Can You Buy A Car With A Credit Card in Australia?

Can You Buy a Car with a Credit Card in Australia? Weighing the Pros and Cons

By Staff Reporter, August 26, 2025

In Australia, purchasing a car with a credit card is technically possible but comes with significant caveats, making it a niche and often costly option. As interest rates fluctuate and financial strategies evolve, many Australians are exploring creative ways to finance big-ticket purchases like vehicles. Below, we explore the feasibility, benefits, risks, and alternatives of using a credit card to buy a car, drawing on insights from industry experts and recent discussions.

Is It Possible?

Yes, you can buy a car with a credit card in Australia, provided the dealership accepts card payments and your credit limit covers the vehicle’s cost. According to financial comparison site Finder, many dealerships are equipped to process credit card payments, but private sellers, such as those on platforms like Gumtree or Facebook Marketplace, typically lack the infrastructure to do so. Some dealerships may restrict credit card use to deposits or cap the amount (e.g., $2,000–$5,000) due to processing fees, which range from 1–2% for Visa/MasterCard and up to 3.5% for American Express, as noted by Canstar and Executive Traveller.

For example, a $20,000 car with a 2% surcharge could add $400 to the cost, a fee often passed on to the buyer under Australian Consumer Law, which limits surcharges to the actual cost of processing. In rare cases, services like pay.com.au can facilitate credit card payments for dealers who don’t accept cards directly, though these come with additional fees.

Benefits of Using a Credit Card

1. Rewards Points: A major draw is earning rewards points, especially with high-limit cards offering 1–2 points per dollar spent. For a $20,000 purchase at 1.5 points per dollar, you could earn 30,000 points, potentially redeemable for flights or cashback. Posts on X highlight this strategy, with users like @ActusDei noting people use credit cards “to max out on reward points” by paying off the balance immediately.
2. Interest-Free Periods: Cards with 0% introductory rates or interest-free periods (typically 55 days) allow you to avoid interest if the balance is paid off quickly. For instance, a $12,000 car could be repaid interest-free over six months at $2,000 monthly with a 0% purchase offer.
3. No New Loan Application: Using an existing credit card bypasses the need for loan approval, offering convenience for those with sufficient credit limits (ranging from $2,000 to $100,000+, depending on income and creditworthiness).
4. Credit Building: Responsible use can improve your credit score, especially for new residents or those with limited credit history.

Risks and Drawbacks

1. High Interest Rates: If you don’t pay off the balance within the interest-free period, credit card rates (averaging 20.99% p.a. in Australia) can make the purchase far costlier than a car loan (5–15% p.a.). For example, a $10,000 car with a 15% card rate and minimum payments (2% of balance) could take 31 years to repay, accruing $15,095 in interest, compared to $3,199 over five years for a 6% car loan.
2. Credit Limit Constraints: The average Australian credit limit is $9,833, insufficient for most new cars ($30,000+) or even used cars ($10,000+). Maxing out your limit can harm your credit score by increasing your credit utilization ratio, signaling financial stress.
3. Surcharges: A 1–2% surcharge adds hundreds to the cost, potentially offsetting rewards points’ value. For instance, a $23,000 car with a 2% surcharge adds $460, which may negate points worth less than that amount.
4. Cash Advance Risks: If a dealer doesn’t accept credit cards, withdrawing cash via a card incurs high fees (e.g., 3%, or $120 on $4,000) and interest rates (often 20%+ p.a.) with no interest-free period.
5. Dealer Restrictions: Many dealers limit or refuse credit card payments due to processing costs, with some only allowing small deposits. A Reddit user reported a Ford dealer capping credit card payments at $2,000 without a surcharge.

Strategic Considerations

Using a credit card makes sense in specific scenarios, as outlined by CreditCard.com.au:

• High-Limit Rewards Cardholders: Those with enough cash to pay off the balance immediately can leverage points without interest costs.
• Low-Rate or 0% Cards: Buyers purchasing inexpensive cars (under $5,000) who can clear the balance within a short interest-free period.
• Promotional Offers: Cards with 0% interest on purchases for 6–24 months, like Westpac’s offerings, minimize costs if repaid promptly.

However, experts like Alessandro Simonelli caution that credit cards are “high-risk” for large purchases due to self-motivated repayments and potential debt traps. A car loan, with fixed terms and lower rates (e.g., Westpac’s 5.99%–12.99% p.a.), is often safer. Alternatively, using savings avoids interest entirely, though it may deplete emergency funds.

Real-World Insights

A 2023 Reddit thread on r/CarsAustralia shared mixed experiences, with one user successfully paying $18,000 for a VW Polo on a credit card, earning points and paying it off within 55 days. Others warned of dealers’ reluctance or high surcharges, with one noting a $460 fee on a $23,000 car made points “not worth it.” Services like pay.com.au have emerged to facilitate points-earning for business purchases, offering up to 1.25 points per dollar on a $50,000 car, but fees (e.g., 1.5% or $675 on $45,000) can erode benefits.

Is It a Good Idea?

Buying a car with a credit card in Australia can work for disciplined buyers with high credit limits and the ability to pay off the balance quickly, especially to earn rewards or leverage 0% offers. However, high interest rates, surcharges, and dealer restrictions make it less viable for most. A car loan or savings typically offer lower costs and less risk. Before proceeding, confirm the dealer’s policy, check your card’s terms (limit, rates, and points caps), and calculate total costs, including surcharges. Consulting a financial advisor can clarify if this strategy aligns with your finances.

For more details, compare credit card options at www.finder.com.au or explore car loans at www.canstar.com.au.

If you’d like a chart comparing credit card costs versus car loans for a specific car price (e.g., $20,000), or if you want me to analyze specific card offers or X reactions for real-time sentiment, let me know! I can also tailor advice for your financial situation if you provide details like credit limit or repayment capacity.