Credit Cards

Using a credit card to buy a new car will not often make the best financial sense, as the APRs offered by many cards may be as high as 20%. However, there are a number of cards now available that offer flat rates of as low as 5.9%, although these may come without the standard interest free period offered by most cards. You may also be able to use a credit card that offers an introductory 0% APR for up to 12 months, giving you slightly more time to pay off the balance without incurring excessive charges. If you do your homework carefully, you may be able to 'hop' between credit cards while you are paying off the sum, taking advantage of low or zero percentage offers for balance transfers.

The advantage of using a credit card is that the credit card issuer is jointly liable with the dealer if the car has any faults. However, not all dealers will accept credit cards, and many will charge an extra 1 to 3% fee for doing so.

You can find out more about this type of purchasing option in the handy Credit Card section.