Can I Use a Credit Card to Purchase a Used Car?

LChipchip on 05/11/2015 - 16:28

Hi OzBargainers!

I am looking to purchase a used car, a cheap one at $2000 or so. I know I should just save for it, but I'm so much better at repaying debt than I am at saving. I know I will probably have to pay a credit card fee (2%-ish?), which I am ok with.

My plan is to look for a card with no annual fee (or try to get them to waive it) and a 0% rate on purchases for at least 6 months, although 12 months would be even better. I am positive I can pay the balance off within this time.

I have done a bit of research, but before delving further I wanted to check with this community whether this is even a feasible plan. Are there usually conditions that you need to meet to qualify for these interest free cards, e.g. minimum monthly spends? Will I qualify for a card with a $2000+ transaction limit?

Some more info about me, if that helps:

  • I have never had a credit card before
  • I have a mortgage which I have never been in arrears for
  • My property is not my residence - I earn a rental income from it that covers my mortgage repayments
  • I earn approx $36K in a part-time permanent job

I hope I get some responses, any advice is much much appreciated, thank you!!

Financial

Comments

  • spackbace on 05/11/2015 - 16:33
    +1

    What are you getting around in right now?

    $2,000 car from a dealership is gonna be a very average car!

    • Chipchip on 05/11/2015 - 16:38
      +1

      Public transport. I know it will be terrible and break down, but I am waiting to be made full-time at my job after which I will invest in a better car.

  • ykwon10 on 05/11/2015 - 16:40

    With $2000 car, you are most likely buying trouble rather than a fix to your transportation needs. I suggest you save up this $2000 and use it in your future better car purchase.

    • Chipchip on 05/11/2015 - 16:48

      Thank you for the advice, and I may take it on board, but right now I'm just trying to find out whether the financial side of my plan (the credit card part) will work or not.

      Pretend it's not a crappy car I'm buying. Does the other stuff make sense?

      • ykwon10 on 05/11/2015 - 16:53
        +1

        I don't see a reason why you can't get a credit card of $2000 approved. Shouldn't be a problem.

  • nocure on 05/11/2015 - 16:53

    Do you have any draw back funds in your home loan? ..You could possibly refinance for a little extra spending money.

    • Chipchip on 05/11/2015 - 17:00
      +1

      As I said, good at repaying, bad at saving…

      • Peanut money on 06/11/2015 - 15:11

        i take it someone else is repaying your home loan

  • ozhunter on 05/11/2015 - 16:54
    +2

    Can I Use a Credit Card to Purchase a Used Car?

    Yes

    http://www.creditcardfinder.com.au/coles-no-annual-fee-maste…

    • Chipchip on 05/11/2015 - 16:58

      That's the card I was looking at!

  • rambutann on 05/11/2015 - 16:57
    +4

    Your best bet at that price range is an old corolla. (http://www.carsales.com.au/private/details/Toyota-Corolla-19…)

    Cheap to fix, cheap to run, will most likely run forever. If you buy anything european you will end up spending more on fixing it than the actual car itself.

    • Chipchip on 05/11/2015 - 16:59

      Yay, thanks for the advice!

      • VictimEqualsProfit on 06/11/2015 - 17:54

        Let's not forget the Nissan Pulsar!

        • lgacb08 on 16/11/2015 - 20:36

          or the Honda Civic
          or any Japanese car but Mitsubishi

  • battler on 05/11/2015 - 17:02
    +1

    don't forget to budget for the additional cost of rego, insurance, maintenance & fuel (offset the savings on public transport though).

    • cypher67 on 05/11/2015 - 17:07

      Yeah rego and 3rd party compulsory would be close to the cost of the car itself

  • kickling on 05/11/2015 - 17:07
    +3

    I bought my solar panels on an interest free GE money plan. It was over two years for $7500. I only paid $4.95 a month in fees, so over the life cost $118.80. It was better for me to leave the $7500 cash in my offset account to offset my mortgage at 7% at the time. I suggest looking into the GE money application for Interest Free (if it still exists?).

    It also depends on how fast you think you'll pay off the $2000? Might not even be worth trying to apply for a credit card / facility.

    Regarding spending $2000 on a car, yes it's going to be an average car, but you can get a nice mostly-reliable car still for that price. Just expect to drive a box on four wheels, nothing more. Go Japanese that has been looked after on a medium level at least … Corolla, Echo, Civic, Pulsar. You'll be looking at around 1995 - 2000 era. Probably 180,000km+ on the ticker. Check on whether the 200,000km major service components have been performed (each car brand is different, but you should be able to Google them all)

    And regarding what I mention immediately above … I am still driving my 1997 Honda Civic from my Uni days. 285,000km and although starting to burn a bit of oil, it has had no troubles apart from the stuff that breaks with old age that all cars eventually encounter. I wouldn't say I'm a hoon but I like to drive hard and my old car has stood up to the test. For me, major things that died due to old age were : alternator + coil, bushings, central locking door lock motors, master clutch cylinder (manual car), timing and AC belts. I fixed most of this stuff myself, and I service oil myself.

    So, from my experience, if you bought a Jap car that was in OK condition that had done 200,000km you might see another 50-60,000km (2-3 years?). But keep in mind that if you jumped up to say $5-6000 you would be getting a much more modern and lower km's vehicle.

    Good luck mate.

    • Chipchip on 05/11/2015 - 17:17

      Thanks for such a thought-out reply. I will definitely refer back to this when I am looking to make the purchase.

      • kickling on 05/11/2015 - 17:34
        +1

        I would also check your State's laws on used car sales. Depending on your State law, there will be different Statutory Warranties. For example, in South Australia you only get a Statutory 3000km/2mth Warranty if you spend $3001-6000. Not sure if this is something you're worried about … I wouldn't be, seeing that you're not spending a lot. Plus you're still covered by the ACL (Aust Consumer Law)

  • sparkles on 05/11/2015 - 18:27

    You can't buy one privately with a credit card for obvious reasons. You'd have to draw cash out and there would be no interest free period. The only way around this would be to get a second credit card and then do a balance transfer for the best deal you can find.

    As for buying from a dealer, do secondhand car yards even take credit cards?

  • Randxyz123 on 05/11/2015 - 19:19

    You can.

    I do believe it is ANZ that currently has a bonus 50,000 FF points for joining and you'll obviously earn more for the actual purchase.

    HOWEVER as others have said a $2000 car is not gonna be the best purchase. It's gonna be basically a heap of crap.

    You can't buy one privately with a credit card for obvious reasons.

    You possibly could actually with paypal. Not saying you should…

  • eatwell365 on 05/11/2015 - 20:37

    $2000 to buy a car is not an issue but make sure you know how big the hole you are getting into.
    A $2000 car + green slip + stamp duty + registration + pink slip + set of tyres will set you another grand or so as minimum.

  • Findo on 05/11/2015 - 22:26

    Getting a card shouldn't be an issue with your current pay. But as others have said, $2000 will get you a very, very average car. Depending on how you drive, you might go through a set of tyres every 1.5 years and the cost of rego + insurance will be at least another grand. Factor in repairs of around $700/year for an old car and it's cheaper to save up and buy a car no older than 5 years.

  • paddyadrian on 06/11/2015 - 08:41
    +2

    I just purchased a second hand car for $14k. I applied for a citibank credit card and was approved for $16.5k credit limit. Rather than pay with the credit card i had the option to do a cheque to self rather than a balance transfer.

    I deposited this cheque in my bank account and when i was negotiating with the dealer because i was paying cash i was in a stronger position than paying with credit card or finance. Did i mention that its 12 months interest free also? After that i plan to shop around to get another interest free balance transfer. All up i plan to spend $0 on interest and fees :)

  • modsec802 on 06/11/2015 - 09:10

    when i was negotiating with the dealer because i was paying cash i was in a stronger position than paying with credit card or finance

    Not true. Dealers hate people who pay cash as they make more money off people using dealer finance. They'll do anything to try to get you to use that instead: 'are you sure you don't want to use your cash for something else?'

  • backpaqer on 06/11/2015 - 10:58

    I'd buy a bicycle for $2k instead…no rego, no petrol, insurance is a bitch though - there are not many insurance policies that cover the bike while you are riding it and although if a car hits you and damages your bike and 99% of the time is their fault, getting money out of drivers is not usually easy, so I consider good insurance a must so that they pay you instantly and chase the driver for you.

    You'll then also save heaps of cash because you become very fit, lean and wont require a gym membership or many medical bills (if you do get hit by a car CTP covers your medical costs etc).

    Though you might find that cycling gets a bit addictive…and you start buying lighter, more expensive components. Coffee shops also start exerting a sort of magnetic pull (even on carbon bikes).

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