Every couple of years, it becomes necessary for most people to get their hands on a new vehicle, but as is often inevitable, finding ways to pay for one becomes a real challenge.

As vehicles are common and necessary purchases, there exists a large number of financing options that match people's preferences and financial ability. However, people rarely think of credit cards when it comes to paying, in full or in part, for a car.

So, is using a credit card to get a new car a good idea?
 

Why Would People Want to Use A Credit Card to Buy A Car?

Credit cards are highly versatile tools most people have access to, so it makes a lot of sense to use them for major financial transactions. Of course, credit cards aren't necessarily suited for all purchases, but that doesn't mean you can't leverage them when it comes to buying a car.

It's possible to cover several types of expenses related to car purchases, such as a down payment or processing fees, or potentially even a vehicle's entire cost.

Credit cards are a good go-to option because they simplify payments. Credit card agreements aren't always the easiest to understand, but after a while you start to get the hang of how they work, with late fees, interest, and transfer limitations becoming something you eventually understand.

Loan terms for many vehicle purchases can be just as confusing though, which is an issue because not only does it give you one more complicated thing to keep track of, but if something goes wrong, you're liable for a considerable amount of money with limited experience navigating the whole process.

With a credit card, you likely already know what you're getting into and have all your expenses in one place.

Credit cards also potentially come with rewards and perks that can beat out car loan terms by a wide margin. For instance, if you have a credit card with cashback features, then a portion of the down payment, monthly payments, or outright car purchase gets refunded back to you, netting you hundreds of dollars in the long run.

Better yet, if you have a credit card with a limited 0% APR period, you could potentially pay no interest on a vehicle whatsoever.
 

Why Would Dealers Not Want You to Use A Credit Card?

Even though credit card purchases can make a lot of sense from a buyer's perspective, they're much less favorable from the perspective of dealers.

Credit cards pretty much all come with substantial fees that end up getting charged to businesses who accept them. Some of these can go as low as 1%, but others can have charges that go as high as 5% or 6%. Either way, these fees can seriously eat into dealer's profit margins, which is something they're understandably not super excited about.

If you're especially good at haggling, you might be able to convince a dealer to accept credit cards as a form of payment, at least in part. However, they're definitely going to drag their feet and would almost always prefer receiving money directly from you or a financial institution to max out how much money they make.
 

What Are Some Practical Considerations?

The first obvious issue you might encounter when you decide to make car purchases using a credit card is credit limits. Cars are notoriously expensive and placing all that financial strain on your credit account might be something creditors frown upon.

For a cheaper vehicle, maybe a couple thousand dollars, it's definitely possible to get around credit limit issues, but for newer, more pristine vehicles, it's going to be difficult to find a card with a credit limit that accommodates that expense.

Also, keep in mind that paying with a credit card might not be as linear as just a dealership inputting your details into a system. It might be necessary to use a service like PayPal as an intermediary since it accepts credit card payments. However, keep in mind that you're still going to have to pay a large processing fee, with 3% being the average.
 

Making A Purchase

Paying for a car can be a daunting process, but it should be noted that you have a tremendous number of options at your disposal. Credit cards are just one of these options, but if you can find some way to effectively utilize them, it's potentially the best route you can take.