Buying a Car With a Credit Card in Ontario: Everything to Know

When thinking about buying a car from a dealership in Ontario, you might wonder, "Can I buy a car with a credit card?" It’s a simple question but the answer can vary depending on several factors.

 

Many dealerships offer various payment methods, and using a credit card to buy a car could be an option in some cases. However, there are both advantages and disadvantages to using your credit card for such a big purchase.

 

 

Can You Really Buy a Car with a Credit Card?

Yes, you can buy a car with a credit card in Ontario, but it’s not always straightforward. Not every dealership allows customers to pay for a car with a credit card due to the fees they would have to pay to credit card companies.

 

If they do allow it, you might only be able to charge a portion of the car’s price to your card, while the rest is paid through a different method like financing, a loan, or cash.

 

Before you try to buy a car with a credit card, it’s important to check with the dealership first to understand their policies.

 

Some dealerships in Ontario may have a limit on how much of the purchase price can be put on a credit card, usually around $5,000 to $10,000. Others might allow you to use your card for the full price if you’re buying a more affordable vehicle.

 

The Pros of Buying a Car with a Credit Card

There are several reasons why people might want to buy a car with a credit card:

 

• Earn Rewards: If you have a rewards credit card, using it for such a large purchase could earn you a significant amount of points, miles, or cash back. This could be a nice bonus, especially if your card has a great rewards program.

 

• Build Credit: Responsible use of your credit card by paying off the balance on time could help boost your credit score. This can be helpful, especially if you’re working on building or improving your credit history.

 

• Interest-Free Period: Some credit cards offer a 0% interest period for purchases. If you’re able to pay off the car within that period, you won’t have to pay any interest on the purchase, making it a potentially cheap way to finance the car.

 

• Convenience: Paying with a credit card is often simpler and quicker than dealing with other forms of payment, especially if you already have your card on hand.

 

The Cons of Buying a Car with a Credit Card

While the idea of using a credit card to buy a car may sound appealing, there are some important downsides to consider:

 

• High-Interest Rates: If you can’t pay off the balance on your credit card quickly, the high-interest rates could add up quickly, making the car much more expensive than it originally was.

 

• Impact on Credit Score: Using a large portion of your available credit can negatively affect your credit score. Maxing out your credit card or even getting close to the limit can lower your credit score, which could make it harder to get loans or credit in the future.

 

• Dealership Fees: As mentioned earlier, not all dealerships are eager to let you buy a car with a credit card. If they do allow it, they may add extra fees to cover the cost of credit card processing fees, which can be 2% to 4% of the total price.

 

• Credit Limits: Depending on your credit limit, you may not even have enough available credit to purchase a car entirely on your credit card. If the price of the car exceeds your credit limit, this method won’t work unless you’re making a partial payment with your card and covering the rest another way.

 

What to Consider Before Using a Credit Card

If you’re considering using a credit card to buy a car, there are a few things to keep in mind to ensure it’s the right financial decision for you:

 

• Interest Rates: Compare the interest rate on your credit card with other financing options like a car loan. If the car loan has a lower interest rate, it may be a better choice.

 

• Rewards: If earning rewards is your main goal, make sure the points or cashback you’ll earn outweigh any fees or interest you may end up paying.

 

• Your Budget: Can you pay off the balance quickly? If not, the high-interest rates on your credit card may outweigh the convenience of using it.

Always check with the dealership ahead of time to see what their policies are and make sure using your credit card aligns with your overall financial goals.