Why use a credit card to buy a car?
There are a few reasons why using your credit card could be a smart move:
Section 75 protection
If you pay for even part of the car on a credit card (between £100 and £30,000), you’re protected under Section 75 of the Consumer Credit Act. This means your credit card provider is jointly responsible with the seller if something goes wrong – for example, if the car is faulty or the dealership goes bust.
Spread the cost
Using a credit card lets you pay off the balance over time, which could help if you don’t have the full amount upfront.
Cashback or rewards
If your card offers cashback, points or other rewards, you could earn something back on your purchase – especially useful with such a large spend.
What are the risks of buying a car with a credit card?
While there are benefits, it’s important to be aware of the potential downsides:
Interest charges
Unless you pay your balance in full or have a 0% purchase offer, you could end up paying a lot in interest – which makes the car more expensive in the long run.
Dealer fees
Car dealerships can sometimes add a fee (often around 2%–3%) if you pay by credit card. However, rules around charging extra fees for credit card payments have changed in recent years, and many dealers are no longer allowed to add these charges.
This fee, where it's legally applied, can wipe out any rewards or cashback you earn, so it's worth checking before you pay.
Credit limit
Cars can be expensive, and your credit limit might not be high enough to cover the full cost. You could use your card for a deposit instead and pay the rest another way. Be aware that if you accidentally go over your credit limit, you may also be charged additional fees.
Can you use a credit card for a car deposit?
Yes, and this is often the most common way people use their credit cards when buying a car.
Paying just the deposit by credit card still gives you Section 75 protection for the full purchase – even if the rest is paid by bank transfer, loan, or finance.
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What types of cars can you buy with a credit card?
This depends on the seller. You may be able to use a credit card to buy:
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A new car from a dealership
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A used car from a garage or dealer
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A car through an online car buying platform
Bear in mind, private sellers usually won’t accept card payments. You’d likely need to pay them by bank transfer or cash instead.
Can you use a credit card to lease, finance, or rent a car?
Leasing and finance:
Usually, no – most car finance agreements and leases don’t let you pay with a credit card. You might be able to use it for the initial payment or admin fees, but not for monthly repayments. Always check the terms before committing.
Renting a car:
Yes, you can often rent a car with a credit card – and in fact, many rental companies prefer it. That’s because they usually place a security hold on your card during the rental period. Some companies won’t accept debit cards at all or may ask for extra ID or checks if you’re not using a credit card.
What to check before paying with a credit card
If you’re thinking about buying a car with your credit card, ask yourself:
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Is the seller happy to take a credit card?
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Will I be charged extra fees?
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Do I have a 0% interest offer – and how long does it last?
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Can I afford to pay it off before interest kicks in?
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Is the purchase between £100 and £30,000? (for Section 75 to apply)
Are there better ways to pay for a car?
It depends on your financial situation. Some other options to consider:
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Personal loan – often comes with a lower interest rate than a credit card
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Car finance – such as hire purchase or PCP
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Savings – if you have them, this can avoid interest altogether
Know your options before you buy
You can buy a car with a credit card – but it’s not always the best option. It can be a useful way to spread the cost or get purchase protection, but only if you’re clear on any fees and interest involved.
Always compare your options carefully. That way, you can make a choice that suits your budget – and drive away with peace of mind.
Disclaimer: We make every effort to ensure content is correct when published. Information on this website doesn't constitute financial advice, and we aren't responsible for the content of any external sites.
Fiona Peake
Personal Finance Writer
Fiona is a personal finance writer with over 7 years’ experience writing for a broad range of industries before joining Ocean in 2021. She uses her wealth of experience to turn the overwhelming aspects of finance into articles that are easy to understand.
