Today buying a car on a credit card is a debating topic. So, here we will explain the major benefits and drawbacks to buy a car with a credit card. Besides that, we will also discuss the various aspects that need to be discussed before going to purchase a new car with your credit card.
First of all, let me clear can you buy a car with a credit card?
Yes! you can, instead, this is one of the best ways to buy a car.
Credit cards are the biggest ins in society. Individuals are more comfortable using credit cards to pursue the purchase of products from the market. From a stationary shop to an automobile shop, credit cards can be generously used in any of the sectors in the market.
But there will be a common question in your mind why should I buy a car with a credit card to?
For the reason that I have compiled a genuine answer on this, get it below.
Why should I buy a Car with Credit Card?
It has been seen that buying a car through a credit card is nowadays considered to be one of the cheapest and easiest ways to invest your money. With a good credit score, you become eligible for buying a brand-new dream car with your own credit card without much trouble. So first of all make sure, what is your credit score to buy a car and your credit score for a car loan.
However, it is also necessary to check whether the dealer or shop from where you are purchasing the car, accepts the credit card or not. Meanwhile, there are some car insurance companies in India who avail this facility, need to find them.
Many of the advisers will suggest that buying a car on a credit card is not a fair practice as it can lead to many disadvantages. However, certain added advantages can prefer to go for a purchase of a new car with the help of a credit card.
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Here is the list of advantages that makes it recommendable to buy a new car you’re your credit card.
10 Benefits to buy a Car with Credit Card
1. Lower interest rate
As compared to other categories of loans such as personal loans, car loans, the rate of interest of amount, spend by credit card is comparatively low. As a result, this makes it the cheaper and best way to finance a car with a credit card.
2. No associated fees
This is another advantage of using a credit card to initiate your purchase of a new car. There are no associated fees or any other charges on your credit card. So, this will limit your costing and there can not be any other best way to pay off credit cards.
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3. No preapproval is required
If you opt for taking a loan from any bank or finance, you need to get prior approval for the same. However, in the case of a credit card, your loan is pre-approved. The only thing that you need to make sure of is the minimum credit score for a car loan.
4. Extra protection
Getting a purchase of a car with the help of a credit card will give you an assurance of adding extra protection to the purchase. It comes hand in hand with the use of a credit card. Thus, this is one of the best ways to buy a car on finance.
5. Zero percent credit card scheme
In many of the credit cards, the longest 0% credit card scheme is also available. It allows the owner to clear his debt with a fixed monthly installment. Hence, you can avail no interest for the same.
6. No additional charges
Unlike other loan categories, you can enjoy the benefit of saving a good amount of money as there are no additional charges rather than your spending on your credit card.
7. Can earn cash backs or reward points
you can earn the benefits of cashback with huge spending of money through the credit card in your purchase of the new car. Besides that, you can also earn other reward points that can be exclusively used by you.
8. Pre-closure without interest
If you can pay off all your remaining amount of car, you can easily opt for pre-closure of the monthly installments that too without any charge or interest.
9. Earn flying miles
With the purchase of a car, you might earn many flying miles and can enjoy free or discounted air tickets with co-partnered airlines.
10. Minimum monthly installment
Yes, buying a car can be a smart option with your credit card. Because you will only have a minimum monthly installment to pay off as an EMI for your car.
These were some major advantages to buying a car with Credit Card. Now, let’s move ahead and discuss the various drawbacks that are associated with making a purchase of a car with a credit card. We have a list of disadvantages that can let you think twice before making the decision of buying a car on a credit card.
10 Drawbacks to buying a Car with Credit Card
1. Affect your credit health
With every inquiry you made for the purchase of a car, your credit card number is used to check your eligibility. As a result, it can let you experience a downfall in your credit score.
2. Locking of your card
Until and unless you pay the amount, the limit of your credit card will make the block. Hence, you might not be able to use the card till that time.
3. Complete balance transfer not guaranteed
Balance transfers are not at all guaranteed with the credit card used for your credit card. Meanwhile, you might not be able to pay the whole amount of your car purchase with your credit card.
4. Reverse rate
Many of the credit cards charge revert rates. This cash advance rate is much higher as compared to the common rate of interest which is generally charged with the usage of credit cards.
5. Annual fee
You have to pay the annual fees for the use of credit cards also. This annual fee is quite high. Overall, it becomes costly for the cardholder to pay the amount annually.
6. Addition of up-front cost over time
It has been observed that with the usage of a credit card while paying for a new car, one might end up paying the additional front cost over time.
7. Fewer options available
This is necessary to know that every card dealer does not accept payment from a credit card. Thus this makes it very narrow to choose the options from the available options in the market.
8. Credit card surcharge
There are certain cases in which an individual ends up paying the surcharge amount for the usage of a credit card. Hence, this can bring more financial burden on the purchaser. Meanwhile, there should not have any hidden surcharges.
9. Cash advance fees
If you withdraw cash against a credit card to pay for the amount to purchase a car, you might end up paying an extra cost for the same. Because once you withdraw cash from a credit card, it will charge more. For the reason that people avoid withdrawing any cash from credit cards unless high emergency.
10. Credit card fraud
One of the major drawbacks of using a credit card for the purchase of a car is fraud. As there are certain cases where credit card fraud can be done. For the reason that people are afraid to use a credit card to buy a car.
Hence, considering both pros and cons of the usage of credit cards for the purchase of a new car, one can take the decision. There is always a better option to discuss and look for all the available options.