Pretend that I am very rich and my credit card has a few hundred thousand dollar limit. Say I suddenly had the urge to get a new Mercedes (or other new car.)
Could I walk into a dealer and lay down my card and walk away with a car?
Yeah sure, why not?
What makes you think you couldn’t??
Maybe not.
At least at the dealership Mr. Stuff works at, they pay a 3% fee for each credit card transaction. On a vehicle, this may represent all or almost all of their profit margin. Since they need to stay in business, they can’t allow all of their profit margin to go to a credit card company, and in most circumstances will not accept credit cards for payment on a vehicle. It’s possible that you could offer to pay the 3% fee, but who wants to do that? On an expensive vehicle, it’d be pretty hefty.
I know a guy that bought an apartment in Menorca on a credit card
- it was about $40,000
I bought a used car with a credit card once. I paid the fee (2.5% I think). It worked out better for me then to pay for a rental for a couple more days, get a loan, and then pay for comprehensive insurance. Wouldn’t be the case on an expensive car, though.
My dad tried to buy his last car on the AmEx, for the miles. They only let him do it for about half, because of their fees.
My grandmother purchased a used Nissan Z (about $8000, I think, over a decade ago) on her Visa, in order to get the miles. The dealer allowed it.
As others have said, dealers often refuse due to the credit card fees they would incur.
Does anyone know if a car dealership is breaking its contract with the credit card companies by doing this?
From my readings, it seems typical that the dealer would accept the downpayment of a few thousand dollars on a CC, but the rest, no.
No clue if they’re breaking any sort of rule by limiting the size of purchase as Bippy asks… but the last 2 cars we bought, both Hondas (one in 1998 and one last fall) were both partially paid-for via credit card. In both cases, the dealer had a limit of 2,500 dollars for down payments made via credit card. Two different dealers, by the way. So I’m not sure if that limit is mandated by Honda, or is just an arbitrary standard set by the DC-area dealers.
It’d be an interesting exercise to go into a dealer and say “sell me this car on my credit card, or don’t sell me a card at all”. Someone should try it. Maybe if I’m ever in a position to pay cash for a car (as opposed to financing) I’ll do just that 
We bought a Camry hybrid in September and wanted to pay by credit card to get the miles or points or whatever it is we get. The dealer would only put $3000 on the credit card (the total purchase price was over $30,000). We didn’t press it.
As a matter of fact, I just bought a new Toyota Camry a few months ago, and I tried to pay for it using a credit card (which has a high limit, and gives me miles). The dealer wouldn’t put more than $5000 on the card.
Edit: Simulpost!
Ed
Shops often have a minimum credit card purchase, and this is widespread enough for me to assume* that it’s not a breach of contract. I’m not sure why, in principle, a maximum purchase would be different.
- I know, I know …
Sorry for the double post. I didn’t see this part. I think one of two things would happen.
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They’d sell you the car, but with the credit card fee figured into the purchase price and not discussed. And possibly, depending on the uprightness or lack thereof on the part of the manager, an irritation fee added as well.
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They’d say goodbye. If you insist on using a credit card, and it eats their entire profit margin, they have no reason to do business with you, since they can sell that car to someone who won’t insist on using a credit card.
Aren’t most very expensive cars (like M-B) owned by the factory? The dealer just holds the car, paying a finance charge. So i would guess the dealer might take a credit card sale. I have another question: suppose i show up at my local M-b dealer-with $80,000 in $100 bills. I point to a floor model and say: “This one!”. Is the dealer going to report me to the local police? I know banks have to report cash transfers of >$10,000, But do car dealers have to?
I think some doper a few years ago recounted a story that Elton Joun once bought a new car in…Las Vegas?.. with a credit card.
The answer, nowadays (2007), in the USA, as far as I know it, is no. There are laws against it because it is so easy to get a credit card with a high limit. You can buy a car on a credit card, or multiple, then stop paying, but you still have the cars as physical assets. Since it is an “unsecured loan”, the credit card company *cannot * come after your cars to pay the bill.
This is why I had to get a damn Buy-Here Pay-Here loan on my jeep…I didn’t want to, it makes me feel like I’m gonna get it repo’d on a technicality or something. I have good credit (700’s) but the age of the car prevented financing normally. I would have paid by CC, then paid it off in like two payments but nooooo. They told me that in addition to the fees for the transaction, there’s a law preventing the transfer of a vehicle title in that fashion.
Requiring a minimum purchase is a direct violation of Visa’s and MasterCard’s acceptance procedures. If a merchant refuses your card because you didn’t buy enough, you have the recourse of reporting the incident to Visa / MC.
There is no such law, nor is this practice permitted under the Visa / MC rules. Neither is a merchant permitted to impose a surcharge for a credit card transaction.
I bought my car on my Visa, and the dealer tried to charge me for the transaction fee due Visa. I told him that I wouldn’t pay it, as that was forbidden by his Visa Merchant Agreement, so he quickly dropped it.
We’ve covered min / max purchases and surcharges before. Lemme find the thread real quick.
ETA: OK, here’s the thread with the min / max discussion, and here’s another one about ID requirements.
No. The bank that fianaces the dealer owns the car in most dealerships. MB may have a credit arm that does dealer loans, off the top of my head, I don’t know. This arrangement is called flooring. The longer the car sits on the lot the more flooring is paid. So if you have a car that has been around several months, the dealer is getting eaten alive on flooring on that unit.
As to your second question, the answer is yes they would report the cash transaction.
Thanks the first thread contains links to 2 pdf files
Visa
and
Master Card
Both of which state that a Minimum and Maximum is not allowed. If this is in effect for car dealerships is it possible to report them? Also is there a case for a group legal action against dealerships that have previously insisted on a limited maximum. I know when I last bought a car I lost out on a potential $200 cash back or there abouts due to the dealership insisting on a $2500 credit card maximum.