Do car dealerships accept credit cards for down payments

If you’re reading this, you’re most likely thinking about buying a car and paying for the down payment by charging it to your credit card.

While most dealerships prefer cash for the initial down payment, many of them do allow credit cards and you shouldn’t run into any problems on the bank’s end as far as processing the transaction.

But there’s still a few things you should know because there’s different ways they can accept this type of payment and there may even be better options for you as well.

So to answer the main question: Yes, you can use credit cards to pay for down payments on vehicles/cards, but here’s the main things you should know before you do so.

Depends on Dealership

Majority of dealerships will accept a credit card for a down payment, but not all. You just have to call each dealership in your area and ask them if they do or not. That’s the only to determine who will accept them and who won’t.

Since most dealerships are independently owned, it really boils down to the owner of the dealership or what instructions they gave management there. Some owners may not want to accept cards unless they’re platinum cards or have some other indicator that the card holder is responsible.

Whether a card is platinum or not shouldn’t matter, but it all depends on how the owner feels about things. Their lot, their rules.

Why Some Dealerships Won’t Accept Credit Cards

The main reason why some dealerships are reluctant to accept credit cards for large purchases or down payments is due to the risk of having to deal with a chargeback. Sometimes customers charge things to their credit cards and then call their bank to dispute the charges.

Depending on the bank, the charges will then be returned to the customer or not. When they’re returned, the dealership end up taking the loss. In regards to downpayments, dealerships may miss out on another potential sale if they hold a car or truck for you and you end up having the down payment reversed/charged back.

The whole point of a down payment is so they can reserve the car for you so nobody else can purchase it or so they can agree to finance the remaining balance to you. So it really just depends on how comfortable the dealership is with accepting this type of payment.

How Deposit Will Be Charged

When you do find a dealership that will accept a down payment, they may charge the card and keep the amount that’s charged as a downpayment as the vehicle deposit.

However, some dealerships will work with you and may just authorize the amount but not capture it. Authorizing a credit card just basically means that they are putting a hold on the funds on the card to make sure those funds are there.

When they take the next step, which is “capturing”, it just means that they will then charge that amount or proceed to start the process of actually taking it off of your card.

So if the main purpose of you giving a down payment is so they reserve the car for you until you come up with more cash to pay for the whole thing, you may want to ask them to authorize the card or put a hold on the down payment funds until you return with actual cash.

This way you won’t have to charge a large amount to your card and worry about paying all the interest on any outstanding balances.

So instead of the charged amount serving as a down payment, it will actually serve as a security deposit (similar to the types many landlords ask their tenants to provide in order to rent to them).

If your purpose of giving a down payment is to start financing on the vehicle so you can drive it off the lot and then start making payments towards the remaining balance (which is almost always the case), the dealership will have to authorize and capture the full deposit amount.

Other Options

Instead of using your charge card for the down payment, you may want to explore other options. You don’t necessarily have to finance the vehicle through the dealership.

You may want to apply for a vehicle loan through a credit union or possibly a personal loan. Vehicle loans usually have lower interest rates than personal loans and credit unions usually have lower interest rates than car dealerships.

So try exploring other options in regards to financing the purchase as it may work out to be better and cheaper for you in the long run. Even if you want to finance the vehicle through the dealership, you may want to explore other financing options for the down payment at least, such as financing that part through the credit union.

The interest rates you’ll end up paying on a credit card amount are almost always going to be higher than some of the other options you may have and not know about.