Purchasing a car is a dream for many middle-class families like ours. Whenever we think about buying something expensive, we instinctively look for ways to save a little extra while spending the necessary amount. As credit card enthusiasts, we try to utilize our cards for shopping, bill payments, and earning rewards—so why not use a credit card for purchasing a car?
A typical family car costs anywhere between ₹8 lakhs to ₹20 lakhs. If we strategically use our credit cards for such a purchase, we can definitely extract good value through rewards, milestone benefits, or cashback.
So, you're planning to buy a new car for your family and also wish to use your credit card for the payment. But what are the things you need to remember, and how should you proceed? Let's break it down.
Also, if you’re planning to take an auto loan, using a credit card won't be an option, as banks directly disburse the loan amount to the car dealer. A workaround? If you have an existing home loan, you can consider taking a top-up loan, which will be disbursed to your savings account. You can then use this amount to pay the car dealer through your credit card and pay off the credit card bill without incurring interest.
After selecting the car, contact multiple local dealers. Begin by negotiating the price, possible discounts, and complimentary accessories. Do not mention anything about credit card payment at this stage. Finalize all deal aspects first.
Once you’ve locked the price and offers, then tell the dealer that you want to pay the full amount via credit card.
In metro or Tier 1/Tier 2 cities, this negotiation might be difficult due to higher sales volumes. But in smaller towns or cities, dealers are more flexible. It’s highly recommended to contact dealers in nearby smaller towns—chances are very high that you’ll get a better deal with lower or even zero processing fees.
Pro tip: A dealer in a small town with lower sales targets is more likely to accommodate your payment method and processing fee negotiation.
First, ask the dealer about the MCC (Merchant Category Code) of their POS machine. If they don’t know (and chances are, they won’t), make a small transaction of ₹200–₹500 using the card, and after 3–4 days, call your credit card issuer to ask:
Real example: A member of the TechnoFino Community once reported that he bought a car using his credit card, but was later charged a fuel surcharge because the dealer’s MCC was incorrectly set to a fuel station.
First, check your cards for pending milestone benefits. Use a card to complete those milestones first—this could unlock bonus rewards or fee waivers. Then, move on to the card with the highest base reward rate.
Example: If I have cards like:
My Car Purchase Experience Using Credit Card:
I purchased a compact SUV back in September, 2023, and I wanted to share my experience—especially how I used credit cards for the payment.
My requirements were pretty straightforward: I wanted a car that’s reliable, comes with good after-sales service, affordable maintenance, and decent customer support. I shortlisted a few options: Mahindra XUV300, Tata Nexon, Hyundai Venue, Volkswagen Taigun, Skoda Kushaq, and a couple more.
After researching and comparing, Hyundai Venue stood out as the most practical choice for me. Given its reliability, widespread service network, and overall ownership experience, it just made the most sense.
Once I finalized the car, I started contacting multiple dealers to get the best deal. Surprisingly, almost all dealers in Kolkata quoted the same price, but they all wanted to charge 2% credit card processing fees, which I wasn’t comfortable paying. Since I live about 200 km away from Kolkata, I decided to reach out to my local Hyundai dealer.
I told them upfront that I would be paying the full car amount using my credit card. They agreed without any hesitation and did not mention anything about extra fees. Since they didn’t raise the topic, I didn’t ask either. And as expected, I paid the entire ₹13 lakh using two of my credit cards.
Now comes the best part—my intention wasn’t just to earn reward points, it was to redeem existing reward points. I used my HDFC Infinia credit card to pay ₹1 lakh, which I paid from my own funds. The remaining ₹12 lakh was paid using reward points (indirectly).
So, in essence, I bought my car using mostly reward points, which felt incredibly satisfying. No EMI, no loan, no interest—just smart planning and execution.
Buying a car is a significant expense, but with the right planning, you can turn it into a rewarding experience—literally! From negotiating fees to choosing the best card, every step can save you money and earn you benefits. But remember, only proceed if you can pay the credit card bill in full. Credit cards are a great financial tool—use them wisely.
If you still have doubts or want personalized suggestions, feel free to drop a comment. Happy driving—and swiping smartly!
A typical family car costs anywhere between ₹8 lakhs to ₹20 lakhs. If we strategically use our credit cards for such a purchase, we can definitely extract good value through rewards, milestone benefits, or cashback.
So, you're planning to buy a new car for your family and also wish to use your credit card for the payment. But what are the things you need to remember, and how should you proceed? Let's break it down.
Step 1: Have Sufficient Funds Ready
First and foremost, make sure you have the full amount available in your bank account. You should never carry a balance on your credit card after making such a big purchase. Never plan to pay off the car cost in EMIs through your credit card, as the interest rates are extremely high and can lead to serious financial damage.Also, if you’re planning to take an auto loan, using a credit card won't be an option, as banks directly disburse the loan amount to the car dealer. A workaround? If you have an existing home loan, you can consider taking a top-up loan, which will be disbursed to your savings account. You can then use this amount to pay the car dealer through your credit card and pay off the credit card bill without incurring interest.
Step 2: Choose the Car First, Not the Payment Mode
Select the car you actually want to buy, not the one that’s convenient for credit card payments. Never compromise on the car model just because a dealer is allowing credit card payments.After selecting the car, contact multiple local dealers. Begin by negotiating the price, possible discounts, and complimentary accessories. Do not mention anything about credit card payment at this stage. Finalize all deal aspects first.
Once you’ve locked the price and offers, then tell the dealer that you want to pay the full amount via credit card.
Step 3: Negotiate Credit Card Processing Fees
At this point, the dealer may say that a credit card processing fee will be applicable—usually around 2%. However, this is negotiable. Try to negotiate the fee down to 0.5%, and absolutely avoid paying more than 1%.In metro or Tier 1/Tier 2 cities, this negotiation might be difficult due to higher sales volumes. But in smaller towns or cities, dealers are more flexible. It’s highly recommended to contact dealers in nearby smaller towns—chances are very high that you’ll get a better deal with lower or even zero processing fees.
Pro tip: A dealer in a small town with lower sales targets is more likely to accommodate your payment method and processing fee negotiation.
Step 4: Choose the Right Credit Card
Which credit card should you use? This depends on your card portfolio.First, ask the dealer about the MCC (Merchant Category Code) of their POS machine. If they don’t know (and chances are, they won’t), make a small transaction of ₹200–₹500 using the card, and after 3–4 days, call your credit card issuer to ask:
- What is the MCC of the transaction?
- Will you earn reward points for this category?
Real example: A member of the TechnoFino Community once reported that he bought a car using his credit card, but was later charged a fuel surcharge because the dealer’s MCC was incorrectly set to a fuel station.
Step 5: Strategically Use Cards with Milestone or High Reward Benefits
Still confused about which card to use?First, check your cards for pending milestone benefits. Use a card to complete those milestones first—this could unlock bonus rewards or fee waivers. Then, move on to the card with the highest base reward rate.
Example: If I have cards like:
- HDFC Infinia
- Axis Atlas
- ICICI Emeralde Private Metal
- SBI Cashback
- And a few entry-level cards
- Use Axis Atlas first to complete its milestone.
- Then use HDFC Infinia for its 3.33% reward rate.
- Followed by ICICI Emeralde Private Metal for its 3% reward rate.
My Car Purchase Experience Using Credit Card:
I purchased a compact SUV back in September, 2023, and I wanted to share my experience—especially how I used credit cards for the payment.
My requirements were pretty straightforward: I wanted a car that’s reliable, comes with good after-sales service, affordable maintenance, and decent customer support. I shortlisted a few options: Mahindra XUV300, Tata Nexon, Hyundai Venue, Volkswagen Taigun, Skoda Kushaq, and a couple more.
After researching and comparing, Hyundai Venue stood out as the most practical choice for me. Given its reliability, widespread service network, and overall ownership experience, it just made the most sense.
Once I finalized the car, I started contacting multiple dealers to get the best deal. Surprisingly, almost all dealers in Kolkata quoted the same price, but they all wanted to charge 2% credit card processing fees, which I wasn’t comfortable paying. Since I live about 200 km away from Kolkata, I decided to reach out to my local Hyundai dealer.
I told them upfront that I would be paying the full car amount using my credit card. They agreed without any hesitation and did not mention anything about extra fees. Since they didn’t raise the topic, I didn’t ask either. And as expected, I paid the entire ₹13 lakh using two of my credit cards.
Now comes the best part—my intention wasn’t just to earn reward points, it was to redeem existing reward points. I used my HDFC Infinia credit card to pay ₹1 lakh, which I paid from my own funds. The remaining ₹12 lakh was paid using reward points (indirectly).
So, in essence, I bought my car using mostly reward points, which felt incredibly satisfying. No EMI, no loan, no interest—just smart planning and execution.
Buying a car is a significant expense, but with the right planning, you can turn it into a rewarding experience—literally! From negotiating fees to choosing the best card, every step can save you money and earn you benefits. But remember, only proceed if you can pay the credit card bill in full. Credit cards are a great financial tool—use them wisely.
If you still have doubts or want personalized suggestions, feel free to drop a comment. Happy driving—and swiping smartly!
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