Credit cards can be very handy for purchasing most things when you don't have funds immediately available.

But before you brandish your credit card to buy a car, it pays to stop and think whether it's the best financial move over the longer term.

Do car dealers take credit cards?

This will vary between dealerships, but some will accept credit card payments. However, using your credit card for a car purchase will also depend on your card issuer and your credit limit. Even though a credit card is an easy way to pay for a car, it could bite you down the track.

Before you use your credit card for a major transaction like a car purchase, it's wise to have done some homework beforehand. Make sure you have checked:

  • your credit limit and current credit card balance

  • whether your card has a daily transaction limit

  • whether you have other upcoming expenses in the billing period

  • what your current credit card interest rate is

  • the number of interest-free days you have

  • the due date of your monthly bill

  • whether the seller will levy a surcharge fee (A 3% surcharge on a $10,000 car will add another $300 to the total cost. On a $30,000 car, it will be an extra $900.)

Cash Advances

Alternatively, if the seller doesn't accept credit card payments, you may choose to transfer available funds from your credit card to your debit card in the form of a cash advance. This also attracts fees of anywhere between 2-5% (levied by the card issuer).

Beware: The ongoing interest rate you pay on a cash advance may be considerably more than the interest charged for a direct credit card transaction. It also applies immediately, unlike the usual purchase rate, which has a set number of interest-free days.

If you're planning to pay for a car with a credit card, read the fine print of your particular credit card product so you can be sure you're taking the lowest-cost option.

The table below features some of the lowest interest rate credit cards currently on the market:

Overview
Features
Fees
Other
Credit card
N/A0[Minimum credit limit : $1, 000 Card replacement fee (Australia) : $15 Apple Pay, Google Pay, Samsung Pay, ]0015$product[$field["value"]]15.49Visa
More details
Disclosure

G&C Mutual Bank Low Rate Visa Credit Card

    More details
    Disclosure
    N/A0[Apple Pay , ]00$product[$field["value"]]$product[$field["value"]]8.99Visa
    More details
    Disclosure

    Easy Street Financial Services Easy Low Rate Visa Credit Card

      More details
      Disclosure
      N/A0[Low ongoing variable interest rate 0% p.a. on balance transfers for 12 months. Same ongoing rate for retail purchases, cash advances and balance transfers Up to 55 days interest free. Additional card available for $0. Minimum credit limit $500 Low annual fee of $40. Half the annual fee ($20) donated to the McGrath Foundation every year you hold the card. Choose a credit limit from as little as $500 and up to $15, 000. Access to the worldwide Visa network. Replacement of Visa card (within Australia) $12.50 Replacement of a Visa Card (overseas) $55 Apple Pay, Android Pay, Google Pay, Samsung Pay, ]0025$product[$field["value"]]8.99Visa
      More details
      Disclosure

      Community First Bank Low Rate Pink Credit Card

        More details
        Disclosure
        N/A0[Up to 58 days interest-free credit. Competitive low interest rate on purchases Low annual fee of $39 - waived if you make purchases of more than $8, 000 a year. Accepted at more than 24 million outlets worldwide - just look for the VISA symbol. Can be linked with up to two other Bank of us accounts ensuring you only have to carry the one card. Option to make balance transfers from existing cards - treated the same way as a purchase with up to 58 days interest free. Minimum credit limit $500, ]0020$product[$field["value"]]9.99Visa
        More details
        Disclosure

        Bank of us Visa Credit Card

          More details
          Disclosure
          N/A0[Minimum Credit Limit $1, 000 0% interest on balance transfers for 12 months Apple Pay, Google Pay, Samsung Pay, ]0020$product[$field["value"]]11.8Visa
          More details
          Disclosure

          Heritage Bank Visa Gold Low Rate

            More details
            Disclosure
            N/A0[Apple Pay, Google Pay, Samsung Pay, ]00$product[$field["value"]]$product[$field["value"]]19.99Mastercard
            More details
            Disclosure

            Bendigo Bank Bright Credit Card

              More details
              Disclosure
              Important Information and Comparison Rate Warning

              All products with a link to a product provider’s website have a commercial marketing relationship between us and these providers. These products may appear prominently and first within the search tables regardless of their attributes and may include products marked as promoted, featured or sponsored. The link to a product provider’s website will allow you to get more information or apply for the product. By de-selecting “Show online partners only” additional non-commercialised products may be displayed and re-sorted at the top of the table. For more information on how we’ve selected these “Sponsored”, “Featured” and “Promoted” products, the products we compare, how we make money, and other important information about our service, please click here. Rates correct as of June 23, 2025. View disclaimer.

              Important Information and Comparison Rate Warning

              When you might use a credit card to purchase a car

              There are some circumstances when using a credit card to buy a car may be an option, but not all of them are necessarily good options.

              When the car you are purchasing is under $5,000

              The minimum amount you can typically borrow on most car loans or personal loans in Australia is $5,000. If you approach a lender wanting a loan less than that, they may even advise you to take up a low-interest rate credit card rather than a loan.

              Some low-interest credit cards can come with lower rates than some car loans so it may be an option for vehicles in the lower price brackets. Even if the car you are looking at buying is a little more than $5,000, a low-interest credit card may offer you a similar rate and more flexibility than some loans.

              When you repay the full amount within the interest-free period

              If you have the cash available in a savings account or a term deposit due to mature within your credit card's interest-free period and you plan to repay the amount in full before you get hit with interest charges, using your credit card can be a convenient option.

              When you want to earn reward points

              You may be looking to earn considerable rewards points with a major purchase such as a car, but if you're not planning to clear your debt quickly, this can prove to be false economy. A hefty card surcharge from the seller could also see you pay a high price to obtain the points.

              When you are after a quick purchase

              Credit cards are highly convenient at point-of-sale and can help you make an easy transaction and drive away in your new vehicle sooner than you could with other forms of finance. But make sure you are not prioritising a quick sale over financial prudence.

              When you split the cost of the car between multiple payment methods

              Perhaps you have funded some of the purchase via a car loan or personal loan, or through your savings, but need to make up the shortfall using your credit card. If this is your strategy, it's wise to ensure the repayments that attract the highest interest are for the smallest slice of the purchase amount. Also, make sure you have a plan to pay off the highest interest rate component first.

              If you were rejected for a car loan

              This is where we get into dangerous territory. If you weren't approved for a car loan, it's unlikely that paying for a car using a credit card is a good option, particularly if you were turned down because of a poor credit score.

              If a lender has assessed you as being unable to service a car loan, it's not a good move to take on the debt via credit card, particularly if it's going to attract a higher interest rate than the car loan you applied for.

              Ask yourself whether the loan amount you applied for was too high and whether a less expensive vehicle could meet your needs. It can also pay to shop around with other lenders who may be able to offer you a loan with a lower interest rate than your credit card.

              See also: How to get a personal loan with bad credit

              Remember though, each time you apply for a loan, it will be noted on your credit history. Make sure you do your research and apply to a lender where you meet the criteria and have the best chance of being approved.

              Comparison of average interest rates

              The interest rate you will be offered for a car loan or personal loan will vary greatly depending on a number of factors, including your credit score, existing debts, income level, the make and type of vehicle you are purchasing, and whether the loan is secured.

              Here's a rough guide on rates as at April 2025:

              Product

              Interest rate range

              Average advertised interest rates

              Car Loan

              5% - 12% p.a.

              New car loan 7.56% p.a.

              Used car loan 8.08% p.a.

              Personal loans for cars

              5% - 25% p.a.

              Secured personal loan 9.10% p.a.

              Unsecured personal loan 10.91% p.a.

              Low-interest credit cards

              8% - 15% p.a.

              14.61% p.a. (non-rewards credit cards)

              All Credit cards

              8% - 25% p.a.

              19.94% p.a.

              Cost of buying a car with a credit card compared to a car loan

              Let's run some figures for a $10,000 car paid off over a three-year term (although bear in mind, a credit card has no end date requirement for repayments). We'll use the average interest rates for a secured personal loan and a standard credit card, according to the table above.

              Product

              Interest rate

              Term

              Monthly repayments

              Fees/surcharge

              Total cost

              Secured personal loan

              9.10% p.a.

              3 years

              $318.46

              $300

              $11,764.56

              Credit card

              19.94% p.a.

              Planned repayment over 3 years

              $371.33

              $200 (at 2% surcharge)

              $13,567.99

              Source: Savings.com.au Car Loan Calculator. (Calculations assume credit card is not used for any other payments over the three-year period.)

              If you're considering a car loan, the table below displays some of the lowest-rate car loan products on the market.

              Rates
              Features
              Fees
              Other
              Lender
              VariableNew99 yearsN/A
              More details
              • Available for purchasing new and demo vehicles
              • $5,000 to $150,000 loan amount
              • Redraw facility available up to $5000/day
              • Required: Good credit history, stable employment history. Aus citizenship or PR.
              Disclosure

              Variable Car Loan - New/Demo

              • Available for purchasing new and demo vehicles
              • $5,000 to $150,000 loan amount
              • Redraw facility available up to $5000/day
              • Required: Good credit history, stable employment history. Aus citizenship or PR.
              More details
              Disclosure
              FixedNew, Used99 yearsN/A
              More details
              • A leading Australian Finance Broker with proven experience you can trust
              • We've assisted more than 150,000 customers access over $8 billion in finance!
              • We are the experts at getting the keys in your hands
              Disclosure

              Car Loan (5 Years)

              • A leading Australian Finance Broker with proven experience you can trust
              • We've assisted more than 150,000 customers access over $8 billion in finance!
              • We are the experts at getting the keys in your hands
              More details
              Disclosure
              FixedNew99 yearsN/A
              More details
              • No vehicle age limit
              • No ongoing or early exit fees
              • 1-7 years loan terms. Pay monthly, fortnightly, or weekly
              Disclosure

              Car Loan Secured Fixed (Exceptional Credit) ($5k-$100k) (New) (5 Years)

              • No vehicle age limit
              • No ongoing or early exit fees
              • 1-7 years loan terms. Pay monthly, fortnightly, or weekly
              More details
              Disclosure
              Important Information and Comparison Rate Warning

              All products with a link to a product provider’s website have a commercial marketing relationship between us and these providers. These products may appear prominently and first within the search tables regardless of their attributes and may include products marked as promoted, featured or sponsored. The link to a product provider’s website will allow you to get more information or apply for the product. By de-selecting “Show online partners only” additional non-commercialised products may be displayed and re-sorted at the top of the table. For more information on how we’ve selected these “Sponsored”, “Featured” and “Promoted” products, the products we compare, how we make money, and other important information about our service, please click here.

              The comparison rates in this table are based on a loan of $30,000 and a term of 5 years unless indicated otherwise. The comparison rates for car loans and secured personal loans for the relevant amounts and terms are for secured loans unless indicated otherwise. The comparison rates for unsecured personal loans are applicable for unsecured loans only. WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. Comparison rates are not calculated for revolving credit products.

              Monthly repayment figures are estimates only, exclude fees and are based on the advertised rate for the term and for the loan amount entered. Actual repayments will depend on your individual circumstances and interest rate changes. Rates correct as of June 23, 2025. View disclaimer.

              Important Information and Comparison Rate Warning

              Pros and cons of buying a car with a credit card

              Positives

              • Convenience: Credit card transactions are simple and much faster than waiting for a loan to be approved.

              • Points: A major purchase such as a car can earn substantial reward points on credit cards that have such features.

              • Interest-free period: Unlike a loan, credit cards come with interest-free periods, typically around 55 days, which can allow you the opportunity to pay for your car in full interest-free.

              • Lower fees/lower interest rates: Some credit card products may come with lower fees and/or lower interest rates than you might pay on a car or personal loan - but not always. Doing your homework for your particular circumstances is key.

              • Part payment: A credit card can take up the slack if you're a bit short on savings or weren't able to take out a loan for the full amount of the vehicle you wished to purchase.

              Negatives

              • Not always accepted: Some car dealerships won't accept credit card payments, and not all credit card issuers will allow a car purchase.

              • Credit limit: Purchasing a car on a credit card could account for a sizeable chunk, if not all, of the card's credit limit meaning you won't be able to use it for other payments for some time in the future. There are fees for going over your limit.

              • Losing interest-free period: If your car purchase becomes your outstanding balance, you will not be able to take advantage of an interest-free period for additional purchases.

              • Fees: Using a credit card for a large purchase may see you hit with a hefty card surcharge fee.

              • Credit score impact: Having a maxed-out credit card or one with a substantial debt will lower your credit score, making it harder for you to access other credit products.

              • Higher interest rate: Many credit cards come with high interest rates - often double or even triple the rate on car loans - if you don't pay off your debt in the interest-free period. This could see you paying thousands extra for your car in the time it takes you to repay the debt.

              • Debt spiral: While a car loan sets a term for repayment of the loan, you can carry a credit card debt for many years as long as you're paying the minimum amount due. Unless you are highly disciplined, the debt could feasibly be a drag on your financial health for many years, even decades.

              Alternatives to using your credit card

              Savings.com.au's two cents

              Using a credit card to pay for a car may be a viable option in some specific circumstances, including if you intend to pay the car off within an interest-free period or during a low-interest promotional period on a new credit card product.

              But it should be carefully considered. Credit card debts can last forever (as long as you're making minimum repayments) whereas car or personal loans will have a fixed end date. In many cases, the interest rates charged on loans can be considerably lower than average, and even low-interest, credit card rates.

              Before you make any major purchase, it pays to do your research. Consider all your options to see what will best suit your needs, not just in the short term but also over the longer term. You could be paying a hefty price for convenience and immediacy. Cars, particularly new cars, can be notoriously bad investments so it's worth taking the time to investigate how to minimise your losses.

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