Using credit card to buy used car (and pay back using savings)

jammy_mummy

We have a bit of money set aside for our children, but need to buy a car now.
We could pay cash for one, but my idea was to get a 0% credit card to buy the car,  so we keep earning interest on the savings. 
The trouble is, we've never had a credit card before (aged 50) and all Tesco would lend us was <£5k. This is a bit gutting as we have more than that in savings, so could pay off the credit card bill immediately, we just wanted to earn interest while it's better at the moment. 
Any good ideas, or banks that might be more generous? I don't want to keep trying different ones if it's going to drop our credit rating. 
TIA

la531983

Your main issue is finding a car retailer who would accept a credit card for the full balance anyway.

QrizB

MSE has an eligibility calculator:

https://www.moneysavingexpert.com/eligibility/credit-cards/search/

As above, though, are you certain that the dealer you want to buy your car from will accept a credit card payment?

DullGreyGuy

jammy_mummy said:

We have a bit of money set aside for our children, but need to buy a car now.
We could pay cash for one, but my idea was to get a 0% credit card to buy the car,  so we keep earning interest on the savings. 
The trouble is, we've never had a credit card before (aged 50) and all Tesco would lend us was <£5k. This is a bit gutting as we have more than that in savings, so could pay off the credit card bill immediately, we just wanted to earn interest while it's better at the moment. 
Any good ideas, or banks that might be more generous? I don't want to keep trying different ones if it's going to drop our credit rating. 

Have you found a car and checked if they will take a card? Many won't take more than the deposit by card but there are a minority that will accept credit cards on larger transactions. A visiting friend had a Mercedes branded credit card and the local Mercedes garage wouldnt accept it for buying a car. 

QrizB said:

MSE has an eligibility calculator:

https://www.moneysavingexpert.com/eligibility/credit-cards/search/

Most of these are just a wet finger and certainly some seem to be more optimistic on the ones that are offering them the bigger commissions. 

You generally get a better idea with the "soft search" option from the card issuers themselves but even this isnt guaranteed. Who is more generous or not very much depends on how you fit with their view of the idea customer. MBNA have always been exceptionally generous to us but you'll find others on here who say they always get bad limits from them. 

david29dpo

The CC company dont know anything about you, why would they give you a high limit with your first card?

Nasqueron

jammy_mummy said:

We have a bit of money set aside for our children, but need to buy a car now.
We could pay cash for one, but my idea was to get a 0% credit card to buy the car,  so we keep earning interest on the savings. 
The trouble is, we've never had a credit card before (aged 50) and all Tesco would lend us was <£5k. This is a bit gutting as we have more than that in savings, so could pay off the credit card bill immediately, we just wanted to earn interest while it's better at the moment. 
Any good ideas, or banks that might be more generous? I don't want to keep trying different ones if it's going to drop our credit rating. 
TIA

Savings could be spent at the drop of a hat so lenders will not accept them as security for cards

As above, if you even find a dealer who will accept a CC for the value of the car (very unlikely), you won't get a CC with enough of a limit because of your lack of credit history. 

Exodi

As above, your plan is likely dead in the water as most dealers do not accept credit cards for the majority of the funds.

Unfortunately you're not the first to have this idea, and when I questioned the last dealer I bought a car from ~4 months ago they responded "Our policies allow a total of £1,000 to be paid on a card whether that be credit or debit, remaining balances must be paid via a bank transfer".

It's likely this will be because debit and credit cards (particularly credit) cost the merchant anywhere between 0.5% to 3.5% in processing fees. I believe they are not always allowed to pass these on and even if they were, increasing the cost of all their cars by ~2% to compensate would risk looking un-competitive compared to their competition.

It guess it would also heavily damage the HP/PCP industry.

QrizB

OTOH I did buy a car (my current one) entirely with a credit card in 2022, so there are dealers out there who cater to this market.

It's just a matter of finding one with the car you want at a price you like.

DullGreyGuy

Exodi said:

It's likely this will be because debit and credit cards (particularly credit) cost the merchant anywhere between 0.5% to 3.5% in processing fees. I believe they are not always allowed to pass these on and even if they were, increasing the cost of all their cars by ~2% to compensate would risk looking un-competitive compared to their competition.

They would have to be doing something very wrong to be paying 3.5% fees in this day and age; anyone can sign up for a Zettle account, and if you have an iPhone you dont even need to have any hardware, and get 1.75% fees straight up. 

They are never allowed to direct pass on fees for a personal CC use (they can for business CCs). Obviously it will be included in the general markup they charge in the same way their salaries, marketing costs, rent etc are. 

born_again

DullGreyGuy said:

Exodi said:

It's likely this will be because debit and credit cards (particularly credit) cost the merchant anywhere between 0.5% to 3.5% in processing fees. I believe they are not always allowed to pass these on and even if they were, increasing the cost of all their cars by ~2% to compensate would risk looking un-competitive compared to their competition.

They would have to be doing something very wrong to be paying 3.5% fees in this day and age; anyone can sign up for a Zettle account, and if you have an iPhone you dont even need to have any hardware, and get 1.75% fees straight up. 

They are never allowed to direct pass on fees for a personal CC use (they can for business CCs). Obviously it will be included in the general markup they charge in the same way their salaries, marketing costs, rent etc are. 

Smaller dealers could. But you bigger franchises will be using their business banks systems. Which is why they tend to shy away from full payment via CC. As bank transfer is a cheaper option for them, when they have centralised accounts teams.

DullGreyGuy

born_again said:

DullGreyGuy said:

Exodi said:

It's likely this will be because debit and credit cards (particularly credit) cost the merchant anywhere between 0.5% to 3.5% in processing fees. I believe they are not always allowed to pass these on and even if they were, increasing the cost of all their cars by ~2% to compensate would risk looking un-competitive compared to their competition.

They would have to be doing something very wrong to be paying 3.5% fees in this day and age; anyone can sign up for a Zettle account, and if you have an iPhone you dont even need to have any hardware, and get 1.75% fees straight up. 

They are never allowed to direct pass on fees for a personal CC use (they can for business CCs). Obviously it will be included in the general markup they charge in the same way their salaries, marketing costs, rent etc are. 

Smaller dealers could. But you bigger franchises will be using their business banks systems. Which is why they tend to shy away from full payment via CC. As bank transfer is a cheaper option for them, when they have centralised accounts teams.

Business banking systems should be lower than Zettle, when dealing with a piece of work around CC payments large companies were paying 0.5% or less