Savvy shoppers may get car with card
A few weeks ago, I responded to a reader’s question about the possibility of putting the purchase of a new car on a credit card.
Based on my personal experience — and that of several friends who tried to do this — I replied that most dealerships won’t allow the full purchase price of a car to be put on a credit card.
Some will allow part of the purchase price — sometimes as much as $5,000 — to be put on a card. But they balk at putting the full price of a car on a credit card because the dealership must pay the credit card company a fee that ranges from 2 percent to 3 percent of the purchase price.
With profit margins thin on many new car sales, dealers aren’t eager to give away another $600 to $900 on a sale of a $30,000 vehicle.
After my response was posted, I received this e-mail from Matt Fadiman, vice president at Riverbank in North Andover, Mass.
“I have worked in banking and merchant card services for 15 years, and unfortunately (Jackson’s) response was not accurate. He was correct that the dealer would pay an approximate 2 percent fee on the transaction. However, as per both the MasterCard and Visa merchant agreements, a participating merchant must accept that credit card (assuming it is valid and approved) for all purchases. The merchant cannot, by policy or practice, decide which transactions it will allow and which it will not.“I do agree that in reality many dealerships will attempt to refuse to charge the sale on a credit card, but when pushed they will back down. I have purchased my last 4 cars all on credit cards. To say the least the dealer was not happy, but when presented with both a copy of the merchant agreement, and my declaration to pursue with the credit card company, they quickly reversed their position. My calculation is that between the rewards (cash back) and the zero percent rates on the credit cards, my savings were well in excess of $6,000.”
I spoke with representatives from Visa, MasterCard and American Express, and while Mr. Fadiman is correct on some points, the reality most buyers face is not so clear-cut.
|