topic Re: Auto purchase with cc in Credit Cards

Auto purchase with cc

gingerflower — Sun, 08 Nov 2015 21:03:46 GMT

Hello Fico friends. I have a question to ask regarding a friend who got approved for a visa cc with a $10,000 CL. She is thinking of purchasing a vehicle and charging the vehicle with her cc. My advice to her was not a good idea. Can anyone give an answer to her question? Thank you.

Re: Auto purchase with cc

Anonymous — Sun, 08 Nov 2015 21:09:11 GMT

@gingerflower wrote:
Hello Fico friends. I have a question to ask regarding a friend who got approved for a visa cc with a $10,000 CL. She is thinking of purchasing a vehicle and charging the vehicle with her cc. My advice to her was not a good idea. Can anyone give an answer to her question? Thank you.

Go for it. Only if she has many other cards and this purchase wont put her at 30-40% overall utilization. If it was a 5k car or 6k, that wourld be fine for a few months just make many times more than the minimum payment.

Hopefully she gets points or a bonus too! Can always secure financing later.

Re: Auto purchase with cc

Anonymous — Sun, 08 Nov 2015 21:15:42 GMT

If she wants to make payments the interest rate on most credit cards will be too high, much higher than what one could secure a conventional auto loan for. Having been a finance manager at a dealership for many years, we would not accept that amount on a credit card anyway. $3k is going to be the max at most places, due to what the CC company charges the retailer for fees. Outside of that, will also result in too high of utilization.

Re: Auto purchase with cc

gingerflower — Sun, 08 Nov 2015 21:20:04 GMT

Jfriend33 this is her only cc and I recommended to do a auto loan . Her Apr is 13.65

Re: Auto purchase with cc

elim — Sun, 08 Nov 2015 21:22:48 GMT

The last car i purchased i put a big chunk on CSP. I paid it off the minute it posted but it was no problem at all (I ran my DP through the card for the UR's).

If the CC has a 0% on purchases intro and she can pay it off in a year i would do it (If she is responsible, has a back up plan, and can handle the purchase).

She may want to contact the lender and let them know she is making a large purchase and what her pay off plans are. May even try for a CLI to help with Utilization.

Re: Auto purchase with cc

Anonymous — Sun, 08 Nov 2015 21:30:57 GMT

@gingerflower wrote:
Jfriend33 this is her only cc and I recommended to do a auto loan . Her Apr is 13.65

if you recommended the auto loan then why are you posting this here lol?

I guess I assumed with a limit that high it at least had to be a 0% intro offer with a normal bank, or have some type of rewards.

Re: Auto purchase with cc

Open123 — Sun, 08 Nov 2015 21:32:24 GMT

PIF or in a few months is fine.

These days, the "only" way I purchase a car is if I can charge it. I'll negotiate the CC fee with Dealership. If I don't like the terms, I'll walk out and go to the next one, until I find one who will waive the CC surcharge fee.

Re: Auto purchase with cc

Anonymous — Sun, 08 Nov 2015 21:32:25 GMT

or can pay it off in a month or two..

Re: Auto purchase with cc

NRB525 — Sun, 08 Nov 2015 21:38:24 GMT

@gingerflower wrote:
Jfriend33 this is her only cc and I recommended to do a auto loan . Her Apr is 13.65

The recommendations to use a CC are all predicated on the ability of the borrower to be able to pay it off immediately, in other words, there is no need to borrow, the CC is just a payment conduit for a few days.

Putting the car loan into the mix means she is not intending to pay it off immediately, therefore it is a bad idea to even think of using the CC for this purchase.

Go to a local CU or a bank where she has a relationship, and get a preapproval for the automobile financing. This gets any hard pulls out of the way. Then, at the dealer, DO NOT allow the dealer to "shop for a better rate". They tend to run all over the credit report, throwing out HP right and left trying to get their best payback when the APR change is probably 0.02%. Then use the CU or bank funding to pay for the automobile.

Re: Auto purchase with cc

gingerflower — Sun, 08 Nov 2015 21:40:45 GMT

Jfriend33 the reason I recommended a auto loan is because it makes more sense!! By the way her cc is Nfcu Lol!!

Re: Auto purchase with cc

Open123 — Sun, 08 Nov 2015 21:42:30 GMT

@gingerflower wrote:
Jfriend33 the reason I recommended a auto loan is because it makes more sense!! By the way her cc is Nfcu Lol!!

Aassuming your friend can pay it off within 12 - 18 months, 0% promo CC would be ideal.

Re: Auto purchase with cc

gingerflower — Mon, 09 Nov 2015 04:41:48 GMT

Thank you for all the feed back advice everyone.

Re: Auto purchase with cc

takeshi74 — Mon, 09 Nov 2015 14:05:54 GMT

@gingerflower wrote:
Can anyone give an answer to her question?

What was her question?

She should probably see if they dealer will accept a card. Whether a dealer will and how much they will accept can and does vary. That may quickly answer whether or not that's even an option worth considering.

As others have said, if there's a 0% offer (and utilization is kept in check) and/or if she can pay off the balance immediately it's no probably not a big deal. If she need to carry the balance then keep in mind that installment debt isn't considered the same as revolving debt. The latter is seen as a bigger risk. An auto loan would be an installment and if she doesn't have any installments then she would see a benefit to her mix of credit as well with an auto loan.

@Anonymous wrote:
I guess I assumed with a limit that high it at least had to be a 0% intro offer with a normal bank, or have some type of rewards.

Becareful with assuming. Limit, intro offer and rewards are 3 entirely different things. It's possible to have a $10K limit (more, even) without the other two.