There are pros and cons to buying a car with your credit card.

To begin, We are not talking about using your credit card for the down payment, while the rest of the car is subsidised by a car loan. We are talking about paying for the full price of the vehicle with your credit card. Yes, that might sound crazy, but should you do it? Here are some of the pros and cons:

First, the biggest advantage to buying your car using your credit card is the loan is unsecured. If you find a need to tighten the belt, the car remains yours. The bank can’t touch it. Should you default on your payments, the bank has no claim to your car. None. Zip. Nada. The wolf can’t coming knocking at your car door.

So you should pick an unsecured loan, like a credit card,, to make a car purchase, right?

The interest rate on your credit card is inevitably higher than the interest rate of a typical personal loan . The reason for this is that the card issuers don’t have a claim to your purchases if you don’t make timely payments. The banks have to cover their behinds.

Second, there is no need to get down on all fours and wriggle through the sinister array of hoops that car loan applications typically demand. If you have no idea how to answer “How much did you pay in sales tax for each of the previous 300 years?”, the appeal of an unsecured loan is irreplaceable. Being able to avoid the stressful forms is especially welcome news for students, the recently employed and the self-employed. Credit cards help you avoid the effort and the worry.

While less paperwork and not having to apply for a typical loan is appealing, there is a cost to this convenience. You won’t likely pay down the price of a car at the end of the month – which is when the shocking rate of interest kicks in (and maybe kicks you in).

Here’s a great way to deal with that: find a balance transfer credit card with 0 APR for the longest period possible. Sign up for it, transfer over the balance from your current card then pay it down faster than a giant can yell Fee Fie Foe Fumm. If you are still carrying a balance by the end of the grace period, it should be much smaller and you should be better positioned for a lower interest secured loan.

Third – and surely the best reason to charge your car to your credit card – month-to-month, you are in control. You can pay as much or as little as you want in any given month, as long as you pay more than the minimum monthly payment. That is usually a paltry one percent depending on your card’s program. On a $25,000 car, you would have to pay at least $250 per month (but that would go down as your balance goes down).

There will be months when you may want to Pay no moe than you have to, which would fortunately be much less than a car loan payment. You might need this financial wiggle room to pay high winter heating bills or if a roof collapses or the basement is flooded.or if income is suddenly reduced. There will also likely be months when you might have more financial flexibility and you can speed up your payment schedult and obliterate the debt faster.

Fourth, your credit card may offer purchase rewards; making a car purchase with your card might earn you huge wads of cash – something a car loan won’t do.

The one thing about rewards cards, at least most of them, is that they usually have higher interest rates and may have annual fees that may result in higher costs than the reward offered in the purchase. Don’t rush out and get a rewards card, without first reading the fine print. You have to make sure to go over the particulars of any credit card before using it for such a big purchase.

However you decide to finance your new vehicle, be sure to keep in one important code-of-conduct when speaking of debt: getting into debt is a lot easier than getting out of it. Never take on additional debt you are not sureyou can painlessly pay back. Carefully determine what you can afford before signing for any car purchase.