Consider credit cards for next auto purchase

There are many reasons why buying a car from a private party instead of a dealer is the smarter and more flexible financial choice.  Credit cards offer convenience and flexibility that so many of us are used to.  Whether paying $4 for lunch at the drive-thru or $4000 for the latest LCD bigscreen TV, you just hand the cashier your plastic, sign your receipt, and off you go. 

That convenience is pretty much the case everywhere you go, except at the auto dealer, even more so if its a new car dealer.  Try to pay for the vehicle with a credit card and the dealer will give you a hard time.  You’ll either be discouraged from using it, be allowed to charge only a small portion of the price, or get your deal renegotiated altogether.  Dealers don’t like credit cards because they have to pay a fee of about 2% of the transaction, and that eats into the deal’s profit.  What makes their tactics questionable is that their agreement with the credit card companies requires them to unconditionally accept a valid credit card as payment, not to use their discretion in when and what to charge.

While private individuals can’t accept credit cards directly you can still, in effect, pay them with a credit card.  All you have to do is deposit a credit card check and wait for it to clear, which can take up to a week so plan accordingly.  Assuming that you have good credit, you should get these checks in the mail regularly and often with a 0% interest rate for as long as 12 months.  Be aware of any fees for depositing the check.  Pay it off within the time specified and you got the loan interest free. If you plan to take your time in paying it off you may want to compare the numbers with an auto loan. So why not deposit the credit check to pay a dealer?  You can, but because they usually profit on the financing as well, your vehicle’s price will be higher to make up for that ‘loss’.