Buying new car with credit card

Bmann999 on 12/06/2015 - 19:53

As a follow up to my earlier post regarding buying a new SUV.

I know that most dealerships are offering 0-1% interest on new cars. However, from what I have read on numerous Whirlpool posts, by accepting cheap finance you have to pay RRP or close to it.

I was thinking about taking out a new credit card with 12 months interest free and then buying the car with the card. I know I will have to pay a surcharge, but I was at a dealership recently and I saw a sign saying that the Visa/MC surcharge was only .2% which is a lot better than retail interest rates.

Am I missing something here, or is this actually a viable way to get cheap finance?

Automotive

Comments

  • Settero on 12/06/2015 - 20:08

    just how much credit do you think you can get on the once card ?

    • Bmann999 on 12/06/2015 - 20:26

      I was hoping for $40K but we will see how far that goes.

        • 2jzzzz on 12/06/2015 - 20:36
          +9

          Citibank gave me $25000 and I'm under $100k. I didn't even ask for so much, they just offered it.

        • Gina Rinehart on 14/06/2015 - 02:26
          +1

          Not true. CBA approved me for a $10k limit and I am a student! LOL. Might be because I had a small amount of savings at the time, but you do not need to earn $100k+ to get over $5k…

        • dannyboi on 14/06/2015 - 11:01

          $25K with CBA and earning much less than $100K.

  • xoom on 12/06/2015 - 20:08

    Using credit card to buy a car is the fast way to getting into a huge debt. Have you seen how much interest credit cards charge? Exhorbitant.

    Option one should be save for a car.

    Option two save part of the price of car and get the rest on loan.

    Option three get a bank loan for the whole amount.

    • Bmann999 on 12/06/2015 - 20:24
      +4

      I know credit cards have crazy interest, but many offer 12 months interest free. I can come up with the cash, but if free credit is available, it is best to hold the cash in offset against nondeductible mortgage interest.

      • sareth on 12/06/2015 - 22:25
        +4

        I've only seen 12 months interest free on balance transfers to another card, not transactions.

        • morbo1980 on 13/06/2015 - 08:06
          +2

          NAB were offering 12 months interest free on balances and purchases. I got their low rate credit card under that offer a few months back. Not sure if they are still offering it.

      • Gotchas on 12/06/2015 - 23:02

        Instead of being bman you might have to be robin. I mean round robin between credit cards so purchase on one card then payoff with interest free card them pay off at the end of promotion period

  • t_c on 12/06/2015 - 20:17
    +2

    Will dealerships accept the full purchase price on a credit card?

    • Bmann999 on 12/06/2015 - 20:25
      +1

      That's what I'm trying to find out here. I know they all take credit cards. Why wouldn't they take full price if I agree to pay the surcharge?

      • djones145 on 12/06/2015 - 22:20

        When. I got my Honda, they only allowed the deposit to be on cc. And the max I could do was 5k :(. I wanted to buy the car on cc, paid in direct transfer anyway

    • cuteseal on 13/06/2015 - 23:05
      +1

      Bought a car recently from a Ford Dealer - they would only take up to $2000 without surcharge.
      Above $2000 they were going to add a surcharge on top - can't recall how much - might have been around 1.5 or 2%.

      Might want to check that surcharge amount - might be 2% instead of 0.2%.

    • kyttiekat on 14/06/2015 - 17:51
      +1

      My dealership did. With a 1 or 2% surcharge, though. And a $500+ discount on the price, plus new wheels and some accessories.

      It was a smallish amount, but I calculated the rewards on the credit card were greater than the surcharge would be. :)
      And more convenient, of course.

  • RockyRaccoon on 12/06/2015 - 20:29

    2% is great, but you have to pay it off in 12 months.

    How are you going to do that? If you go past that deadline, you will pay 20% on any outstanding balance. Have you considered that?

    If you can pay it off in 12 months then that's ok.

    BTW negotiate the deal, then when they say $X say ok, now I want to pay on credit card. If they say that's going to be 2% then haggle and say eg I'll pay 1% or even no deal etc worth trying. 😀

    • t_c on 12/06/2015 - 20:39
      +1

      Balance transfer in 12 months no?

  • Archi on 12/06/2015 - 21:18
    +3

    Just bought a hyundai on with a credit card… Negotiated a 1.15% fee of the purchase price of 40k which is about 500 odd dollars

    • pitiek on 14/06/2015 - 19:23
      +1

      Which Hyundai worth 40k…?
      Genesis?

      • Archi on 14/06/2015 - 22:15

        Used Santa fe highlander.. MY14

        Yeah that genesis thing, not quite sure about it… Haven't aquired that taste just yet.

  • Archi on 12/06/2015 - 22:49
    +2

    Having said that no bank or credit card is going to give you 12 months interest free on purchases straight off the bat..

    12 months interest free usually offered on balance transfers…

    So you'll need to get a card with the right limit on it…

    Purchase the car

    Then apply for a balance transfer to another credit card assuming that the new credit card company isn't going to care that you already have a credit card that's got a high limit in which you used to purchase the car in the first place.

    • TheAccountant on 13/06/2015 - 07:44

      Look up gem visa it's a long interest credit card with 6,12,18 or 24 months no interest based on purchase made.

      • Bmann999 on 13/06/2015 - 14:57

        Was actually thinking about this Westpac deal

    • Kenb0 on 14/06/2015 - 07:05

      I've seen a few deals offered by bank credit cards where it was part of the deal when you opened the account, that you get 12 to 18 months interest free on purchases. In fact, I've only just come off my 12 month interest free deal with Westpac when I got the westpac black card last year(double points for first 3 months as well).

      I bought a brand new Merc on the card as well. Didn't matter that the limit on the card was 30k, and the price of the car was about 55k. I just put the card into credit enough so that the credit limit plus the amount I put into the card was enough to pay for the car, and just been making the minimum repayments on the card every month since then until last month, when I paid it off completely as the 12 month interest free on purchases was expiring. Got a nice bundle of points out of it :)

  • Woodyg22 on 13/06/2015 - 00:55

    Huge risk, is the potential reward worth it?

  • r2160 on 13/06/2015 - 07:30

    If you have 40k spare leave it offsetting your mortgage or pay off your mortgage. The car will lose you money. Psying off your mortgage will get you ahead.

  • Tcm9669 on 13/06/2015 - 09:12

    Most dealers went accept more than $2k in credit card.. Unless you want to pay fees. I tried.

  • decryption on 13/06/2015 - 10:20

    I tried to buy my car on a CC as well (mostly to get points), the dealer wanted a 2% card fee - on a $23,000 car that's an extra $460. Wasn't worth paying $460 for 23,460 points.

    • psdillon on 13/06/2015 - 12:04
      +1

      Beware that many cards have a points cap anyway. My (free) credit card is capped monthly and I go over the cap every month with just the regular supermarket & utility bills.

  • dp1 on 13/06/2015 - 12:08
    +3

    I have only ever bought cars on Amex, have rung round all the potential dealerships and the one who accepted Amex for full payment got my business. Valley Ford Northam split the 2% fee half way, as did Toyotaways Rockingham a couple of years later. I bought when Amex had a 2.99% promotion and paid off within 3 months. I don't buy $40k cars though, more like my old trade in plus 8 to 10k on Amex.
    The comment above about the depreciation costs vs mortgage is so true. I would be $93000 better off if my first car was the one I drive now and I never changed it.

    • Randxyz123 on 14/06/2015 - 20:49

      Buying on Amex isn't a bad idea. You can collect the frequent flyer points.

      If you do buy on a credit card make sure you pay it off on time.

      Most banks/ credit cards have a auto payment option.

      To get around the surcharge, get a low interest rate credit card that has enough for the car on it. Then walk into the dealer and say right I'll buy the car right now if I don't get a massive credit card surcharge.

  • sintro on 13/06/2015 - 17:36

    @Bmann999

    It's a part of the negotiation, first you get the best price that you want to pay for the car. Then tell them you want to pay with CC with no fees or put down a large deposit on the CC with no fees say %50 etc.

    If you don't get what you want, just walk away. Try else where…
    What make car are you getting?

  • Shwayne on 14/06/2015 - 02:03

    It's great until one month passes and you need to pay 20% interest.

  • This Guy on 14/06/2015 - 02:37

    What you are missing:

    0.2% was the one off surcharge that one of the dealer's you visited charges for using a Visa or MasterCard. If the dealer will accept credit card for $40k then the card will also be charged an $80 surcharge (0.2% of $40k). This is not an interest rate.

    You will still need to find a credit card with a $40k limit and an interest rate between 0 and 1% to compete with dealer financing (unless OP can negotiate a great discount).

    The credit card surcharge and the interest rate of a loan/credit card are two different things.

  • meumax on 14/06/2015 - 09:41
    +1

    I bought my mum's car using my Citibank signature card which has a $20k limit. Trick is to negotiate the best price first and only then mention you want to pay by CC with no surcharge.

    Was able to get them to agree to no surcharge for the visa but not AMEX.

    After I made the purchase I got an ANZ CC with 16months interest free balance transfer offer and transferred it to my citi card. So mums been using the card for months now and I haven't even paid for it yet. Money sitting in my offset account saving me interest on mortgage.

    When the balance transfer promo period ends in Feb 2016 I'll just roll the balance over to another cc with a balance transfer offer and postpone payment even further.

    • OzFrugie on 14/06/2015 - 12:12

      i heard that your credit rating will be impacted if you apply for many credit cards..

      • meumax on 14/06/2015 - 19:04

        True. Once every six months should be fine though. Take advantage of Veda's free credit check to check your score free once per year and make sure you're still good.

  • drfuzzy on 14/06/2015 - 15:54

    Make sure you get comprehensive insurance immediately.

    I've heard of cases of people buying on a car on CCs, writing the car off, and being lumped with the credit card debt plus interest with nothing to show for it.

  • Smerch on 14/06/2015 - 16:04

    So has anyone tried to buy a car with something like this?
    http://info.westpac.com.au/creditcards/55platinum/creditcard…

  • DarkOz on 14/06/2015 - 17:31

    Credit card surcharge at 0.2%? Do you mean 2% or it is really 0.2%?

    For a $40k car 0.2% is $80 but 2% is $800.

    I wouldn't recommend paying by credit card unless you can pay off the credit card debt within the free interest period.

    After the free interest period the interest rate is most likely to be around 14% or 23-24% depending on the terms and conditions of the balance transfer. Most of the balance transfer used to be reverted to the purchase rate but lately most banks had changed to the cash rate.

  • kyttiekat on 14/06/2015 - 18:03

    I paid by CC, 1 or 2% surcharge, but the full amount less than $10k (small used car).
    Paid off entire amount straight away. Dealership still honoured the discount we'd already negotiated, ie $500 off, new wheels, some accessories.
    I'd previously calculated that the surcharge amount was less than the rewards I'd gain on the credit card, so that was good for me. :)

    I definitely wouldn't recommend it if you're not going to pay it off though. Some CC interest rates can be skyhigh!

  • sintro on 15/06/2015 - 00:10

    Yes, no surcharge for $20K payment on VISA/Mastercard is possible, just need to ask/negotiate.

Login or Join to leave a comment
Login Join