Is it wise to use a credit card for the down payment on a car?

Question

or would this cause me financial troubles on down the line?

I don't have much income, and have a credit card i need to pay down. I also need a car. So i was thinking I could pay down the credit card, and get the car. the car would enable me to find a job in a better location which would enable me to pay off the car faster. I'm in college and basically have no income.

My credit card is maxed out, I need to pay it down. But also need a car. So I could pay down the CC, then get the car. the car would enable me to have a job (I live in a location where's there's virtually NOTHING in walking distance) which i could use to pay down all the bills.

Otherwise, it'd end up paying down the credit car and saving for the car at the same time, meaning another 1 or 2 years I'd have to wait. but the money I'd save for the car COULD be use to pay down the CC in the meantime. See what i mean?

Answer 1

Definitely not my friend. If you can't afford to hand cash over you can't afford to buy the item.

Plus just buying the car isn't the end of it, it needs fuel, you need insurance. They breakdown etc. Owning a car is a great way to get skint without going into debt before you get behind the wheel.

Answer 2

In most cases it's a bad idea. Credit card interest rates are typically higher than average. Now if you can get a 0% for a year deal or something like that then that might be alright, so long as you pay off the balance before the introductory periods runs out. You do have to make sure you can afford both the car payment and the credit-card payments. You also have to factor in the cost of ownership and insurance.

edit:

If you can take other means of transportation then do that instead. I went without a car for more than a year of college. Mostly, I relied on my legs, car-pooling and public transport. Eventually, I got enough saved up to buy a descent used car. What you probably need to focus on is studying and paying off your debt. You might also ask your financial-aid department at the college if they can help you out. Sometimes, they offer no interest or low interest loans to students that are for living expenses. You could use that to pay off the CC.

Answer 3

Normally I would not suggest using a credit card for downpayment on a car. BUT, since you need a vehicle to work I would pay the cc off and then use it for downpayment. If you dont have a car and cant get to work then you will never pay off your cc. I would also check out the interest on your cc and buy a cheap good car. Hyundai's are the best value. You can get a sonata for 12,000 and then you will have a 100,000 mile or 10 year warranty so you wont have to worry about paying if anything goes wrong with your car. They also have the highest safety ratings!
You could also go with a used car like one that is a 05 or 06. You will pay much less and still have the warranty on it! Good Luck! I know what a tough situation you are in....

Answer 4

Auto finance is what I do for a living and you have several problems here.

First it's never a good idea to put a down payment on a credit card unless you either have 0% interest or can pay it off in full inl 90-days or less due to the interest.

Second it's never a good idea to go further into debt betting on getting a better job so you can pay your way out of it.

Third if you can even get approved for a car loan most likely you will have to prove your income to the lender. Most lenders require $2,000.00 a month before taxes.

Answer 5

I would NEVER advise using a credit card for anything, and CERTAINLY not a down-payment on a vehicle.

Financing a vehicle can sometimes double the overall amount of money you'll pay for the vehicle.

Most financial advisors recommend that you make car payments to yourself instead, and pay cash for a vehicle.

Remember...vehicles DEPRECIATE in value, meaning the longer you keep and use them, the less they're worth. At the same time, the more you fianance, the MORE you're going to owe. Not a good combination.

On top of all that, if you use a credit card for the down payment, you'll be paying some obscene interest rate to the credit card company on the amount you financed on the down payment.

Answer 6

It depends on a persons income and how long it would take to pay off the credit card, credit cards have a large interest rate and would be very unwise to use it for a down payment on a car unless you can pay it off within 3 or 4 months.

Answer 7

Absolutely not. If you cannot afford a cash down payment, then you cannot afford the car! If your credit is not good enough(or in other cases, perhaps it's that the dealership just doesn't offer a good buyer loan program) to get a low interest rate without needing a good sized down payment, then you should work on improving the credit that you already have before taking on more credit! The ONLY time, in my opinion, that it is acceptable to put a car's down payment on credit is...if you don't carry cash on you(perhaps due to safety/theft reasons), and you know you're able to pay off the down payment IN FULL by your credit card's next billing statement.

The only other time that it might be okay(but not great) to put a car's down payment on credit, is if it is for a "once-in-a-lifetime" classic/antique car that is being sold for a VERY good deal(i.e., a $40,000 valued rare car being sold to you for $18,000 and there's no other car like it around your area). This is because these kinds of antique cars could be considered as "investments," since they are rare and their values will just appreciate/increase more over time if the car stays in good condition. But I doubt you are talking about a rare antique car, since most antique cars are ineligible for auto loans/financing anyway.

Answer 8

Using a credit card as payment for other bills is definitely not the smart way to go as you are essentially transferring a balance from one location to another - which will pay neither balance down faster and will end up costing you more in the long run.

Answer 9

for credit cards, they apply a APR rate on the amt u dun pay...in the end it can either be higher or lower then the amt u borrow on a car loan. figure out how much it would cost u in the end and then decide if u wanna charge it on ur Credit card. at least in a car loan, u pay a fixed amt per month and dun have to worry about interest rates going up or stuff like that. but u need to make sure u pay each months pmt.

Answer 10

I would say it's just going to get you into trouble, because now you have a car payment and a HUGE minimum payment on the credit card, and that might put you in a bind where you don't have enough to cover both, especially if something happens down the road- change jobs, bills increase, etc etc

Answer 11

If you don't have the cash for downpayment, maybe you should wait until you do. Using a credit card should be for small purchases on a short term basis. If you know you'll have the money to pay it off when the bill comes, then ok. Short term means less than 6 months. Always pay more than balance on credit cards.