After saving for your dream car, there are many ways that you can pay for it. It doesn’t matter if it’s an old, new, or used vehicle. You can pay it using cash, finance the balance, exchange with another car, or combine all the three methods to get the transaction done.
However, some people prefer using their credit or debit card to settle the transaction. But do all car dealers accept credit or debit cards?
In this post, we’re going to find out whether you can buy your dream car using a debit card. Of course, you can buy a vehicle using a debit card. Nevertheless, there are several things that you need to know before using a debit card to acquire a car.
So, be ready and find out if it’s worth settling a car purchase using a debit card or not. Here are the things that you should know:
Depends On The Dealer
Before you even think of using a debit card to buy your car, you need to find out if the seller allows it. Most car dealers don’t allow debit cards because of the risks and costs involved.
For instance, the buyer can dispute the purchase if the dealer sends the wrong car or it has issues. This can be costly to the seller, more so if the buyer wins the dispute.
Additionally, if there is a dispute, and the buyer wins it after covering several miles, the seller can no longer sell the car at the same price. On the other hand, he will have to refund the buyer, which will be a loss on his side.
Aside from a possible dispute, the fees involved in a debit card transaction can be costly to the car dealer. This is because he will have to swipe the card to access the money, which is costly. In most cases, the car dealer will have to lose at least 3% of the overall payment.
Depending on the price, the dealer may end up losing on profit or receiving very little profit. Unless it is an old vehicle or second-hand car being sold, this may prove to be a loss. Most banks charge swiping fees between 1.5% and 3%, which is equivalent to hundreds of dollars.
Cost Of The Car
Unlike paying with cash or through bank finance, paying with a debit can turn out to be costly. This is very true, especially if the value of the car is beyond $30, 000. Most banks charge a 3% swipe fee to the seller when he withdraws the funds.
If the car is below $30, 000, then the difference is not huge. But if the car is costly, for example, beyond $35, 000, this might be costly. This is because the swipe fees will increase and even eat through the dealers’ profit.
And no car dealer would want to make losses when they have a chance to profit from cash deals.
Debit Card Limit
Another thing to consider before deciding to pay using a debit card for your new car is the bank limit. Many banks put a limit on the amount of cash you can spend from a debit account in a day. This usually is done to prevent theft or fraud from taking place.
Therefore, if your debit card is stolen or lost, you don’t have to worry about losing a lot of cash.
If a bank realizes that you’re withdrawing huge cash from your debit account, they will give you a call. Hence, it is vital to get in touch with them before withdrawing a huge amount. In case you withdraw without their permission, they will contact you and ask you to provide security details.
For instance, your name, address, and much more. Thus, you shouldn’t be surprised when this happens. But it’s better if you let them know in advance that you will be spending a lot of cash. Whether it is to buy a car or land, it doesn’t matter.
Also, you can tell them to increase your limit so that you can have a smooth transaction.
No Interest From Bank
One of the advantages of using a debit card to pay for your new car is a lack of interest. Yes! The bank doesn’t charge interest on money withdrawn using a debit card. This is because the money comes straight from your bank account.
Besides, using a debit card is also cheaper compared to using a credit card.
Payment Plus Taxes & Registration Fees
If you decide to pay for your new car using a debit card, know that there are additional costs. Aside from the initial car price, you will also be required to pay taxes and registration fees. These should be included in the full payment of the car.
What’s more, you should make sure that you have got enough cash in the account before swiping the debit card. Note that the tax and registration fees differ from one state to another.
With our detailed guide, you now know what to do if you want to buy a car using a debit card. As stated above, the first thing to do is to get in touch with the dealer and know if they will accept debit card payment. Paying a car dealer with a debit card is one of the safest modes of payment.
This is because you can use it to dispute the dealer if you got a raw deal or the wrong car. Therefore, your investment is very secure when you use a debit card to pay for your new car.
You can go ahead and make arrangements to pay the car dealer using a debit card for your dream car! Just know that you will have to cover the additional costs (taxes and registration fees). Also, you should notify the bank in advance to avoid any delays in the transaction.
All the best as you acquire your dream car using your debit card!
With comprehensive experience in writing exceptional quality articles and blogs about cars and related stuff, Daniel is one of the finest bloggers and a hardcore car lover we have. He is an ASE certified technician with an across-the-board experience of 10 years in the industry. He could not help tinkering with anything he got his hands on from a young age, which led to his remarkable career in the automotive repair industry.
When he is not under any hood, you can find him on the water or in the woods to pursue his passion for hunting and fishing. He has been writing for multiple sectors and is a regular contributor to several publications.
He currently owns a Nissan 300ZX TT and a Pearl Yellow but plans to upgrade it to 550 HP. His favorites include the Koenigsegg CCX and Lamborghini Diablo 6.0 VT, but for him, the Ferrari 360 Spider is one of the sexiest cars that exists to date.
Being an avid world traveler, he has spent most of his time analyzing the automotive markets, latest technology, and local favorites to enhance his knowledge base. He is currently living in North Caroline, where it’s all about food and coffee and, of course, cars.