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If I buy a car from a dealers should I pay by credit card?

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  • thescouselander
    thescouselander Posts: 5,547 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    edited 27 March 2010 at 5:24PM
    pgilc1 wrote: »
    +1

    Was thinking that. If the dealer was happy to give away that much of his profit margin so easily (£300 on a £10K car), he must have had a lot to work with. :eek:

    Not really, the whole thing about charging extra for credit cards is a bit of a scam. If it is a big group that does a lot of credit card business they probably don't pay anywhere near the 3% for the transaction.

    I have direct experience of this from when I used to run an internet business wit a few of my mates. Once you get to a certain number of transactions per month the bank moves you onto a different pricing structure that makes the cost of credit card transactions cheaper.

    So if you're a small independent dealer only selling a handful of cars per month you're going to get clobbered with charges. If you are a dealer that is part of a large group selling lots of cars and other stuff like servicing, accessories and parts etc then you'll get a much better deal.
  • motorguy
    motorguy Posts: 22,611 Forumite
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    thescouselander wrote: »
    Not really, the whole thing about charging extra for credit cards is a bit of a scam. If it is a big group that does a lot of credit card business they probably don't pay anywhere near the 3% for the transaction.

    I have direct experience of this from when I used to run an internet business wit a few of my mates. Once you get to a certain number of transactions per month the bank moves you onto a different pricing structure that makes the cost of credit card transactions cheaper.

    So if you're a small independent dealer only selling a handful of cars per month you're going to get clobbered with charges. If you are a dealer that is part of a large group selling lots of cars and other stuff like servicing, accessories and parts etc then you'll get a much better deal.

    True, but it'll rarely drop below 1.75%.

    So thats still £175 out of the profit of a £10K. Average net profit on a £10K could be as little as £500 A salesman wont give any of that up easily, unless he has a much larger profit margin worked in.
  • thescouselander
    thescouselander Posts: 5,547 Forumite
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    edited 27 March 2010 at 5:49PM
    pgilc1 wrote: »
    True, but it'll rarely drop below 1.75%.

    So thats still £175 out of the profit of a £10K. Average net profit on a £10K could be as little as £500 A salesman wont give any of that up easily, unless he has a much larger profit margin worked in.

    Well, in our case we ended up paying a flat fee per month and that gave us a number of inclusive transactions for that month - the size of the transaction didn't come into it.

    In any case when I changed car I had bought from a main dealer - they are more expensive so I would expect paying by credit card to be free.
  • motorguy
    motorguy Posts: 22,611 Forumite
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    thescouselander wrote: »
    Well, in our case we ended up paying a flat fee per month and that gave us a number of inclusive transactions for that month - the size of the transaction didn't come into it.

    In any case when I changed car I had bought from a main dealer - they are more expensive so I would expect paying by credit card to be free.

    Well, you've summed it up - they charged you more for the car, so they can accomodate the charges.
  • DaveF327
    DaveF327 Posts: 1,160 Forumite
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    You must have a very generous credit limit - either that or a cheap car :p
  • thescouselander
    thescouselander Posts: 5,547 Forumite
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    edited 27 March 2010 at 8:27PM
    DaveF327 wrote: »
    You must have a very generous credit limit - either that or a cheap car :p


    Not quite, I loaded my card up with cash first so I was in credit although I do have one card with a £12,000 limit - that could get you a good car with a trade-in as well.
  • derrick
    derrick Posts: 7,424 Forumite
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    DaveF327 wrote: »
    You must have a very generous credit limit - either that or a cheap car :p


    No, see post #11.
    Don`t steal - the Government doesn`t like the competition


  • jack705
    jack705 Posts: 18 Forumite
    If you pay over £100 by credit card you are protected by the consumer credit act for the full purchaase.

    Therefore put a deposit or nominal amount on the credit card at 3% fee and pay the rest in some other manner.
    A contented mind is the greatest blessing a man can enjoy in this world.
  • derrick
    derrick Posts: 7,424 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    jack705 wrote: »
    If you pay over £100 by credit card you are protected by the consumer credit act for the full purchaase.

    Therefore put a deposit or nominal amount on the credit card at 3% fee and pay the rest in some other manner.


    As I said in post above yours, read #11, it is already on this thread!
    Don`t steal - the Government doesn`t like the competition


  • verybigchris
    verybigchris Posts: 630 Forumite
    Part of the Furniture 500 Posts Name Dropper Combo Breaker
    Just out of curiosity, if you don't pay by CC, how else would you pay?

    All payment methods carry some cost somewhere along the line, and I'd guess the purchaser either pays for it directly or it effectively gets added to the price of the car.

    There's a thread somewhere else on this site where someone was asking if they'd get a discount from a dealer if they paid cash. The responses where mostly that dealers hate cash payments, as it means time wasted counting it and an immediate trip to the bank to pay it in (probably taking 2 members of staff to satisfy their insurance company).
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