Buying a car is a good investment in the interest of yourself and your family. Buying a car is also quite simple as you have multiple financing options available for you that will help you keep your savings in place and you can choose what suits your financial situation the best. But can you buy a car with a credit card in Canada? Let us find out. In the following sections, you can take a look at the requirements for buying a new car with your credit card in Canada. By the end of this article from Carsfast, you will have all the details to help you decide whether or not you should be financing your car with your credit card.
Can I Buy A Car With A Credit Card In Canada?
Yes, you can finance your car using a credit card. If you wish to buy a car with a credit card, Canada has no laws that will prevent you from doing so. You may or may not be able to make the payment using your credit card depending on multiple factors like where you are buying your cars and what is the borrowing limit on your credit card. Some auto dealerships allow the buyer to make the complete payment using a credit card while other dealerships will allow you to pay only a part of the cost using a credit card. Some dealers avoid sales on credit cards completely.
Why do some car dealerships not accept credit card payments? There are multiple reasons why your dealer will refuse to accept a credit card payment for your car like:
- When you purchase a car on your credit card, there is a processing fee that is charged to the dealership, which might cost them a lot.
- There are limitations on the transaction amount on a credit card which might require the dealer to repeat the same procedure multiple times to complete the sale.
- There are other better options like leasing or loans where the car loan rates will be lower allowing you to save more.
- Unless the interest rate on your credit card is 0%, you will end up paying a lot of interest if you buy a car on your credit card. To prevent you from this financial situation your dealer might not accept this payment method.
Should You Buy A Car With A Credit Card?
If your dealer accepts credit card payments, is it a good option for you to choose this financing method?
You should use your credit card for buying a car if:
- You have a high credit limit.
- You will earn reward points and cashback on making a big purchase on your credit card.
- The interest rate on your card is lower than the car loan interest rate.
- You can pay off the full balance on time.
You must avoid paying for a new car using a credit card if:
- The credit card you use charges higher interest rates compared to a car loan.
- You will not be able to complete the repayment on time or there are chances of missing your payments.
- You are working on improving your credit score.
- You do not wish to limit your cash flow by making a major purchase.
How To Buy A Car With A Credit Card Canada?
How can you buy a car with credit card in Canada? To make a big purchase like a car on your credit card you must have a high credit limit and a low-interest rate being charged on the payments you make. If the credit card company offers you a 0% APR for some period, you can use the same to your benefit but make sure once this offer ends you do not have to pay higher interest rates.
Can You Make Your Down Payment With Your Credit Card?
Another option that you can choose for financing your car is to make your down payment using a credit card in Canada and finance the remaining amount using a car loan. This way you only have to repay the amount used as a down payment in a short time while the rest of the amount can be repaid in installments as per the terms of the car loan.
Factors To Consider When Buying A Car With The Best Credit Cards Canada
If you planning to finance a new car with your credit card and your car dealership accepts this method of payment, you must take a look at some factors that you should consider. This will help you make a better choice and save more money on the car deal.
- First and foremost you need to consider that certain credit cards charge annual credit card fees in Canada. When you are calculating your payments, you must consider this amount as well.
- What is the borrowing limit on your credit card? You need to make sure that with your credit limit, you can manage to pay for at least some part of your car purchase.
- When making a big purchase like a car using your credit card, you could earn reward points or get cashback. Compare the value of this cashback to what you pay as interest before you pay for the car with your credit card.
- Your credit card might also have an interest rate that is charged on making payments using the same. Most credit cards have higher interest rates compared to loans and other financing methods.
- Does your credit card offer a 0% APR as a promotional offer for a certain period of time or a low APR in the earlier months? This is a good offer if your car is not too expensive as you can complete the payment within a short period and save on the APR charged.
- If you are trying to build your credit score to improve your credit report, it is advisable to borrow a car loan instead of putting the purchase on your credit card.
Alternatives To Buying A Car With Credit Cards Canada
What if your car dealer does not accept a credit card payment or the credit card fees in Canada for purchasing a car are too high for you? Here are a few alternatives that you can consider for financing your car:
- Car Loan. Borrowing a loan from a bank or a credit union, or an online loan provider is one of the common ways of financing your car. Your lender will set the car loan interest rate and loan tenure by checking your credit score. You will be offered a lump sum amount to purchase your car which you will have to repay in installments over a period of 3 to 7 years.
- Personal Loan. A personal loan is another common financing option that allows the borrower to use the borrowed funds in whatever way they want. Personal loans are highly beneficial if you have a good credit score. This loan can be secured or unsecured and the loan term is usually short.
- Lease To Own. Leasing is like renting a car for a certain period but you will have no ownership of the car. You get to drive the car for the time period fixed at the beginning of the lease. You will have the option of buying the car at the end of the lease term.
Bill Kring quotes, “Credit cards are a really great cheap source of funds.” Your credit card can be a good way of paying for certain purchases and so you might be questioning “can you buy a car with a credit card in Canada?” In the previous sections, we have looked at the answer to this question. Yes, your credit card can be used for paying for a car but there will be certain restrictions based on where you are buying your car. We hope you have been able to gather the required information for making an investment in a car from this article and that you will be able to use your credit card the right way for financing your car.
Are you looking for a reliable source to secure car loans in Canada? Carsfast is the best option for you! Not only offer a wide range of options for car loans, but we also provide some of the best rates on new car auto loans in the market
Frequently Asked Questions (FAQs)
Can you use a credit card to buy a car in Canada?
Yes, you can use your credit card to buy a car in Canada. You have to note the rules set by the car dealerships and understand the fees that will be charged before you make the payments.
Do car dealers accept credit cards?
Yes, many car dealers will accept the payments that you make using your credit card. Some dealers might not accept the complete payment being made by a credit card and you will be allowed to make only a portion of the payment using your credit card.
Can I finance a car if I just got a credit card?
Yes, you can finance your car if you just got your credit card if your car dealership accepts this payment.
How much of a car purchase can you put on a credit card?
Most auto dealerships in Canada will allow you to pay a portion of the price of the car on your credit card. You can generally make a payment of up to $5,000 using your credit card.