The Best Credit Cards for Buying a Car

We all need reliable wheels to get around town for work, play, or take care of our daily errands. Recent statistics from the U.S. government reflect that 95% of American households own a car, and most Americans commute to work by automobile. 

Americans love our rides, but interestingly enough, according to government data, we rank fifth in the world for car ownership per capita. Buying a truck or minivan is a necessary and expensive purchase, but let’s face it: From a financial perspective, cars are a bad investment. 

Could the best credit card for buying a car help make the car purchase transaction easier? We’re here to say it can. Keep reading because the freedom of new car ownership awaits with the best credit cards to buy a car.

Reviews of the Best Credit Cards to Buy a Car

After taking them for a test drive, we settled on three credit cards as the best for buying a car. The Platinum Card from American Express tops the list based on high or no spending limits, generous points programs, and other rewards meant to maximize the car-buying investment.

This article presents the three best credit cards for buying a car. We also provide tips and pointers for choosing the right credit card for your car purchases and transportation needs. 

Best Credit Card for Buying a Car: The Platinum Card from American Express

What sets the Platinum Card from American Express apart in car buying is the vehicle purchasing program at select dealerships and your ability to earn rewards. After your car purchase and it’s time to fill up, the card gives 10X points at grocery stores and gas stations on purchases made within the introductory period.

Although the Amex Platinum card has a high annual fee ($550! Gulp!), this credit card issuer more than makes up for it in other advantages for those interested in new car ownership. Chiefly, the card comes with no—, and we mean absolutely no—spending limit. So as long as your dealership takes cards, the sky’s the limit. 

Read the fine print, though, and participating car lots accept anywhere from $2K, a decent down payment up through the entire purchase price, so again, it’s a good idea to call ahead and ask.

There’s also a generous welcome bonus: 75,000 points on the first $5K spent in the first six months. That’s an estimated $1,500 value on purchases and balance transfers up to $15,000, or roughly three times the annual fee.

Once you’ve driven the car off the lot, it may be time for a vacation, and here the Amex Platinum continues to excel with points offered on prepaid hotel stays and Uber rides once you arrive.

Card owners can use their Membership Rewards points per dollar spent to book travel through American Express Travel. Automobile purchasing aside, the card boasts Complimentary Gold status with Hilton Honors and Marriott Bonvoy.

Particularly notable for a large purchase like a vehicle is the extended warranty benefit, extending eligible manufacturer’s warranties of five years or less by an additional 12 months. 

Pros

• There are complimentary memberships in Hertz Gold Plus Rewards, Avis Preferred, National Car Rental Emerald Club Executive, and access to Amex Fine Hotels and Resorts. 
• Despite the annual fee, purchase protection offers added security against theft, accidents, or other loss for up to three months from the original purchase date.

Best Credit Card for Buying a Car with Cash Back Points: Chase Freedom Unlimited

The best card for buying an automobile while maximizing your cash back points is the Chase Freedom Unlimited. In addition to no annual fee, the Chase Freedom Card also offers Chase Points, which can amount to about 1.5% back on your purchase. 

You can get the cash back through a statement credit or direct deposit into U.S. savings or checking accounts. This adds up to a lot on a purchase as expensive as a car or about $600 bucks back on a purchase of about $20K. 

It also offers 75,000 sign-up bonus miles when you spend $4,000 on purchases and balance transfers in the first three months from account opening if you play your cards right (pun intended) and pay off your car purchase within the first 15 months. However, it’s like 0% financing while earning rewards on the investment.

With the Freedom Unlimited card, Chase also offers an introductory rate that’s hard to beat, or 0% introductory APR on purchases made within the first 15 months of opening the account. Following that, a variable APR ranges between 14.99% and 23.74%.

In addition, Chase offers a $200 bonus on up to $500 in purchases made within the first three months of card ownership. If you have another Chase Card offering Chase Ultimate Rewards, that initial $200 points can be transferred to 20,000 reward points.

We especially like the roadside assistance this credit card issuer offers, dispatching help as small as a tire or a jump-start on up through a tow if that’s what’s required. You can also use the Chase Ultimate Rewards points for lockout service, winching, and gas delivery (though additional fees may be required).

Pros

• With zero annual fee, the Chase Credit Journey helps travelers with generous travel and emergency perks in the form of legal and medical referrals or other travel and some emergency assistance while you’re away from home.
• Reward points can be used at select hotel partners on your first road trip. 

Best Card for Buying a Car with a High Spending Limit: Capital One Venture Rewards Credit Card

The Capital One Venture Rewards Credit Card is the next in our ranking, offering a high spending limit and sign-up bonus, especially on large purchases like an automobile. Its generous sign-up rewards include 100,000 bonus points on the first $20,000 spent on the card within the first year after opening the account.

The card offers 2x Capital One miles on almost all car purchases as an ongoing benefit. Cardholders can use those miles to offset travel charges on the card statement or transfer them to select hotel and airline partners.

What this all means is that those with a high enough spending limit to put an entire vehicle purchase on the Venture Rewards in the first year after opening the account can earn 100K bonus points, up to 20K in spending, plus 2X Capital One Miles on the rest of the purchase. 

The annual fee on the card is also quite affordable at only $95, and there are no foreign transaction fees. Card users can also enjoy up to $100 credits on Global Entry or TSA PreCheck. 

Further incentives to choose Venture Rewards include no minimum redemption amount, new balance transfer partners, and an improved transfer ratio. Capital One is sensitive to recent report inquiries, even if you have excellent credit, creating eligibility issues for some applicants.

Pros

• Spend $3K on the card in the first three months after opening the account, and earn an additional $50,000 bonus points.
• Despite having an annual fee, it offers many travel perks, including secondary car rental insurance, travel accident insurance, and extended warranty protection.

Do Car Dealers Take Credit Cards?

Before heading to the lot with your brand-new card from our ranking, call ahead and ask. With about a billion credit card transactions occurring daily worldwide, why would car lots want to miss out on those sales? The answer to that question is fees. 

Like any retailer, car dealerships pay a processing fee on credit card transactions and transactions as large as a car purchase. Credit card companies issue fees ranging from 1% to 4%, which can add up to a lot. 

Most dealers only make about 5% profit on each transaction and annual fee, and paying a 4% processing fee eats up most of their margin. Once you’ve confirmed your car dealership accepts cards, and if your spending limit isn’t high enough, consider just putting the down payment on your new card instead. This approach offers many advantages:

• You may earn your introductory signup bonus in a single transaction.
• You won’t be required to spend cash on your new wheels until the following credit card billing cycle.
• You’ll be able to pay off in installments.

Most importantly, those early card transactions will likely be within the 0% APR introductory period, so it’s like a no-interest loan. In some cases, there will be a variable APR once the intro APR offer ends in certain months after the account opening.

Why Would You Purchase a Car Using a Credit Card?

Before telling you everything we liked about each one of these cards and why they make a great credit card for a big car purchase, let’s first examine a few key points that set these cards apart from the rest.

A big purchase like an automobile will fulfill some card minimum spending requirements. Take advantage of some credit cards’ no-interest introductory rate, and it’s a bit like a no-interest car loan or a no-interest personal loan (just be sure to pay it off quickly).

You’ll rack the spending points with a card offering the right membership rewards, cash back rewards programs, and zero foreign transaction fees. While using a card to buy a car may seem strange, it offers many benefits that can improve your financial plan. Whether new or used, the advantages of buying a car with a credit card include the following:

Seamless and Secure Transactions

Credit cards offer a simple and secure payment method, eliminating the need to carry a lot of cash or understand complicated financing arrangements. 

Despite some banks having a transaction fee, this convenience from credit card companies simplifies the purchasing process. It provides a simple and effective way to buy the vehicle of your choice.

Rewards and Cash Back

Numerous cards provide sizable rewards and cashback for significant car purchases. With the right card, you can accrue points or a flat cash back rate to help you pay for a sizable portion of your car.

Some cash back rewards do not expire even months after account opening. Some cards let you enjoy a variable APR for certain months from account opening, as well as balance transfers and zero annual fee.

Building Credit

Your credit score can be established or improved with responsible card use, including paying the annual fee on time. Using a credit card to purchase a car and making on-time payments afterward can show you are a responsible consumer and improve credit scores.

Interest-Free Periods

Many credit cards provide introductory interest-free periods. You can effectively obtain an interest-free loan for your entire new car purchase if you can pay off the remaining balance within this time frame. However, be careful since late fees may apply on variable APR on balance transfers after account opening.

Consumer Protections

Additional consumer protections credit cards usually offer include purchase protection and extended warranties. These safeguards can give buyers peace of mind when purchasing a costly item like a car.

In other words, you need a new automobile for many reasons. So long as you can pay off the balance without incurring additional interest, why not make the most of it? 

How Do You Purchase a Car With a Credit Card?

While using a credit card to purchase a car might be more complex than swiping it at the dealership, a few tips can help you get through this process without any problems.

Dealer Acceptance

If you plan to buy a car, ask the dealership if they accept credit cards. Due to processing costs, some dealerships have caps on the amount you can charge on a card.

Split Transactions

If the dealership has a limit on the card amount, think about splitting the transaction. Use your card to the fullest extent permitted, and then make the remaining payment using another method.

Balance Transfer Checks

Some credit card providers offer balance transfers that can be used to make a direct payment for the vehicle. Combining payments or taking advantage of a lower interest rate and minimal annual fee can be especially helpful.

What Is a Credit Card Spending Limit?

You’ll need a pretty high spending limit to make a large purchase like a car on a card. In this section, we’ll define a credit limit, tell you how to determine your spending limit, and how to get a higher spending limit if you need to.

The limit on your credit card, sometimes called a spending limit, credit line, or credit limit, is the maximum amount of money you can spend on your card without penalties. Getting a higher credit limit from credit card companies typically requires the following:

• Improving your credit score through on-time payment of all debts, paying off your full balance, and only applying for a few loans or credit cards all at once.
• Building or repairing your credit through secured credit card purchases.
• Look for a card with a generous welcome bonus or ample rewards program.

Asking for a Higher Credit Limit

In addition to asking the dealership whether or not they take credit cards (not all of them do), if you’re in the market for a new car, can you just ask your lender for a higher credit limit? Well, yes, and no. 

To lower your CUR or credit utilization ratio, or the amount of credit you have available versus how much debt you carry, a key metric in calculating an individual’s score, asking for a higher spending limit can be a good idea.

Asking for a higher spending limit just to boost your max spending limit with no real plan or ability to pay off the debt, however, is not advised.

Paying Your Balance to Avoid Costly Interest

Credit cards give you flexibility; however, you must manage your balance to keep from accruing high-interest fees.

• Budget and plan: Before buying a car, make a budget that considers the vehicle’s price and any additional costs. To prevent carrying the balance forward, plan how you’ll pay it off, including the annual fee.
• Opt for interest-free periods: If your credit card has one, use it to pay off the balance during this period to avoid paying interest.
• Avoid minimum payments: Each month, make a larger payment than the bare minimum. This speeds up principal reduction and limits interest accrual.

Related Questions

Conclusion

Considering the convenience and benefits, using credit cards to purchase a car is wise. You can combine the convenience of credit cards with the thrill of car ownership without difficulty by being aware of the necessary steps. Remember that a well-rounded strategy ensures your car-buying experience is simple and economical.