Buying a Car on a Credit Card – Everything You need to know

By | December 25, 2018

Buying a car on a credit card is certainly a wonderful feeling as we can get a car out of nothing, literally. I mean no loan paper docs, no sign, nothing. Just a single swipe and you can take home your car with a lot of reward points!

There are even couple of readers here who reported that they had bought a car on credit card and its good to see how they’re maximizing the high value spends for reward points.

If this is running on your mind too, here’s everything you need to know about buying a car on a credit card.

Buying a Car on a Credit Card (Image Credit: Autotrader)

Can I actually Buy a Car 100% on card?

Almost all car showrooms “will accept” credit card as a payment option for paying the “booking amount”. The booking amount usually is around 5-10% of the car value.

In my personal experience, most car showrooms (like VW, Skoda) will accept transactions upto 1 lakh as booking amount on credit/debit card and not beyond that, as it hits their margin. Sometimes it can go as high as 3 lakhs on premium cars.

But other than booking amount, most showrooms will not accept the remaining amount on card because they’ll loose ~1.75% (transaction fee) or so on the charge. It’s even worse on Amex Cards as they loose about ~2.5% or so.

So in this case you may try to:

  • Stretch the booking amount a little further,
  • Bargain on the transaction fee share for the remaining amount.
  • Or, simply absorb the full txn fee

As long as you’re holding one of the super premium cards, you’ll anyway end up in net profit even if you absorb the full fee. But, the common issue here is most of us don’t have such high credit limit.

So yes, technically you can buy a car on credit card. But, should you do it or not? That covers the rest of the article, read on,

Fun Fact: If you’re holding Amex Gold charge card with high limit hoping one day you can swipe your card to take home a luxury car, forget it, as Amex rewards are too low to cover the txn fees.

When You should buy?

1. If you’ve enough liquid cash

If you’ve enough liquid cash sitting idle that you couldn’t invest anywhere, then yes, You can happily go and swipe your card and payback in full the next month.

This way, you’ll get lots of points & miles that’s good enough to cover a weekend domestic trip.

Those who’re thinking about buying car on card usually belongs to this segment. But this is not a wise idea, unless you get outstanding returns on spend, like 5% or above.

Tip: Time your spends to achieve the milestone rewards or to fulfil the spend based offer.

2. Low EMI Rates

If you donot have liquid cash but still have a high credit limit with an irresistible EMI offer, you can make use of it. For example, Yesbank recently came up with 9.90% ROI on EMI which is almost same as the ROI given for car loan. 

Paying by credit card is a good idea in this case because you don’t need to get into all those documentation & hypothecation stuffs on your RC!

If you belong to this segment, usually you’re in <10L range car. If you’re looking for >10L segment cars, you probably need to read the next topic.

When You shouldn’t buy?

Note: This section is beyond credit cards and more about personal finance.

Basically paying 100% of the amount (either by card/EFT) for a car (or) a home loan is not the right way to handle money, especially when your lifestyle is well settled with basic needs. Let’s see why!

1. If you’re a Businessman

If you’re running a business, you shouldn’t buy a car with full cash because you’re investing in a depreciating Asset

You could rather invest the same amount on Stocks/Mutual funds or even better – in your own business that can fetch you more returns than your Car loan ROI. 

For example, if your investment in stocks gives 15% returns and if you’ve taken a car loan at 10% ROI, you still save 5%. If we are talking about a 10 Lakh car loan, you’re saving sweet Rs.50,000. 

More than 90% of the luxurious cars (Audi/Merc/BMW) that you see on road are on loan for a reason. Its not that they can’t afford to pay full, but they know a way to get better returns on the money than buying it upfront.

Apart from that, if you’re in 30% income tax slab, this will save you on income tax front too. 

2. If you don’t like Taxman

If you’re buying a car by paying 100% upfront, this “may” trigger a flag on your PAN for a review. This maynot be true for small cars in ~5L range, but for bigger cars, chances are higher.

You still don’t need to worry, as long as your ITR supports the spends.

Most of us are not trying to evade the tax system, but dealing with taxman is still a time consuming process.

3. For a better CIBIL Score

One of the factor that decides your credit score (CIBIL/Experian/Crif) is your credit mix. Meaning, you need to hold good mix of Secured loan & unsecured loan.

Fortunately as car loan is a secured loan (good debt), having it on your profile will certainly improve your Credit score.

This is quite important if you’re dealing with too many cards, as having secured loan on profile is a good sign for the issuer to give you a better credit limit or even for card approval at times.


So, should you buy a car on credit card? Yes & No. There is no single answer for this as each of our profile is different. It depends on one’s financial situation and lot other factors as mentioned earlier.

But if you’ve a credit card that gives significantly higher rewards its perfectly OKAY to buy your dream car on a credit card 🙂

What’s your take on buying on a car on a credit card and do you like these crazy topics? Feel free to share your views in the comments below.

Author: Siddharth

Helping Indians to choose right credit cards, pick right offers and enjoy luxury vacations for less. Day & night exploring the spiritual reality of our human existence.

98 thoughts on “Buying a Car on a Credit Card – Everything You need to know

  1. Shubham Gupta

    I am regular reader of your blog and follow every story.
    I will always advise to pay for a car using any Credit Card as long as we don’t have any previous outstanding balances and are not being charged any transaction fees.
    Since demonetisation, literally all car companies have started accepting credit cards for payments.
    Not only do we save money in terms of interest (for around 30-50 days), we also earn points (more points on Premium Cards and on those which offer higher incentives on threshold spends).
    If the limit on the card is low, we can add money on the excess of the card limit totalling to the amount which has to be paid.
    I have heard problems involving taxmen, but that is only if the outstanding of the credit cards are paid using unaccounted cash.

  2. Amex Guy

    All this is true and great information (I paid around 25% of my car on Amex in April), except the taxman part. I spend over 10L consistently on my fav cards and have never once got a notice, even when the threshold was 2.5L. Moral of the story is — if your spends match your returns, don’t worry.

    For smaller cars, the transaction size isn’t big enough. And if your car is over 10L, there will be TDS deduction anyway from the showroom. So using CC doesn’t really increase exposure to taxman anymore than it will be anyway.

    Regarding luxury cars, since leasing has gone to dumps because of GST, manufacturers are giving out low ROI loans with guaranteed buy back. Best way to drive one today.

    Also, if one holds Amex Plat or Centurion, check the Auto program. May not work with manufacturer of choice but worth a try.

    1. Siddharth Post author

      Ah yes, updated content on IT Returns part.

      I’ve been exploring leasing recently. Because of GST as in? Service tax was there anyway isnt it?

      I wish we’ve an affordable service, like a “cheaper Zoomcar” so that we don’t even need to buy a car 🙂

    2. SH

      Amex Guy,

      Always something new from you..:-). What is the Auto Program? Pls throw some light.

      Great post. I was reading this last evening as we were having our Christmas dinner – to the bitter irritation of my wife. Even if the tax man does not come after you, my wife will..:-)


  3. Nikhil Goel


    M buying a Jaguar XF next week. Will try making the down-payment using the cards in my disposal. Will let you know as soon as I get the information from the dealer.

  4. Himanshu

    Buying a car on credit card is really cool but most of the cardholders are not issued with the high credit limit. If one has AMEX charge cards or super premium cards with high limit it will be great.

    I’m in a process of building a good credit history with good credit behavior. Let’s see in coming years I’ll be able to get some super-premium cards with the high limit.

  5. pradeep shaw

    I recently buy baleno on credit card. every one has surprised to know that i had buy the car with credit card with CSD and nobody belives it. I save almost 25000 by paying with credit card.

  6. AJAI

    I paid 5lac as advance for a Skoda Octavia in HP thru DCB but was not given all the points “Capped maybe?”. It helped up my rep over the bank and the CC team but still not enough for a HDFC Infinia 🙁

    Now my DCB has been downgraded to a Regalia to get a PP for my wife and still they are not giving me Infinia access even after Preferred+ “No Imperia in branch” relationship and double digit lac transactions every year. Don’t know how to get that bloody card.

    1. Siddharth Post author

      They’re not capped for sure. Did you check with DCB support?

      1. AJAI

        I sent a mail to them and they said that it is not retail spending so I am not going to receive reward rate at 5 per 150.

        Even after sending them the receipt for the car I got nowhere since they have classified that point of sale something other than retail.

        Thanks to the hidden way HDFC rewards points I do not know how much I got from that transaction since it was a mixture of all the spending I had done that month ‘9lac’ but it was much less than (900000/150)*5.

        Do it wise about how to get an infinia lifetime free or can I hold DBC along with my regalia, since regalia has a poor reward rate compared to DCB and that forces me to use Axis Select card with 20x bonus retail spending RP.

      2. AJAI

        Got this replay from HDFC in mail:

        “Sir the transactions at the Merchants with MCC code not included in retailers list avalible with HDFC will not be considered as retail spends.”

        1. GTMAX

          But a car showroom should ideally be classified as a “retail establishment”. You should have escalated this.

    2. Anand

      It’s not wise to downgrade a card simply for pp access better open a family account and make her preferred customer along maintain good balance in her account u could easily get a pre approved card within 6 months span which can get her lounge access my mom got diners club miles same way

      1. AJAI

        The problem was that we required her pp before Feb 2019 since our trip is in the first week. I also have made them part of my preferred account but eligibility will only come post May 19.

        Does the pre-approved card come via net-banking ?

        1. Abhijeet

          Hey Ajai,

          Get your wife a HDFC account and get her Rupay platinum debit card which gives 2 international lounge access in a financial year. Saves you a lot of hassles to get PP. Rupay platinum Debit card comes at 200 INR per year.

          Cheers, Abhijeet

          1. Sumeet Gupta

            I think rupay platinum debit use is limited to domestic lounges, whereas rupay credit will work in international too.

  7. Majumdar

    I purchased a Wagon R on exchange of an Alto (net cost was around 4.5 L) with my Infinia CC in March 2018 (if I remember the date right). The dealer was asking for 2% premium as service charge but was able to negotiate down to 1%. Also the whole payment was broken into an advance of Rs 1 L and final payment of Rs 3.5 L or so. Was able to get that 1% too waived on the advance. So effectively paid 0.8% extra.

    The base reward rate of course is 3.3% plus there was some milestone bonus RPs in that month. So effectively ended up getting a little over 4% return as RP and expense of 0.8%. So net RPs was over 3.5%.


  8. Imran

    I bought Maruti swift dZire in 2008 from Sai service Parel, Mumbai on credit card. The total amount was 660000/- I had to use 2 credit cards due to available limit. It’s a different story now. I can buy an Octavia with just one of my cards. I remember to have used Barclays credit card (which I think is taken over by stanc ?) and hdfc card. So I guess I am decade ahead of this article 😜

  9. Abhishek Roy

    I still remember, 2 years back, I bought a bike for my brother. I just paid on his behalf. We had a plan in the process. My wife had got a DC Black that time. She did not get first year free. Atleast that’s what we were told. So the card came with a joining fee of ₹10K. I had to spend ₹1lakh within first 3 months to waive off my joining fee.

    Then I made a plan. My brother wanted to take a bike. I found out that at that time Paytm was selling bikes online. I mean the entire showroom price could be paid through the Paytm. The only other part that needed to be paid was the road tax etc. So I made a payment of ₹84K (ex showroom price) for the bike from Paytm with our DC Black card. That time an offer was there of ₹5K cashback on bike booking from Paytm. So I earned a cool 3.3% RPs + paid ₹84K or my ₹1Lakh criteria for joining fee waiver. At the same time my brother got a cashback of ₹5K from Paytm. He only had to pay around ₹16K more with cheque directly to the dealer.
    Beat that!!!!!!!

  10. Shiva

    Hello Siddharth,

    I’m planning to buy a car in the near future and I’ve been thinking of using my CC for the payment as well but my CC limit is 2L. With that I surely cannot buy a car, I’ve been with HDFC for over 4 years and have a Regalia First card. How do I upgrade the card and the limit as well. I spoke with my account manager (RM) regarding this and she is of no help. My salary is around 72k per month and have over 5L in my savings account with HDFC.

  11. Himanshu

    Hey Shiva,

    How old your card is? Send your docs either salary slips/ITR to Chennai with limit enchancement form.

    Try to use your card more. Hit 90% limit in 6 months or so. It has worked for me.

    1. AshishR

      “Hit 90% limit in 6 months or so”

      so example limit is 4 lakh
      do you mean to spend 90% of 4 lakh in 6 months?

      1. Himanshu

        No, I actually mean try to use 80-90% limit in a month once in 6 month to a year. So that lender can see that user needs higher limit. It’s easy for lender to consider while there will be no effect on your score.

    2. Shiva

      Hello Himanshu,

      4 yr old card.

      After dropping my comment I checked my netbanking and found my limit has been raised to 5L. 🙂


  12. Priyansh Modi

    I have multiple cards, so I guess my use of diners premium has been limited.

    But basis what I read, chances of an upgrade being offered is high if I use diners premium a lot?
    I don’t have required ITR, though dmat is with HDFC and can also may be arrange some funds in savings if needed.

    Would love to hear any suggestions or tips to get DCB

    1. Himanshu

      High spending on your cards and high relationship with bank like s/b account,current account,loans, insurance+ you need RM/BM help for upgrade otherwise eligible ITR is required.

  13. Vivek

    Is it possible to pay beyond your limits?
    Both my cards have a limit of 2L, so can I prefund one card’s account with 2L to get an overall limit of 4L to buy a car or any other purchase.

    1. Priyank

      Yes, it is possible.

      However, better will be to keep some margin and load amount such that the credit limit utilization is in between 90-100% and not precise 100%

  14. Ekas

    Hey !
    I’d like to know what’s the highest limit on a credit card in India for individuals and Business ? Also, which CC are those?


      1. Shivi

        It actually does. NPSL doesn’t mean an infinite credit limit.

        I was quoted spending power of up to 50 Lakhs for the first year, enhanced to 80 lakhs in the second year & 1 crore and beyond subsequently. We are ofc talking of monthly credit limit and case to case/ individual to individual basis.

        1. Himanshu


          As you have said every account has been given upper limit. My ques is suppose someone spent say 10-15 lac in a month. What will happen to cibil score/ profile.

          As the score gets down when you use high limit on the card.

          1. Shivi

            CIBIL score does not take a hit if you spend high on your credit card, Himanshu. It is how you spend and repay. Make multiple payments to your credit card to bring down the outstanding balance though again, there is no hard and fast “rule of 30%”. I have been maxing out my Amazon Pay card every month lately (low credit limit of 38K) without any visible effect on CIBIL (yearly subscription). Just don’t default on your payment! I pay in full within a week of my cards statement generation date.

    1. Shivi

      For individuals, it is 10 lakhs on a non-secured line and up to 25 lakhs on a secured credit card line (against FD). For businesses, it is up to 1 crore. This is on paper; might be more for Super HNI/Private clients/ corporate powerhouses.

      1. Amex Guy

        This is obviously wrong info. I have over 10L limit from multiple banks, including some known stingy ones, and I am no mega-honcho, I mostly eat at McD.

        I’m not even factoring NPSL cards like Infinia and Plat, because that’s not revolving limit usually.

        1. Shivi

          Quoted by StanC (non-secured- chatting over the phone @ Chandigarh) and Axis Bank (secured – branch visit @ Shimla). This has nothing to do with your lifestyle or in some cases even the ITR. Hey, I live in a village with Infinia and Prestige cards myself!

          Generally speaking, there is no upper limit then as BipLav ^ mentioned, once you cross over to the premium side (NPSL cards).

  15. Shiva

    Is it possible to double my CC limit to 10L on my Regalia First card? The car I’m eyeing is around 11L on-road.

    1. Shivi

      Check with HDFC card customer support; they may not allow the pre-funding to such an extent! Also, if you do not get the corresponding RP, it will be waste of time, money and resources to have undergone the whole process for nothing!

  16. Amar

    I bought a car today from Nexa showroom.
    Despite a very hard bargain they charged me 2% for using my credit card.
    For debit card, there was no charge and hence I used my Citigold card for 1.5 Lacs (max per day limit) to earn 1% on that.
    For remaining amount, I paid through HDFC Infinia, DCB and SCB Ultimate out together just to spread out the risk just in case some bank doesn’t give me the points.

    1. AshishR

      congraz of new car amar,

      let us know which cards didnt give pts for car purchase

      1. Amar

        Citigold world debit card reward rate is 1% (and NOT 2%) for sure. As for Limit, I tried 6 lacs first, it was declined. I then called up my RM who told me it is 1.5 Lacs.

  17. Maneesh Singhal

    I have Corporate Amex card and I have charged upto 30 lacs. Among my personal card hdfc Infinia card has limit of 16 Lacs and once I utilised 15 Lacs of it. Citi prestige has 15 Lacs. Few other low variant cards have limit around 10 Lacs. I have an eye on yes private or amex centuriun but didn’t got the invite yet.

    1. Amex Guy

      If you’re spending on Corporate Plat, Amex is looking for 1.5 crore a year spend and they have a tendency to discount whatever they consider business spends from that threshold. Spend on a personal card if you are into getting a Centurion with under a crore spend. If you hold both personal and corporate, combined spends of both cards will be considered for Cent, but they will discount a lot of corporate spends.

      1. Maneesh Singhal

        Thanks Amex Guy
        My corporate Plat amex expenses was about 1.2 crores last year, and roughly around 90 lacs in the preceding year.
        I hold the personal amex plat card as well but yearly expense on it are in order of 25-30 lacs only. So if I combine both the expense, it is close to 1.5 crores for last year. Hopefully this year it will be much more. I prefer using my UK credit cards for personal international expenses as they 0 forex charges and exchange rates are much better.
        Is the invite for centurion automatic or should I drop a note to Amex to consider for the possible upgrade. Also do you hold the centurion card.

  18. Amar

    An update on the points –
    I got points for all the cards.
    And yes CitiGold is 2% – my bad and I look like a fool now.
    Should have paid everything through that as no charges were levied by the dealer on that.
    Also lambasted my RM for giving me incorrect limit detail – it is indeed 5 Lacs.

  19. Amann

    Hi Sid

    Can you review citi gold & it’s world debit card. Seems to be very good for HNIs.

    1. Shivi

      You missed out on a small detail here, Amann ~ CitiGold account variant requires NRV of over 75 Lakhs 😀 CiTi has started capping the RP earned on the CG World Debit card on all categories of spends even excluding a few vital ones AND most of its’ running offers will expire on March 31, 2019!

      1. Raj

        Hi Shivi – Please let me know about the capping threshold for Citibank CG debit card reward points. While I understand that certain transactions are completely excluded, I am unable to find any capping.

  20. Hardik

    Bought a Tiago JTP in Mumbai for Rs7,20,000 using two credit cards, Diners Club Black and Standard Chartered Ultimate. Now it remains to be seen how much points I get against them. I was charged 10,400 on 7,20,000 (1.45%) after bargaining. I divided them into Rs4,50,000 from SCU and Rs280400 from DCB given a previous comment that HDFC gave less points for a car purchase.

    1. Praveen Katiyar

      Congrats on new car. Thats a nice negotiation on trxn charge. Iam eager to know your points journey on these trxns.

    2. AshishR

      nice deal hardik

      you gave them 1.45% annd got yourself 3.33% worth of RP

    3. Hardik

      I received 15000 points against my Standard Chartered Ultimate Card. I will have to wait for my Diners Club Black statement to see if I received points for that particular transaction. The Standard Chartered transaction has in itself covered the transaction cost 🙂

    4. Hardik

      I am glad to report that I got 3.3% points on HDFC Diners Black credit card as well.


      Hardik Parikh

    5. Gagan

      Thanks @Hardik for sharing details. Can you share what was the initial ask on credit card charges by the showroom guy?

      1. Ankit

        Guys, anyone knows how to transfer the EMI to credit card? Any wallet or something? TIA!

  21. Manpal Singh Julka

    So, i was lucky enough to be able to spend 3.5 L across my 2 CC at a Hyundai showroom – WITHOUT ANY CHARGE. Thanks to the motor slowdown, they offered (read haggled) me CC transactions without any charges.
    Used my Amex Travel and Yes Preffered.
    Got a good no. of points!!

    1. Seetha Raman V

      hi Manpal,

      So, can you please confirm if Yes First credit cards do give reward points for Car purchase transactions and you already see it in your account? I have an Yes First Exclusive credit card that I am planning to swipe for buying a car. The showroom said they will charge me 1.5% extra which will effectively nullify the 1.5% Reward points I will get on Yes first exclusive. The only benefit is the free credit period of approx one month. On the other hand, if they don’t give Reward points (citing it is not Retail transaction etc), then I actually end up on the losing side. Thanks much for your reply, in advance!

      1. Praveen Katiyar

        @ Seetha Raman V
        There is no exclusion of this kind on RPs . I would also like you to negotiate well with your dealer, this 1.5% can be brought down to 1.0%. If required try another dealer as well for ur car.
        Hope it helps..!!

        1. Sharathkumar Anbu

          For the cars in lower demand, showroom will adjust it some how in the discounts offered and accessories but for the cars in high demand like Maruti Ertiga, Hyundai Venue, etc.. there is no chance to negotiate on 1.5% extra charges.

      2. Harshal

        Except payments for fuel transactions, Yes Bank cards give RPs on all transactions

  22. Akash

    Hey Guys! I’m planning to buy a new car and hold an HDFC Infinia Card. Tata’s car dealers are not willing to negotiate on 2% transaction fee on purchase of the vehicle. Given, recent devaluations in Infinia and uncertainty of travel in the future.. Do you think it still makes sense to save ~1% in the form of rewards.

    Look forward to your thoughts.


    1. Varun

      I purchased Tata Nexon through credit card. Talk to finance team at your dealers place. Don’t talk to sales guy they are not aware. Also don’t swap the card on machine. They accepts online payments. They will generate the URL link and just pay through the credit card. No extra charge.

        1. Varun

          Go ahead with 5 star rated Tata Punch. The most safest car.
          I paid roughly 2.5 lacs via card (online payment through link generated but tata finance team) not the complete amount. Rest was card loan directly paid to dealer.

  23. Prashant bhushan

    A noob question here.

    If I apply for a car loan, pay for the car with my credit card, and pay the creditcard with the car loan amount, does that work? Also is there a way of doing that?


    1. Pranab

      There’s no way you can do it.
      Irrespective of the Bank you choose, the car loan amount is directly transferred to the car dealer, NOT on your account. Same goes for House loan too.

    2. Kiran

      The DD, will given in dealers name. You will not be able to do this.


    3. Ros

      You can do that i have done you should ask for reimbursement loan from the bank

    4. manoj

      Yes it is possible even though you have already paid full amount of your car/house. The bank will directly credit the amount in your account upon showing the proof of complete payment (SBI does so up to 6 months post sanction of home loan). Why would a bank loose business oppurtiny just because customer availed his funds prior to loan disbursement?

  24. Abhi

    Just bought one last month, and had negotiated with dealer at 1% charges. They were otherwise asking for 2% in case of crcard (but NO Amex). My combined rewards were roughly at 3%. Used a mix of 3 cards to avoid any single card hit 10L spend, though 1% TCS was paid anyway and will reflect in my tax account. Idfc debit is running a 1% cashback which negates that 1% the dealer charged when I use it to clear card dues. Good thing is I paid everything via crcards including base price, road tax, TCS, accessories etc, and also got an extra month’s time to pay it off.

  25. Ajay Arora

    Thanks for all the useful information.
    However a quick query, if the downpayment is done via CC and the amount due is converted into 3/6 EMI’s , will it be cheaper as compared to car loan interest.
    Might be not, but still it will save the time and effort in documentations and hypothecation, additionally points will be gained.
    Plan is to buy a sedan car less than 10L
    Will it be a better idea.

    1. Siddharth Post author

      It may not be cheaper but if you’re happy to pay that extra for convenience, you may do so. Yesbank’s 9.9% for loan on CC is the best IMO for this.

      But again, taking car loan may give a credit mix (secured) on CIBIL, which is useful depending on the age of your credit history.

  26. Arnold kamble

    I want to buy a car worth 65 lakhs as my family business is all run by cash only no one in my family has a finance history or profile. Right now I have all 100% amount available with me can I get any premium credit card against FIX DEPOSIT. If not is there any other way I can earn extra benefits.

  27. Shivakiran

    Hi thala,

    Good morning. I would love to share my experience in this topic of purchasing car through credit card and in the process give some inputs and tips to prospective car buyers looking to go this route. Also, Sid you can update this article as well basis few of my observations i got using this route.

    Long Post WARNING!

    Here we go…

    I was planning to upgrade my car for quite sometime and after multiple TDs and deliberations I decided to go with MG Astor. Now, with the car finalized i decided to pay the booking amount(₹25k)+full payment through my credit card. With close to 21 Laks as the onroad price, I narrowed down and chose to pay the amount through HDFC Infinia initially and then added the SCB Ultimate to the party (More on why I added SCB Ultimate to this in a while).
    After having read through almost all the posts of Sid here at Cardexpert, I figured that this was the day/ time and transaction where i wanted to try out and utilise the much coveted Shadow Limit/Internal Limit of Infinia card. I wanted to bump up my shadow/internal credit limit by an additional 9 laks and I with all eagerness called up the premier customer care services of HDFC. The lady on the other side was very knowledgeable and soon after verifying my credentials, took my request for an additional shadow limit of 9 laks for purchasing a new car in my case. I was asked about the duration for which i needed the bump up and was told to follow up in 4 hours time on the status of the request.
    Now, i promptly call back the customer care after 4 hours to check on the status of the request and I was told that my request got rejected! When i pestered to know why it was rejected, i was informed that as an internal policy the shadow limit addition is provided only for use cases of Travelling, Medical Emergencies and funding education. That was a bummer and it sure did pinch me and made me think that the grapes (read Infinia and HDFC) are indeed sour.
    Enter SCB Ultimate. True to its name the card is indeed ultimate. If only i had the same limit as in my Infinia, I would completely shift my spends to SCB. Their regular customer care team is eons ahead of HDFC’s so called premier customer care team. The clarity and the ease with which the SCB customer care team is able to understand and provide you with answers is indeed commendable. Now with HDFC’s ineptitude, i had to use the SCB ultimate to cover the balance for paying towards my car.
    The key differences: SCB never once called me for verifying if i had made those high value transactions while HDFC never once missed verifying. SCB’s spped of accounting transactions is unmatched. In 24 hours i get all the transactions acocunted along with the reward points in SCB while HDFC takes close to 48 hours.
    Final words to consider before going this route.
    1. MDR Charges: I was able to negotiate with my showroom to reduce the CC MDR charges from 2% to 1.5%. Now, both the cards i mentioned gives 3.3% as RR and it still made sense for me to forgo 1.5% and get 3.3% RR (1.8% net gain). If your card is not offering you such returns then its prudent to not follow this route.
    2. CC Utilisation: Never let the utilisation of your CC go beyond 25-30% of your overall limit as this will pull your credit score. Best way to keep this in tab is to use your card’s full limit and pay the balance 70-75% before the bill gets generated.
    3. Milestones: Some CC have milestone spend programs and that can give you a cool 4-5% additional bonus RR. Time your payments so that it covers the balance milestone and you are able to reap the additional RR.
    4. Part Payment: If not for the entire car’s on-road price, you can negotiate and pay a part of the amount through CC and the rest using other options. This way you will still get the benefits of your CC without having to worry about available limits.
    5. Payback: Finally, to squeeze even more RR, payback your CC bills using a good, rewarding debit card through which you can get back some % RR again. I don’t have much information on which Debit cards give the best RR when used for paying your CC through say Cred. Sid or our other esteemed contributors here will probably pitch in to help the rest of us here figure out best debit cards for making CC payments.

    TLDR: You can pay for your car purchase entirely through credit cards and get rewards for doing so. Choose CC wisely for making payments and follow the tips to get the maximum benefit.

    1. Siddharth Post author

      Thanks for sharing your experience in detail, Shivakiran.

    2. Manoj Singh

      I have recently bought my car in 100% credit card with IDFC wealth credit card which give me 2.5% instant cashback in form of reward points. I negotiated with dealer for 0% MDR which was agreed after few negotiation. I made payment of 5 lacs initially and then next payment in gap of 2-3 days to get rid of daily limit criteria and credit limit usage which is 5lacs, IDFC doesn’t give temporary increase of credit limit option and then paid my bill for first payment on very next day. Then next payment of 5 lacs after 2 days when bill is settled.

      After thay i paid my credit card bill through my IDFC wealth debit card through mobikwik which inturns give me 0.75% extra reward points. So all in i get 3.25% cashback in form of cash to my account. Which is best bet i believe. Otherwise redeeming reward points for voucher and then forced spend money on things you don’t need is never a good idea. Getting cash settled to your statement is always best option for me.

      1. Abhi

        How do you get reward points in IDFC wealth Debit card and where to check it? They had advertised about it but I didn’t know if it ever took off. Even now I don’t see any reward points against my idfc wealth debit though I have used it often in past few months.

        1. Manoj Singh

          Just wait for it’s official launch. They confirmed me with discussion ticket number that whatever spend i have done till date will fetch me reward points from back date after its officially launch. So just spend they will give you all reward points.

          Anyway we have to pay our credit card bills so even if they don’t give reward points it doesn’t matter much. It’s just an extra cashback.

      2. Phani

        > Otherwise redeeming reward points for voucher and then forced spend money on things you don’t need is never a good idea.

        Re: I believe this applies to cashback too. For me cashback credited usually on next month, from that month onwards I feel that I have some cash left in credit card account, so I force myself to spend money on things which I might or might not need because I feel that at the end of the day, existing cash credit will be utilized for these purchases and I no need to pay anything.

        I think it depends on where we spend and actually we need or not, whether it is cashback or voucher.

        Here, whoever saved money on car purchase using credit card, hope they utilized those reward points / cashback on things they will purchase one way or another, instead of using them because these points or cash in their credit card accounts.

        One question: I heard that if we purchase more than 10lakhs using credit card, income tax will keep eye on us. So, in this case if we purchase car, won’t it attract taxes.?

        1. Abhi

          There are 2 things here:
          1. If you purchase a car worth 10L or more, 1% TDS has to be deposited by dealer, regardless of your mode of payment, except in case of hard cash. In case you make cash payments the threshold for TDS is 2L, so practically all cars are included.
          2. If you make repayments (not spends) to a credit card exceeding 10L in an FY, your bank has to report it to IT, normally you will see that entry in your 26AS. There’s no tax implication as long as you can prove your spends are not disproportionate to your income(s). If you still want to avoid seeing such entries in 26AS, use multiple bank cards and keep repayments to each of them to under 10L in an FY.

  28. RM

    I paid for my Mahindra Thar with Infinia too. Extra charge being 1.5%. With a reward rate of 3.3%, there is an obvious net gain. If you are not going for a loan, CC is the best way to pay for a car (assuming you were have the funds for NEFT/RTGS/DD etc). Paying the bill with Cred you end up with some minuscule extra cashback/rewards too. Just to add, the card machine at the showroom couldn’t take a single transaction over 9.99 lacs so had to split and do two transactions. It gets declined if you try to swipe more than 10 lacs in a single transaction. Not sure if it is the specific swiping machine issue or something else.

  29. RKR

    Recently I purchased Honda City ZX. At one showroom, I have negotiated for 1.5% (down from 2%) for CC payment.
    At another showroom, the sales person informed me that, any amount paid at the time of booking the car will be at 0% MDR (for the customer). So I gone ahead and paid Rs 2 lakhs as booking amount (& rest by loan) using my SC ultimate with 0% charge.

  30. Abhinav

    An year ago purchased my Tata Nexon from Gurgaon at price of 12.6 lacs. 10 thousand was booking amount.. for remaining 12.5 lacs.. I took loan of 10 lacs from sbi and 2.5 lacs I paid through online link shared by tata showroom. I used Infinia card and I did not paid any extra amount. Always check with the finance team of showroom for an option to pay via online link rather than pos machine that may save this MDR cost.

    1. Abhi

      I had negotiated for 1% (mentioned few posts above) and made payments using link provided by dealer, but the dealer always added 1% on the amount payable pre-filled in the link itself. So all payments I made physically at the dealership or via online link, there was 1% always added, except the initial booking fee. So you got lucky with the link. And there was no choice to increase the booking fee either, it was a fixed amount only which was payable through any card, even Amex. So except booking fee, all the amount was +1%, with no Amex acceptance.

      1. Manoj Singh

        You need to negotiate hard. Big showroom get approval from their management to waive off charges. Just your sales agent need to take pain in that and have to influence their management.

        1. Abhi

          Sales agent had taken it only to 1.5%, beyond that I had to take management approval to get to 1%. By their own admission, they had never extended such low charges to anyone earlier (its been a fairly high-demand long-wait model). Checked with some buyers of same brand who went with same or different dealers, few were surprised that was 1% possible, rest were baffled that one can pay through credit cards also 😀.

  31. Amar

    If you have Citi Gold debit card the cashback will be 2% and no showroom charges additional MDR for debit cards.

    1. manoj singh

      Citi is gone now. Just matter of time. Welcome to axis hell

  32. Sajid

    For a 10 lakh+ car, the dealership will charge 1.5% transaction fee for credit card payment.

    What would be the best option between HDFC DCB, Axis Magnus and Citigold debit card ?


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