When you buy a new vehicle, you know to get the best deal you need some sort of down payment or trade-in. If you have trouble coming up with the $1,000 to $5,000 needed for a better rate, you might be tempted to use a credit card. Pennsylvania area Toyota dealership discusses the good, the bad, and the ugly with using credit cards for down payments.
Can You Use a Credit Card?
At most dealerships, probably not. Plastic can be a real pain for car dealerships. Car dealerships have to pay when you use your credit card. Credit card companies may charge up to 4% for a dealership to process a credit card, which can result in hundreds or thousands of dollars in fees for the dealership. Consumers also have the right to refuse payment. Therefore, if you dispute a charge, the credit card can stop payment once the car is off the lot. Ask your dealership professional about the policy for paying with a credit card.
Why it is not a Good Idea
If you are considering using your card so you can cut your monthly payment and interest rate, you will not be doing that in the end. Look at your current credit card statement. What is the interest rate? It is probably two or three times what you would pay for a car loan.
How to Get a Good Deal
If you want a good deal on a car loan, ask the dealership about rebates and special incentives. If the dealership still has last year’s inventory on the lot, it will be anxious to make way for the new lineup. This is your chance to score an awesome deal. If you are considering using your credit card because your credit is not where it needs to be for a good rate, consider waiting a little longer and saving a little bit of money per week to save for a down payment.
If You Still Want to Use Plastic
If you have the money to pay off the balance of the card, and you are only using it to get rewards, using plastic may work for you. Keep in mind when you charge: the more you spend, the higher the interest if you do not pay the balance off or down.
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