Why I put my car down on a credit card

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Putting down a deposit for a car on a credit card can sometimes be a smart financial decision.


Key points

  • When you buy a car, you usually have to pay a deposit.
  • I recently bought a car and had to put down $5,000 for it.
  • I put the deposit on a credit card

Recently, I bought a new car to accommodate my growing family. When I bought the car, I paid for it with the money I had saved up. However, I had to pay a deposit before finalizing my purchase because the vehicle was still in transit and I couldn’t bring it home right away.

I was given several options to make my $5,000 deposit, but chose to put it on a credit card. Here’s why.

The big reason I put my deposit on a credit card

The reason I put my car down on a credit card was simple.

By charging the $5,000 I had to deposit, I was able to earn credit card reward points. My card offers a 2.265% rewards bonus, so the $5,000 charge I made ended up earning me $113.25 – just for a purchase I should have made anyway.

Due to the valuable credit card rewards I have been able to earn, I would have actually liked to charge Continued the cost of my vehicle. Unfortunately, car dealerships usually place strict caps on how much they allow you to charge.

My dealer initially wanted to limit the amount I could put on my card to just $2500, but I insisted on charging the $5000 deposit, and eventually they agreed rather than risk losing the entire sale.

Charging a deposit for a car can also help you qualify for a new cardholder bonus if you recently opened a new card and need to meet spending requirements. I wasn’t looking for a new card at the moment as I’m really happy with the one I have so it wasn’t an option I was interested in – but it’s a good approach if you can open a new map when you buy a new vehicle.

Be aware of this possible downside of putting a car down on a credit card

Now charging my car deposit made sense to me. It was the right financial decision as I was able to immediately refund all of the $5,000 I charged the card for my deposit. As a result, I did not have to pay any interest on the card. It would have eclipsed the value of the rewards I earned for charging the deposit.

If you are unable to pay off your card in full, this technique is probably not the best one for you. You should seriously consider saving more money so that you have enough money to cover the total costs with a reasonable down payment.

This way, you can take out a smaller car loan and reduce the chance that you’ll end up owing more than your car is worth – as well as benefit from the ability to charge the down payment, earn card points, and earn it. refund. right now .

If you can’t do that, then making a smaller down payment and borrowing more on a low-interest car loan might be a better solution than charging so much on a card.

Ultimately, though, if you can pay off your card, there’s no reason not to charge the cost of your vehicle as much as your dealership will allow.

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