Ideal for: People who want to buy a car valued at less than their current credit card limit, and who are able to pay the balance off within a relatively short time period.
At the beginning of the agreement
Once you have found the car you would like to buy, you pay the full amount to your dealership using your credit card. You immediately become the owner of the car and you can use the car as you see fit.
During the agreement
Due to the unsecured nature of credit card finance, the interest rates are generally higher than dealer finance options. For this reason, you may want to repay the outstanding amount of credit as quickly as possible.
At the end of the agreement
You will need to continue to repay the credit card provider until the balance is paid off in full.
Advantages of credit cards
- Credit cards are easy to apply for and use.
- You are protected by the Consumer Credit Act for items purchased up to £30,000.
- You often receive rewards from the provider for using your credit card.
- There is often a 0% interest introductory period on new credit cards.
Things to remember
- Your application for a credit card may be declined, subject to your credit history.
- As soon as any period of 0% interest finishes you will face a higher rate of interest and these charges will be added to your account.
- You may be charged a transaction fee for using your credit cards.
- A car may cost more than your credit card limit and require you to find another source of money to complete your purchase.
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