Using A Credit Card To Buy A Car

BMW X1 2013The last five cars I’ve owned have all been purchased by cashier’s checks. I loathe going into debt on an asset that is guaranteed to depreciate. In fact, I dislike buying anything that is guaranteed to depreciate!

I stopped by the BMW dealer on the way home from golf one day and checked out their new 650i coupe series. If someone could figure out a way to bottle that wonderful new car smell, they’d make millions off fanatics like me!

Given this particular 650i coupe was priced at $104,000, I decided to check out the more moderately priced 2014 X3, 2.8 litre engine SUV for $48,000.  Same new car smell for half the price. Score!


Out of curiosity, I asked the saleswoman whether I can put the car on my credit card which has a $50,000 limit.  She said, “Nope!”  The most I can charge on the card is $3,000  What the heck is the point of carrying a credit card if I can’t charge a BMW on it? Gee whiz!

In actuality, the $3,000 limit is a good thing since I’d be tempted to buy a new car every single year! I asked her why the $3,000 limit?  And she responded, “Fees, those darn fees.”  Credit cards charge 1-2% fees on average for every single purchase.  2% on $50,000 is $1,000 out the door.  Hey, kinda like PayPal fees, but not as bad!

I then told the saleswoman, “What if I just buy the car for 1% more than asking price, then can I use a credit card?”  She thought about it for a moment and still declined. Of course I would prefer not to pay more than I have to for anything. I just thought this would be an interesting solution.

Our policy, no matter what your credit limit is, is still $3,000 maximum. The reason is we don’t want people charging their downpayment, which then defeats the purpose of a downpayment.  We don’t want a situation where a buyer purchases a car on credit, totals the car, and can’t pay either the payment or the costs necessary to fix the car!  A buyer needs to have skin in the game, that’s our bank’s policy.” explained the saleswoman.

Wait, so she’s saying I can’t borrow money to pay for a down payment to borrow more money? What the hell kind of dealership / country is this anyway? I thought we can do what the government and millions of Americans do everyday and take from one, spend it on ourselves, and never have to pay it back!


The $3,000 credit card limit policy is ubiquitous. I called Mercedes, Audi, and Range Rover, and they all said the most someone can charge to purchase a car is $3,000. The rest must be financed by their own bank or paid in cash.

I was really looking forward to charging $50,000 for the X3 and getting enough rebate points for a round-trip ticket to Europe.  Alas, I will settle for good old Moose, keep the $50,000 and have the optionality of buying 100 round-trip tickets to Hawaii instead.


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Updated 2H2015

Sam started Financial Samurai in 2009 during the depths of the financial crisis as a way to make sense of chaos. After 13 years working on Wall Street, Sam decided to retire in 2012 to utilize everything he learned in business school to focus on online entrepreneurship. Sam focuses on helping readers build more income in real estate, investing, entrepreneurship, and alternative investments in order to achieve financial independence sooner, rather than later.

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  1. Brad says

    What about cash advances from multiple credit cards. Then do a balnce transfer to a reward card for 0% for a few months. Then transfer to another card etc.?

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