Bogleheads

[epilnk]

I just realized our rewards credit card, which gets paid off every month, has a purchase limit high enough to buy a new car. I'm planning to buy a car soon (though I've been saying that for a couple of years now), and don't plan to finance it. Can I buy the car on my credit card to get the rewards points and then pay the card off? Or would that get me a worse deal than paying cash? It seems like there should be a catch, and I can't imagine it's to the dealer's benefit to accept credit cards.

Linda

p.s. I already get it about new vs used cars. The usual recommendations to buy used are not relevant to my question, thanks anyway.

[woof755]

There actually is a thread or maybe multiple here that discusses this.

Basically the dealership will limit or try to limit how much you can place on your credit card. I've been able to put $3000 on a card twice. Never more.

Some said this was illegal--dealership can't limit how much you can put on there. Others said they could do whatever they wanted.

Allowing you to put more on your card cuts into their profits, b/c their reimbursement from Visa is not 100%.

Maybe do a quick search here.
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[chipmaker]

Some dealers counter this by imposing a fee (usually 2-3%, but can be up to 5%) to use your card to pay for the car. Given that, it does not help to use the card unless your reward % is higher than this fee.

[gcturp]

I tried this with my last car purchase and it didn't work. I was able to put 3K down with a credit card and 3K down the next day(with the remaining cash). The dealer stated that their limit was 3K. I did get the 6K in rewards credit.

After my experience I 'googled' around the internet and some people have had success doing this. From the info I gathered: make sure you let your credit card company know you will (try) to make a $xx,xxx purchase prior to going in and if the dealership says it isn't allowed, remind them they have a 'merchant agreement' with visa/mc (you might want to also contact visa/mc to inform them the dealer is not upholding their 'merchant agreement'). If you are in no rush, I would consider getting up and walking out if they don't allow it (call their bluff).

If it doesn't work for the whole amount, try to put as much as possible on the credit card. I plan on doing it for my next car (but next time I am willing to kill the deal over it). Good luck! Let the board know if you're successful.

[grok87]

[dkdoy]

Done it twice, both times they only allowed 5000.00. It did not change the purchase price at all. I did not mention until the deal was agreed upon.

[EmergDoc]

I managed to buy a $7500 car on a credit card. But it was a salvage job (not many buyers), and I had to walk out.
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[norookie]

[mfen]

[bigtime]

might be dealer dependent; i bought a used car for 13K which dealer let me place on cc

[Harold]

I fully intended to put it all on a credit card, but the dealer accepted only $3K on credit card for me as well. The other $13K was a personal (Vanguard Prime MM) check, which I guess is unusual (might've wanted cashiers check instead).

[clock98]

I paid almost $7,000 for a used car and I charged it to get the 1% cash back. then I balance transferred it to a 0% card for 12 months and paid minimum payments until the 0% ended and then paid the rest off in full.

[Independent]

My guess is it's deal dependent. If the sales manager knows that he's got plenty of profit in the deal so far, he will be okay with a CC for some of the purchase price if you insist. Of course, he would have also reduced the cash price if you had insisted on that.

If he's already at his bottom price, then he isn't going to give up any more by letting you use a CC. Maybe he'll do the CC, but charge you a fee.

It seems that we should have at least one dealer or sales manager on this forum to explain this from their perspective.

[bmb]

If the dealer agrees to accept a credit card, you have not obtained the lowest price possible.

[pochax]

i recently tried this in July purchasing a new car. dealer policy was to limit to $3000 on a CC. i pushed them to $4k (took an extra phone call from the finance guy). you can try the Merchant agreement tactic but when you actually read the merchant agreement (yes, i did) it prevents them from denying the CC but not necessarily from limiting what you can charge on it (depending on your legal interpretation i suppose). good luck!

[mikep]

I think you'd be better off negotiating a lower cash price than using CC. CC rakes 3% of the amount charged from the dealer or something like that. I would rather have that 3% cash back to me than to fatten the profits of the CC company.

You could get them to agree to CC, then drive them 3% lower if you offer cash. If they don't go lower use your CC to get 1-2% back.

[giacolet]

Off topic but shows innovative use of a credit card.

I once did a mortgage refinance for an individual who had built a house on St. Pete Beach, Florida with his credit card.

He bought all the supplies on sale at Home Depot and got a contractor's discount. He only used subcontractors who would accept a credit card for their payment.

When he completed the house and moved in he refinanced and paid off the credit card debt. I guess contractors can get a higher credit limit than individuals. He had prior business with Home Depot as the Manager of a high-rise assisted living facility who took care of all their repairs and renovations at Home Depot by credit card.

But he didn't start from ground zero. His girlfriend owned the lot on which he built their new home.
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[eas]