Can you buy a car with a credit card?

Buying a car is one of the bigger purchases you’ll make, apart from buying property, so it pays to do your research into the most affordable ways to pay for it.

Typically, most Australians will save up for a car or take out a car loan. The former may require more time and effort, and the latter may incur its own fees and risks. But some Aussies may be wondering if they could put a car loan purchase on plastic.

Here is everything you need to know about potentially paying for a car with your credit card. 

Is it possible to buy a car with a credit card?

Short answer: Yes, if your credit limit and budget allow it. But is it the right financial decision to make? 

There are several things to take into consideration when it comes to using your credit card to make a potentially expensive purchase, including:

  • The risk of growing debt. First and foremost, you need to consider that making an expensive purchase on a credit card that you cannot pay back right away (and that’s earning high interest) is a sure-fire way to quickly accumulate a large debt.
  • The credit limit. Your credit limit may prevent you from purchasing your dream car if it’s lower than the asking price.
  • Can you afford this? Maybe you have a credit limit high enough to purchase a car, but can you afford to budget for the potential repayments?

However, you may be looking at a second-hand car only worth a few grand, have been rejected for a car loan before or know that you have the funds to pay the car back immediately.

In fact, if you had the cash ready to go and wanted to purchase the car via credit card, you may be able to earn major rewards points. Plus, you have the advantage of not having to wait around for car loan pre-approval.

When might buying a car via credit card work?

There are some scenarios where buying a car via credit card may actually be a worthwhile option to consider.

  1. You have the cash ready to go to pay your balance in full by the next statement period;
  2. You’re a points chaser looking to earn major rewards points;
  3. You don’t want to offer up your car as security on a loan;
  4. You cannot get car loan approval (perhaps due to the age of the car, or your own financial situation); and/or
  5. You’ve nabbed a 0 per cent interest rate period on a credit card and want to pay down your debt in this time.

The most important thing to consider is how this potential purchase may factor into your budget. As mentioned before, unless you have the cash at hand, your outstanding balance may be hit with a high interest rate immediately, causing your debt to grow. 

For this scenario to work out, one of the easiest ways to pay off your car via credit card may be to use one with a zero per cent interest introductory period. You’ll need to confirm with the card provider that a purchase this large is allowed, and factor in any fees and ongoing costs that may pop up. 

But paying off a car in an interest-free period on a credit card would, in theory, be more affordable than a car loan charging you interest – as long as you repay the balance in full in that time frame.

Zero per cent interest rate credit cards

When might buying a car via credit card NOT work?

If you don’t have the cash ready to go for your car purchase, or if your card charges a high purchase rate, there are serious risks around using your credit card to buy a car. 

As mentioned earlier, the risk of your debt snowballing out of control is severe if you’re not able to budget for repayments. For example, a minimum credit card repayment amount is around 2 per cent of the balance. If you bought a $20,000 car on your credit card, not even factoring in interest and fees, the minimum repayment for the first statement period would be $400.

Not only will you need to budget for your repayments, it’s worth considering that the purchase rate and any ongoing fees will begin to add up. For example, that same $20,000 car purchase on a credit card charging 16 per cent interest would balloon to $57,197 if you only made minimum repayments. It would also take 42 years and 10 months to pay off (based on ASIC’s MoneySmart credit card calculator).

Further, if you do max out your credit card, not only will you be unable to use it for any other purchases until your balance is paid in full, but you may hurt your credit score. Maxing out your credit limit may negatively impact your credit history, making taking out other financial products like a home loan very difficult.

What are the pros and cons of using a credit card to buy a car?


  • No car loan pre-approval needed
  • Earn major rewards points
  • 0% interest introductory offers make repayments easier
  • Car not used as security on loan


  • Serious risk of debt
  • Interest rate surcharges
  • Maxing credit card hurts credit score
  • Budgeting and cash flow issues

What other car finance options do you have?

There are a range of alternative payment methods you can use to buy a car other than using your credit card, including:

  • Using your savings
  • A car loan
  • Salary sacrificing
  • Redrawing on your home loan

The best option for you will depend on your specific financial situation, savings and budget. If you’ve done the maths on your budget versus potential car repayments on a credit card, and still believe it’s the most affordable way to go about it, then this may be the right choice for you.

If you’re just uncertain about taking out a car loan, it may be worth speaking to a car loan broker. They may be able to give you financial advice around car loans that best suit your finances, as well as options that don’t involve offering up the car as security, if needs be. 

Keep in mind that there are some competitive car loans on the market. Car loan interest rates have, on average, historically been lower than an average credit card rate. A $20,000 loan with an interest rate of 5 per cent is a much more manageable debt than a credit card charging 16 per cent interest.

Low rate car loan options

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Learn more about credit cards

Do you need a credit card to get a loan?

You do not need a credit card to get a loan, but you usually need to have a credit history. Without a credit history, a financial institution cannot assess your ‘credit worthiness’, or your capacity to pay off the loan.

If you don’t have a credit card, your credit history can reflect any record of paying off an asset. Without any credit credit history, you’re limited in the type of loans you can apply for. But you may be able to obtain a secured loan against an asset. For more information on improving your credit score, go here

How do you use credit cards?

A credit card can be an easy way to make purchases online, in person or over the phone. When used properly, a credit card can even help you manage your cash flow. But before applying for a credit card, it’s good to know how they work. A credit card is essentially a personal line of credit which lets you buy things and pay for them later. As a card holder, you’ll be given a credit limit and (potentially) charged interest on the money the bank lends you. At the end of each billing period, the bank will send you a statement which shows your outstanding balance and the minimum amount you need to pay back. If you don’t pay back the full balance amount, the bank will begin charging you interest.

What is a balance transfer credit card?

A balance transfer credit card lets you transfer your debt balance from one credit card to another. A balance transfer credit card generally has a 0 per cent interest rate for a set period of time. When you roll your debt balance over to a new credit card, you’ll be able to take advantage of the interest-free period to pay your credit card debt off faster without accruing additional interest charges. If your application is approved, the provider will pay out your old credit card and transfer your debt balance over to the new card. 

How easy is it to get a credit card?

For most Australians, there are no great barriers to applying for and getting approved for a credit card. Here are some points that a lender will consider when assessing your credit card application.

Credit score: A bad credit score is not the be all and end all of your application, but it may stop you being approved for a higher credit limit. If your credit score is less than perfect, apply for the credit limit that you need, rather than the one you want.

Annual income: Most credit cards have minimum annual income requirements. Make sure you’re applying for a card where you meet the minimum.

Age & residency: You need to be at least 18 years old to apply for a credit card in Australia, and most require that you are an Australian citizen or permanent resident. However, there are some credit cards available to temporary residents.

How do credit cards work?

Think of credit cards as a short-term loan where you use the bank’s money to buy something up front and then pay for it later. Unlike a debit card which uses your own money to pay, a credit card essentially borrows the bank’s money to fund the purchase. When you apply for a credit card, the bank assesses your income and assigns you a credit limit based on what you can afford to pay back. At the end of each billing cycle, which is usually monthly, the bank will send you a statement showing the minimum amount you have to pay back, including any interest payable on the balance.

How to get money from a credit card

You can get money from a credit card, but generally it will cost you.

Withdrawing money from a credit card is called a cash advance, as it operates more as a loan than a simple cash withdrawal. Because it is a loan, you may be charged interest on your cash advance as soon as you make the withdrawal. Interest rates are also usually much higher for cash advances than standard credit card purchases.

In addition to the interest rate, you may also be charged a cash advance fee. This could be a flat rate, or a percentage of your total cash advance. If you are considering a cash advance, make sure to add up how much it will cost you before committing.

What should you do when you lose your credit card?

Losing your credit card is a serious situation, and could land you in financial trouble. Here is a simple guide detailing what to do when you lose your credit card.

Lock you card – Contact your provider and inform them about your lost credit card. From here lock, block or cancel your card.

Keep track of transactions – Look out for unauthorised credit card transactions. Most banks protect against fraudulent transactions.

Address recurring charges – If your card is linked to recurring charges (gym membership, rent, utilities), contact those businesses.

Check credit rate – To ensure you’re not the victim of identity theft, check your credit rating a month or two after you lose your credit card.

How long does it take to get a credit card?

There are a few stages you need to go through to get a credit card; each one takes a different length of time.

Applying for the card online, over the phone or in person is the fastest step. This usually takes around 15 minutes, provided you have all of your documents handy.

After submitting your application, it usually takes between one to 10 business days for the lender to assess your eligibility. Some lenders offer instant approval, although you will need to send supporting documents before it is official.

Once your application has been approved, expect to wait between one to 14 days to receive your card in the mail. Keep in mind that delays can happen during busy periods, such as if the lender has launched a special deal.

How to make a credit card online

If you’re wondering about how to make a credit card online application, here are some steps to follow:

  • Test the market. Many credit card options are available online. Compare providers by fees, interest and perks to ensure you’re getting the best deal.
  • Complete the application. Once you’ve selected a card, head to the provider’s website and complete the online credit card application form. Forms vary by providers.
  • Provide details. Most cards require you to meet age, residency, income and credit status condition, and you need to provide details like a bank account statement to prove this.
  • Review details. Ensure the information you’ve entered is correct.

Current Interest Rate

This is the current interest rate on your existing credit card.

Where can I get a credit card?

Looking to get your first credit card? You might be confused as to exactly where to go to apply for one. Here’s where to go when you are ready to put in that application.

The bank: Your bank is a great place to start, provided that you have a good banking history. Since you already have a financial history, you have more chance of your application being approved.

Credit card provider: Another option is to apply for a credit card directly from the issuer, such as Visa, Mastercard or Amex. This will most likely be an online application, so do your research and apply for a suitable card for your circumstances.

Major retailers: Coles, Woolworths, Myer and David Jones all have credit cards available. But watch out for the interest rate and annual fees – these cards are designed to help you spend more in store.

Can a pensioner get a credit card?

It is possible to get a credit card as a pensioner. There are some factors to keep in mind, including:

  • Annual income. Look for credit cards with minimum annual income requirements you can meet. 
  • Annual fees. If high fees are a concern for you, opt for a card with a low or $0 annual fee. 
  • Interest rate. Make sure you won’t have any nasty surprises on your credit card bill. Compare cards with a low interest rates to minimise risk.

Should I get a credit card?

Once you've compared credit card interest rates and deals and found the right card for you, the actual process of getting a credit card is quite straightforward. You can apply for a credit card online, over the phone or in person at a bank branch. 

How to pay a credit card

There are a few ways to pay a credit card bill. These include:

  • BPAY - allows you to safely make credit card payments online.
  • Direct debits - set up an automatic payment from your bank account to pay your credit card bill each month. You can choose how much you want to pay of your credit card bill when you set up the auto payments.
  • In a branch.
  • Via your credit card provider's app.