Do you know that if you want to purchase a car and cannot afford to pay for the car, you can use your credit card to cover part of the cost? Yes, you can do so and, if you are leasing a car or you want to take a loan to purchase a vehicle, you can also make a car down payment with your credit card.
Car down payment can be made with a personal check, physical cash, cashier’s check or credit card. However, in this article, our focus will be on making car down payments on a credit card.
Car Down Payment on A Credit Card
If you want to purchase a car and decide to use your credit card to make a down payment, you have to ensure that you do not take on more debt than you can handle, especially if it is a high-interest credit card debt. This implies that you have to calculate all your costs and payments carefully before making your decision.
When buying or leasing a car, car down payments are required to protect auto lenders or leasing companies. This payment will also reduce the possibility of you owing more than the worth of the car. When you use your credit card to make a car down payment, you earn rewards points and you can afford a down payment you may not be able to make.
Reasons Why You Should Pay Your Card Down Payment With A Credit Card
There are some reasons why you should use your credit card. Scroll down to find out what these reasons could be.
Your Credit Card Company Offers You a Low APR
Most credit card companies give special introductory offers like 0% APR for purchases card users make during the first 18 months. So, if you get a card offering 0% and you charge your down payment, you will not need to pay any interest charges. This will therefore give you significant savings since car lenders will give you less favourable rates on the total money you borrow if you do not make a down payment or if you make a small down payment.
You Have the Cash to Pay Off the Credit Card Debt
If you have the finances to pay off what you owe when your statement comes in or before any promotional rates expire, then you can make a down payment with your credit card. But if you can not pay off the card and you will need to pay high credit card interest, then you should not make a down payment with your credit card. This is because you can pay much for interest. After all, standard credit card rates are high.
You Will Earn Credit Card Rewards
When you use your credit card for car down payments, you will earn rewards like cash back or airline miles if you are using a rewards card. If you also have a new card with a large sign-up bonus, you will be able to get bonus rewards points. But this will work best if have the cash for a down payment or if you can pay your credit card balance on time and in full. But if you cannot do this you will build up interest charges on your credit card balance.
How To Make a Car Down Payment on A Credit Card
The reasons why you need to make a car down payment on your credit card have been explained above. So, if your lender permits you to use a credit card to make a down payment, follow the steps below to find out how you can make a payment.
Third-Party Processing Company
You can make a car down payment with your credit card through third-party processing companies like BLUEDOG or PaymentCloud. Using these third-party companies will reduce the cost of doing business with credit card companies for your lender, while for you, it would mean a significant transaction fee.
Money Transfer
If your lender permits it, you can use your credit card to make your car down payment through a money transfer service like Western Union, MoneyGram and the like.
Cash Advance
You can get a cash advance against your credit card limit to make a car down payment by using the card to withdraw from an ATM or bank and then turn the money into your car payment.
When To Make a Car Down Payment on A Credit Card
Having known how to make a car down payment on a credit, you should know when to make your payment. So, when should you make the payment?
- You should make a payment if your dealer accepts credit cards and does not charge extra for using a credit card.
- If you are going to put the payment on a card with a big spending bonus or valuable rewards.
- If your plan to repay the debt will allow you to save money compared to other options.
Frequently Asked Questions
Can I Use Multiple Payment Methods for My Car Down Payment?
If you want to know if you can split your car down payment between a credit card and a debit card or money order, you will have to consult with the car dealership or your bank.
Do All Car Dealers Accept Payment with A Credit Card for Down Payments?
Not all car dealers accept cards for down payments. So, you have to check with the car dealer beforehand to avoid any surprises.
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