Using a debit card for car rental - Five things to know
How to buy a car with a credit card - and when not to.
Buying a car There are chances that you will grasp the plastic.
In the wake of the credit crunch, with many cards of banks raising interest rates and lowering credit limits, it is not the most practical idea.
But some buyers do exactly that In fact, about a 19 car buyers put all or part of their payments on credit cards in 2008, according to data from CNW Research 3044 The average amount charged.
But their experience with this plastic is not good Less than eight pay these expenses within 90 days.
It is a bad idea, said Ric Edelman, financial planner and author of lies about the money The only reason anyone will turn to a credit card is that they do not have the down payment and the ability to qualify for a auto loan, it says I can t think of any reason to approve it, he said.
If you can pay all or part of a car can get you around the dealer financing hassles, says Remar Sutton, author of Don t Get Taken every time, but it only makes sense that if you pay immediately off.
For long-term funding, no, n t sense, says Sutton If you are stable and your money's stable, it's probably not going to be a cheaper time to get a car loan.
And then there's Murphy's Law If you are using cards as a last resort because you are waiting for approval of the loan to a bank or credit, what happens if you are not approved .
What do you do if you are responsible for earning miles or loyalty points and you lose your job or the card company reduces its points program.
And then there's the convenience You are also monopolize the credit that you can use for other things, said Edelman.
What you should know if you are determined to use the map for your car purchase, presenting the plastic and stay away from these vouchers Cash advances card issuers can send you, says Sutton cash advances are APRs often carry higher and, depending on your card company, the pay back can be difficult.
With most cards, it is worst idea to drink fuel oil, said Sutton.
And know that aren t dealers like the idea of customers using credit cards, either.
Card issuers charge merchants a fee-based on how much a customer fees often January and 5-3 percent and sales down, dealers often can not afford to give up even a part of the narrow profit margins.
We basically have a limit for all our businesses, said Carter III Myers, president of Carter Myers Automotive, a group of five Virginia-based dealer for car purchases, buyers can load up to 3000, he said.
Myers can understand why some buyers may choose to use their cards if they pay the balance immediately You can probably get a nice little piece of a plane ticket, he said.
But if you are not going to pay it, doesn t feel it, Myers said.
Put all or part of the deposit on your card, defeats the purpose of making a payment, said Donald C Lampe, partner Charlotte, North Carolina law firm Womble Carlyle Sandridge Rice You try to be sure that the value of this you are buying is greater than the value of what you need, but if you are financing the deposit by putting it on credit too, so you do not have money invested in the purchase, he said .
While the mortgage industry has learned the hard way, it is rarely good economic sense to fund 100 percent of a large purchase and auto lenders are represses dealers, said Art Spinella, president of CNW Research.
Most auto loan lenders will want to see you put your payment on a credit card and financing the rest, he says they're putting pressure on dealers.
And when it comes to accept plastic for a down payment, dealers aren t particularly happy to do, but if it is the only way'll come, they'll do what he says.
What can go wrong in the showroom, fewer consumers reach for plastic this year, says Spinella But buyers are responsible and do not pay the balance immediately.
In 2003 6 7 percent of car buyers put all or part of their payments on credit cards the average amount charged in 2146 and 18 7 percent paid off in 90 days.
In 2007, 7 1 percent of consumers reached for the plastic on the average amount charged car lot in 2680 and 14 percent four paid the fee within three months.
This year, car buyers are charging higher amounts 364 more than last year on average and 88 percent carry the balance of their cards for more than 90 days.
This means that car buyers use the card not only for practical reasons or to recover points and miles, but as a method of payment and, according to consumer advocates, is a bad idea.
People mean well, says Gail Cunningham, spokesperson for the National Foundation for Credit Counseling They never think they'll dig a deep financial hole.
But reaching the plastic in the showroom is a very risky move, she said.
First, if you load all or part of your deposit, you have little or no money invested in the car this means you are financing nearly 100 percent so when you drive a new car off the lot and the value drops by 20 percent, you already have more than the car is worth.
In addition, most car insurance covers accidents to the amount of real value of the car This means that if you were to have a total loss, your insurance still let you pay the difference out of pocket between what you owe and what the car is actually worth.
For example, if you total a car 25,000 during the first year you own the insurance and pay in full, you will still need the lender at least 6250 - much more than your average down payment .
If you buy an insurance gap to bridge the gap between what you owe and what the car is worth, we must maintain that coverage until the car is worth less than you owe this money you might be saved for the down payment or used to pay the credit card bill.
Every time you put a large amount of plastic and do not pay it off right away, your credit score could take a hit This is because the FICO score calculated how much credit you have on the amount of credit you are actually using higher the percentage, the higher your score.
Issuers of credit cards regularly monitor your score if it goes down, the bank can and often increase your interest rate means that the party responsible for your new car could wind up costing much more than you estimated, with a rating of less credit, you could pay more or even have trouble qualifying for anything you might need.
And with many credit issuers lowering credit limits due to the difficult economic climate, you may find that the deposit you charged it three months ago, suddenly puts you on your new limit this month What does this mean for you is expensive fees on limits and ding your credit score.
Chances are, if you put a car on your card, you are doing for emotional reasons - the car won t be there tomorrow, the selling price will expire at midnight, etc. Instead, think like a bank and a shop for the cheapest money you can find.
If consumers have enough credit to charge all or part of a car, says Sutton, 100 percent of these people can get a loan at a cheaper installment credit union or bank.
How to buy a car with a credit card and when not, credit card amount they charge the car buyers party.