Buy a Car with a Credit Card: We often rely on bank loans to buy a new vehicle. But many people are skeptical about whether it is possible to buy a car using a credit card. Depending on the credit limit and the dealership’s policies, a car can be purchased in whole or in part using a credit card. While paying by credit card is easy, it is important to be aware of the financial aspects of it.
High interest rates: If the amount due is not paid on time, credit cards can charge interest of up to 3.35% per month. This is much higher than the annual interest rate of 9-10% on a car loan. Therefore, consider this option only if you can pay your credit card bill on time.
Dealer Surcharge: Some dealers charge an additional 2-3% (surcharge) when you pay with a credit card.
Credit Score: If you miss a payment or exceed your credit limit, it can negatively affect your credit score.
Not all dealers accept: Not all dealers accept the full amount via credit card. So, talk to the dealer and make sure before paying.
Utilization is likely to increase. This can affect your credit score.
Rewards: Premium cards like Axis Magnus, HDFC Infinia, SBI Elite offer a lot of reward points or cashback on large transactions. This can later be used for travel benefits or gifts.
Interest-free period: Most credit cards offer an interest-free period of 45-50 days. If you can repay the money within this time, you can buy a car without interest.
EMI facility: Some credit cards allow you to convert large amounts into monthly installments
Speed and convenience: You can complete the transaction quickly by avoiding queues and loan procedures at banks.
Buying a car using a credit card is not for everyone. If you can pay off the amount on time, it is a good way to earn rewards. Otherwise, it is advisable to consider traditional car loans and EMIs.
Also Read: 6 Smart Ways to Protect Your Aadhaar from Misuse
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