MilesBuzz! - Buying a car with a credit card.

I have a credit card with a 0 % interest rate and want to buy a car this way. Do you think they will let me?

I have a credit card with a 0 % interest rate and want to buy a car this way. Do you think they will let me?As I recall, it is strictly the dealer's option to set the percentage of the total price (if any) that he/she will accept via credit card. A number of dealerships allow the down payment only. Others only accept plastic in the Service department.

A relative in the business said he dealt with this quite often. I guess policy would vary from dealer to dealer, but he would allow payments over several days in the amount of $9,999.99 a day until it was paid for. This avoided having to report to the IRS about large purchases.

he would allow payments over several days in the amount of $9,999.99 a day until it was paid for. This avoided having to report to the IRS about large purchases.

Hah, that's called "structuring" in AML (anti money laundering) jargon - breaking up a reportable payment into several transactions just below the reporting threshold. It's still illegal if done for nefarious reasons, and it's also an offense for the receiving party (if required to have AML procedures) not to detect such a pattern, and report it to OFAC or law enforcement where appropriate.

Back to the OT, I think the main issue is the credit card merchant fees cutting into the dealer's profit, plus the possibility of a CC buyer "charging back" the transaction for bogus reasons. They don't want to end up with no cash and no car, which theoretically could happen. I'd bet that if the dealer knows you well (i.e., you've bought several cars from the same dealer over the years) they would become more flexible on this.

I have bought two new cars with credit card downpayments in the last four years. Got some miles on each. In both cases (two different dealers) I was told the max they would take on a credit card was $5,000 which is what I charged. There was no suggestion that I could pay so much one day and then pay more on a credit card the next. As mentioned earlier in this thread the dealer has to pay the card company an interchange fee and that can cut way into profits. They are apparently happy to take the card for a downpayment to try and lock you into a deal. After that, cash, check or financing is what the dealer wants.

By the way, its not clear to me that paying with a credit card should involve reporting to the government as a cash payment might. After all, credit cards have a clear paper trail. I don't think I have to report my Amex card to customs when I leave the county even if I could charge over ten grand on it in one day.

Back to the OT, I think the main issue is the credit card merchant fees cutting into the dealer's profit, plus the possibility of a CC buyer "charging back" the transaction for bogus reasons. They don't want to end up with no cash and no car, which theoretically could happen. I'd bet that if the dealer knows you well (i.e., you've bought several cars from the same dealer over the years) they would become more flexible on this.
As far as the merchant fees are concerned, once you are past the "test drive" phase and sitting at a desk, one of the first questions that the salesman will ask is "will you want financing?" If you reply "No, I'll be putting the whole thing on my Mastercard", the merchant fees won't be a problem, they will just boil that into the price you end up paying.

If you say "I'll be paying cash", negotiate a price, and then insist on putting the whole thing on your credit card, you should expect some resistance.

I think it definitely depends on the dealer. For my last car the max they'd let me put on CC was $3000. I wanted more miles than that :(

This pervious thread last summer on buying a Toyota with a Credit card may help:
http://www.flyertalk.com/forum/showthread.php?t=446719

Does anyone know if a debit card would be more readily accepted than a credit card? There are mileage earning debit cards.

My dealership has a 4000 dollar limit on paying with credit cards. Their reason is that the fees cut into their profits.

I have a credit card with a 0 % interest rate and want to buy a car this way. Do you think they will let me?

This is a relatively old ploy and most (all?) dealers won't go for it -- why -- because they have to pay a commission on the transaction and lose the opportunity to sell you a loan.

At best you might have to pay their credit card fee -- but if it's say 3%, you'd be spending more than the miles are likely to be worth.

Bob H

Does anyone know if a debit card would be more readily accepted than a credit card? There are mileage earning debit cards.
Presumably it would be -- if it was a PIN-based transaction. I believe the fees for this are capped per transaction (in addition to being much lower than signature based). Signature-based fees are in the same ballpark as credit card interchange fees. I don't know if any auto dealers have a PIN-based payment system set up.

Of course, if the goal is to earn miles/points, PIN-based isn't so good (because obviously the bank doesn't get as much in fees).

Hah, that's called "structuring" in AML (anti money laundering) jargon - breaking up a reportable payment into several transactions just below the reporting threshold. It's still illegal if done for nefarious reasons, and it's also an offense for the receiving party (if required to have AML procedures) not to detect such a pattern, and report it to OFAC or law enforcement where appropriate.

Hah! That's hilarious, really. I never took part in that, I only knew about it. Now that I know the facts of the matter it makes me laugh to think how often this went on and how I'm sure it still goes on all over the place.

Car Dealers: anything's for sale if the price is right. Rolling the %-fee into the sale is easy ~ it's the 'charge back' thing that scares the bejezus out of 'em...

$10k rule: applies to CASH transactions. Does your pusher/cartel take a check or VISA? :D
/.

Car Dealers[/b[b]$10k rule: applies to CASH transactions. Does your pusher/cartel take a check or VISA? :D
/.

After the IRS and Justice Dept started cracking down on overseas (read tax haven) credit cards, it applies to all transactions which could be considered "questionable". And buying a car falls into the "questionable" category. Seems that the Caymens, etc. were allowing people to put their money in banks and then have an unlimited credit card to withdraw the money via purchases. There were quite a few Ferraris, Mercedes, speed boats, etc. purchased this way, until the crack down.

I pay cash for all my cars, and have done so for at least the last three cars, whether used or new. I have never had a government reporting issue arise from doing this.

It would be nice to do this with a CC, and then bank the points for the purchase. Perhaps with the next car I will do this. I don't think that getting the car dealer or the CC company to cooperate with me on this would be an issue. Thanks for the suggestion ^

M8

I pay cash for all my cars, and have done so for at least the last three cars, whether used or new. I have never had a government reporting issue arise from doing this.

It would be nice to do this with a CC, and then bank the points for the purchase. Perhaps with the next car I will do this. I don't think that getting the car dealer or the CC company to cooperate with me on this would be an issue. Thanks for the suggestion ^

M8

We buy our cars cash-only, no trade-in. (We hand the old one down.)

In a cash-only, no-trade-in transaction, if I make the best deal while still giving the dealer a adequate profit, it would be impossible for the dealer to take a credit card, because the 2%-3% fee would leave the dealer with a loss.

If a dealer took a credit card, that would mean I had left money on the table.

This has been discussed at great length in other threads - one of which has already been linked above. When something doesn't change week to week, comments from months or even a few years ago are mostly still valid.

The standard advice to "do a search" isn't just because people don't want to read two threads on a topic or are too lazy to post the same thing twice. It's because there's a lot of good content there that isn't likely to be repeated.

So, I heartily recommend it to anyone who really wants to know about this.

Aside from the one linked above, here are others:

http://www.flyertalk.com/forum/showthread.php?t=509438

http://www.flyertalk.com/forum/showthread.php?t=409277

this one doesn't start out as a buy-car-with-cc thread, but it turns into one:

http://www.flyertalk.com/forum/showthread.php?t=395382