Can I buy a car on a credit card?

From the weekly shop to a splurgey holiday abroad, you can buy almost anything with a credit card, but what about a car? The simple answer is yes, but it does depend on the dealership. Some will happily accept credit cards, while others may only allow card payments for deposits. There are a few factors to consider before you go shopping, like dealer policies, card fees, and transaction limits. Let’s walk through the benefits and potential risks of using a credit card to buy your car.

Pros of using a credit card

0% interest offers

Some credit cards come with 0% APR for a set period, letting you pay off your car without any interest for a while.

Rewards & cashback

Many credit cards offer rewards, cashback, or even air miles on big purchases, so you could earn a little bonus while buying your car.

Extra consumer protection

Thanks to Section 75 of the Consumer Credit Act, any car purchase between £100 and £30k is protected, offering you added peace of mind.

Flexibility

Unlike traditional finance agreements, using a credit card could give you more freedom since you're not tied to a long-term contract.

Cons & risks of using a credit card

High interest rates

If you don’t pay off your balance before the 0% interest period ends, you might face much higher rates than car finance options.

Credit limits

Many credit cards have limits that might not cover the full price of the car, meaning you might need to split the cost across multiple payments.

Dealer fees

Some dealerships charge a fee of 2-3% for credit card payments, which can add to the overall cost of your car.
Impact on Your Credit Score – A large purchase can increase your credit utilisation, which might affect your credit score.

How to use a credit card safely for a car purchase

If you’re planning to make your car purchase on a credit card, there are some things you should do to keep yourself safe. Always check the dealership’s payment policies first to make sure that they accept credit card payments. Be mindful of your credit limit, and avoid maxing it out, as that can hurt your credit score. You might also want to look for any available 0% interest deals, and think about the amount of time you’ll need to make your repayments for. Finally, it’s a good idea to compare your total costs with a credit card against traditional car finance options; a PCP, HP, or bank loan could work out more cost-effective in the long run.