Borrowing From Peter to Pay Paul: Is It Acceptable to Use A Credit Card to Finance My Next Automobile?

11 Feb

We have all been in a terrible circumstance at one point in our lives. One of the worst circumstances involving finances can be when we find ourselves without reliable transportation. Depending on where you live, this can be devastating to your career and productivity. When in a bind, we may consider getting a car finance with a credit card as a way to get back on the road. The question many have is, “Is it OK to do this?”. We intend to explore this question in order to shed more light on whether financing a car with a credit card is acceptable.

The Ease of the Credit Card

One of the reasons many consider using a credit card to either finance or make a down payment on their new or used vehicle is the ease of doing it. You can simply swipe and as long as you have enough credit, you’re approved. For those who have recently found themselves without employment or transportation, the temptation to do this is alluring. Many think that by using the credit card now, they will be able to repay the amount shortly after, avoiding any accumulating interest. The simple fact is that credit cards allow you to obtain something that you otherwise could not.

The Potential Dangers

Let’s be clear: it is absolutely never a good idea to fully finance a vehicle with a credit card. Even a moderately-priced used car will cost way more than you need to be putting on any credit card. In just a few months, the potential interest could add way more to the total cost of ownership than what is reasonable. Most people who use credit cards to obtain a car on finance have no business in using the credit card for such a purpose. In the vast majority of cases, using a credit card to obtain an auto-mobile is simply a bad financial decision.

When It’s Acceptable

If you have a credit card with 0% interest for a period of time AND have the ability to pay the amount back before interest charges kick in, then financing a portion of the total cost on a credit card can be utilized. For those who simply need to wait on next week or next month’s cheque but can pay the amount back at that time, using a credit card is not a bad idea and possibly can be done without any penalties to you or additional interest accumulating on your accounts. 

Leave a Reply

Your email address will not be published. Required fields are marked *