rewards with each transaction. You can then use these rewards towards the purchase of a car, offering you extra savings while financing your vehicle.

How to use a credit card to pay for a car purchase?

Depending on your credit card, you have the following options.

Using 0% rates

If you’ve secured a 0% interest credit card, set up a monthly direct debit to cover at least the minimum payment. For larger purchases like a car, calculate how much you need to repay each month to clear the balance before the 0% interest period ends. This way, you’ll avoid paying interest and can spread out the cost over time.

Money Transfer Cards

If your dealer doesn’t accept credit cards, a ‘money transfer’ card can still offer 0% interest. These cards work well for purchases under £5,000. Instead of paying the dealer directly, you transfer money from your new card to your bank account, and then use those funds to buy the car. Essentially, it’s an interest-free loan.

However, the downside of money transfer cards is that they don’t offer Section 75 protection, which leaves you without the security of a refund if something goes wrong with the car purchase.

Is it a good idea to use a credit card to pay for a car?

Using a credit card to buy a car comes with both advantages and disadvantages. Before making a decision, it’s essential to weigh up these factors and ensure you’ve done your research. Discuss your repayment plan with your bank, and double-check your budget to confirm you can manage the payments.

Advantages of using a credit card to buy a car include:

• Access to special introductory offers, such as 0% interest for a set period.
• The ability to earn rewards like cashback or air miles.
• Extra protection under Section 75 of the Consumer Credit Act, which covers purchases between £100 and £30,000.
• Flexibility to make minimum payments if your cash flow is tight.

Disadvantages to consider:

• Not all dealerships accept credit cards, and some may limit how much you can charge.
• Dealers may charge an extra fee for credit card payments.
• High-interest rates can apply after any promotional period ends.
• If you don’t pay off the balance within the 0% period, interest can make your loan more expensive.
• Not everyone qualifies for a card with a high credit limit or a 0% interest offer.

Is it right for me to buy a car using a credit card?

Buying a car with a credit card can be a good option if:

• You have a card with 0% or low interest.
• You have a high enough credit limit to cover the cost.
• Your credit card offers perks like cashback or rewards points.
• You plan to fully own the vehicle and keep it for the long term.

It might be a bad idea if:

• Your credit limit isn’t enough to buy the car outright.
• You like to change cars frequently.
• You think you might struggle to keep up with minimum monthly payment.

How to pay for a car with a credit card

Before making a large purchase like a car, contact your credit card provider for approval. Once you have their permission, the payment process is just like any other credit card transaction.

After buying the car, set up a direct debit to pay off your balance in manageable chunks each month. You’ll need to cover at least the minimum payment, but to maximise the benefits of a 0% interest period, aim to clear the full debt before the promotional rate ends. This way, you avoid high interest charges and keep your costs down.

What additional car-buying options are there?

Following are the different car payment methods available.

Personal Contract Hire (PCP)

With PCP, you pay a deposit of 10% to 20% and make monthly payments. At the end of the loan term, you can either make a balloon payment to own the vehicle outright or return the car.

Hire Purchase

Hire Purchase allows you to pay an initial deposit and make monthly payments. Once the loan is fully paid, you own the car.

Personal Loans

Personal loans are unsecured loans provided to you or directly to the dealership, typically covering most or all of the car's cost. This is often the most affordable car finance option, and you own the vehicle at the end of the term.

Contact a reliable car finance broker

While buying a car with a credit card is an option, it’s not always the best choice. At Carplus, we make securing affordable and reliable car financing simple and stress-free.

As a fully FCA-compliant company, we ensure complete transparency, so you know exactly what to expect. We offer flexible finance plans tailored to your needs, whether you have poor credit or are self-employed.

To get started, try our free car finance calculator, and apply for a decision without affecting your credit score. We’re here to help you find the perfect financing for your next car.