A car dealer who is quoting you a 3% service charge for a VISA or MC is blowing smoke up your a$$. I'm a retailer who frequently has customers buying stuff that costs what a car would cost (OK, maybe not a loaded A6) and my service charges are 1.75%.

Our merchant agreement forbids us from adding a surcharge for customers who opt to pay by credit card; in theory we could lose our merchant account if they caught us doing it (we don't). The credit card charges are just a cost of doing business that we factor into our pricing models.

Someone should really take on a dealer and insist that they can pay for their car with no extra service charges. I would be really surprised if car dealers have a different merchant agreement than someone like me. As a customer you have a lot of leverage: threaten to report them to VISA or MC and see what they say. Be prepared to call their bluff. There are a lot of people now who have credit cards with limits in the 30 to 50K range (the biggest charge we ever put through was $85K on an Amex).