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Refinance, buy, or make a car payment with a credit card.

A credit card may be one way to make a monthly payment on your car, motorcycle or truck. Or it can be used to refinance an existing loan or to even buy a new vehicle. Find pros and cons of using credit cards when it comes to automobiles..

Some people aren't in a position to make a payment and must are not able to pay for their new or used car in cash. Low to moderate income families may struggle to make an auto loan payment from time to time, or someone re-entering the job market may need affordable transportation. Or maybe you want to refinance your current loan to save money on it. In some cases, a credit card can be used for all of these, and it may not be as crazy as you think.

When struggling, or looking for some form of transportation, this usually means taking out an auto loan, applying for financial help, or using some form of short term borrowing. But those are the only options. As crazy as it might sound, it's entirely possible to buy a car or make a payment using a credit card, and doing this actually offers some advantages.

Pros of using a credit card for car payments, refinance or a purchase

Firstly, if you get the right credit card deal from the right lender or bank, you can take advantage of interest rates far below any auto loan you'll find. This is even more true when it comes to a used car or truck, as dealers often charge higher rates for those.

Many credit cards have a 0% introductory rate on purchases or balance transfers for up to two years, while others feature a low rate for life at around half the cost of a typical car finance package. This can be substantial savings for not only a low income borrower who needs assistance, but also a wealthier individual. Buying your car using one of these deals can save you a fortune over time.





Second, buying or making a payment using a credit card will give you an extra level of consumer protection above an auto loan or using say a payday lender. If you have trouble with your new or used vehicle and the dealer won't listen, your credit card issuer must help you by law as there are certain consumer protections.

The third pro is that having to do with buying a car or refinancing it. The fact is that buying on a credit card means the car is yours from the moment you drive it away. There's no risk of repossession or other problems relating to complicated loans packages.

Lastly, credit card repayments tend to be more variable, so they are ideal for people with uneven incomes over the year. If you know that some months you'll only have enough to meet the minimum repayments, but can make up for this by overpaying in other months, credit cards allow this flexibility.

The drawbacks to credit cards for cars, trucks, or motorcycles

However, it's only fair to point out that using a credit card as a form of assistance (for struggling families) or to buy a car has some significant drawbacks as well as risks. If you know about these in advance, you can decide whether a credit card is the right route for you.

- Not all dealers or lenders accept credit card payments as a form of payment. Card issuers charge companies that finance or sell the automobile or motorcycle a percentage fee for every transaction, and with a large purchase like a car this can make the deal unprofitable. If the dealership does accept cards as a form of payment, you're unlikely to be able to negotiate a large discount on the windshield price.

- You'll need a decent to excellent credit score to get a card with a high enough limit to cover a car purchase or payment. This also applies to refinancing a loan Or you need someone to co-sign for you. However, if you're shopping at the lower end of the price range or if you do not need that much assistance for an existing payment, this may not be a huge issue. if need be, find additional help for improving credit scores.

-Some lenders (for existing loans) may also not accept a credit card as a form of monthly payment. They may not want to deal with fees charge by Visa, Mastercard, Discover, or some other credit card company. But if the lender does accept a card, using one can get the borrower out of a jam.

- You'll need to be disciplined and pay off most or all of your debt before any higher interest rate kicks in, or arrange to transfer the balance to a new low-interest card. This is imperative, and this may be where the most risk comes into play.





A typical credit card's standard rate (without any intro benefits or 0% fees) is far more expensive than a good auto loan deal. A pro is only try this method using a credit card if you're sure you can avoid these higher costs, so the bill needs to be paid on time.

The idea of buying a car or making a monthly payment using a credit card may seem outrageous or risky (and it can be in some cases), but it's certainly possible. If you're aware of the limitations, risk, pros, and cons, it will help you decide whether this is the best option. But if have a decent credit rating as well as a future source of income, it could work out to be the best auto financing deal you'll find as well as an effective form of assistance for an existing payment.


By Jon McNamara

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