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Can You Buy a Car With a Credit Card?

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Buying a car is an expensive endeavor. Because cars are so costly, paying for a car with a credit card may seem tempting so you can earn a lot of credit card rewards points.

But whether you can actually pay for a car with a credit card depends on your situation.

Some dealers let you charge part -- or all -- of a vehicle

Whether you can charge your car or not will depend upon the policies of the dealer you buy from. Most dealers do accept credit cards, but they cap the amount you can pay on your card. For example, many credit card companies cap the amount you can charge at around $5,000.

A small minority of dealers will accept a credit card for the whole amount. You're more likely to find this when using a credit card affiliated with the car maker, such as buying a Lexus car with a Lexus credit card. If your credit card has an auto purchasing program -- as American Express does -- then buying through that program maximizes your chances the dealer will accept your card as payment for the whole purchase.

For most dealers, however, strict caps are in place because of the fees credit card processors charge. Your dealer doesn't want to get stuck with a 2% to 3% fee on the entire purchase price of the vehicle, so they'll impose limits on what you charge because of it.

Balance transfer checks could also make buying a car affordable

Another option for buying a car won't get you rewards points, but it might make your car purchase cheaper. That option is to use a balance transfer to pay for your car.

Many credit card companies provide balance transfer checks. While technically intended to allow you to pay off existing debt and transfer the balance to a new card, the checks can be deposited into your bank account and used for any purpose -- including buying a car.

The benefit of using balance transfer checks is that most cards offer an introductory 0% interest rate for your transferred balance. This rate typically lasts anywhere from six to 18 months.

If you're going to use balance transfer checks, be aware that some cards charge a fee -- typically around 3% -- to transfer your balance. That fee could still be cheaper than a car loan. You also need to have enough available credit to pay for the car, and be prepared that your interest rate will increase substantially if you haven't paid off the card by the time the intro rate expires.

Don't charge the car unless you'll pay it back

You might charge some or all of your car on a card to get credit card rewards points or use a balance transfer offer to put your car on your card and pay off what you owe at 0% interest. But either way, it's imperative you only buy a car on a card if you can pay back what you charge.

The regular interest rate on a credit card is going to be far higher than the interest rate on an auto loan. And any points you might earn on the transaction will be worth much less than the interest you have to pay.

It's a good idea to have the money set aside to pay off the card when you get your statement if you're charging it, or have a solid plan to pay off the transferred balance before the intro rate ends. If you can't do that, don't buy a car on a card.

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

If you can find a dealer that will let you charge your car, and if you can pay back the amount you charge when the bill is due, buying a car with a credit card can be a smart way to earn a lot of rewards. Just be sure you don't charge a car and end up paying a fortune in credit card interest if you can't pay back the borrowed money right away.

Love Toyotas? You can buy a Toyota with a credit card. Check out The Ascent's Toyota credit card review and see if this card is right for you.

Still have questions?

Some other questions we've answered:

RELATED: See The Ascent's guides to the best cheap car insurance and best car insurance companies.

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