Can You Buy a Car With a Debit Card?

Buying a car with a debit card is possible, provided you have enough funds to cover the purchase and the dealership accepts debit as a payment method. Few people typically have the funds to pay for a car purchase with their debit card, but it’s not unheard of. However, dealerships may not be as willing to accept debit cards as you may think. 

Swiping a debit card for a car purchase puts the burden of debit card transaction fees on the dealership. The typical fee for running a debit card is 3%, which they may pass on to you. While 3% doesn’t sound like much, it’s $1,500 on a $50,000 car purchase or $900 on a $30,000 car purchase. This fee could be in addition to documentation and dealership fees, taxes, and any additional fees you owe. 

Dealerships also take on a huge liability when you pay with a debit card. The same purchase protection that you rely on puts the dealership in a bit of a pickle. If you dispute the charge for any reason and the bank rules in your favor, the dealership must take the car back. That vehicle cannot be sold for the same price you once paid, making the dealership lose money on top of a sale. 

If you’re used to paying for expenses like a rental car with your debit card, paying for a car purchase with the same card could be a no-brainer. However, here are a few tips to remember if you’re considering paying for a car with a debit card. 

Verify payment methods with the dealership

While paying for a car with a debit card is possible, not all dealerships accept debit cards as payment. Contact the dealership and verify if they take debit cards. Be sure to ask about any additional fees incurred by using a debit card and what, if any, information you must provide when using your debit card for payment. 

Research your daily spending limits

Before you contact your bank about your purchase, check your daily spending limits. Many bank accounts come with set limits that don’t allow you to spend more than that in 24 hours. However, you can make a quick phone call to the bank to raise that limit. 

Contact your bank about your large purchase 

Banks typically red-flag large purchases as fraud, so if you attempt to buy a car with your debit card without tipping them off first, your card may be declined due to a fraud alert. Speak to a bank representative a few days before you plan on making the purchase. Let them know that the transaction with the dealership you’re working with is legitimate and can be allowed to go through. 

Ask for a receipt

As with any large purchase, it pays to get a receipt. If you ever have any issues with disputing the purchase, having a receipt to verify the details can prove invaluable. It’s also a good idea to keep a record of the sale if you get pulled over on the way to the DMV or as a way to prove the vehicle’s value. 

Researching how to buy your first car includes discovering how you can pay for your purchase. Below are the advantages and disadvantages of purchasing a car with a debit card versus other payment methods. 

Pros of purchasing a car with a debit card

Buying a car with a debit card includes several benefits: 

• No interest payments: Paying for a car in full with your debit card means you don’t pay any interest, similar to if you were to pay for the car outright with cash. In contrast, if you were to buy a car with your credit card, you’d pay hefty interest on that balance until you paid it off. 
• Purchase protection: Most debit and credit cards come with purchase protection. Buying a car with your debit card can offer additional protection you typically don’t get when you pay with cash. 
• Convenience and security: Carrying $10,000+ around in cash can raise anyone’s blood pressure. Using your debit card to buy a car instead can offer convenience and help you avoid transporting large amounts of cash.  
• No credit check: While most hard credit checks for financing go away after a few years, paying for a car with your debit card can help you avoid any damage to your credit.

If you want to (and can) buy a car with a debit card, this payment method offers several advantages. 

Cons of purchasing a car with a debit card

However, you should consider the following before you present your debit card at the dealership: 

• Dealership may transfer fees: Debit cards can incur hefty transaction fees, which the dealership may pass on to you instead. While transaction fees may be comparable to or less than interest on an auto loan, it is another expense to account for. 
• Better use of funds: Having enough cash to pay for a car in full with your debit card can feel like an accomplishment. However, your funds may be better used elsewhere, such as in high-yield savings accounts or investments. 
• Missing out on financing benefits: Well-qualified buyers can earn financing incentives from dealerships, but paying with a debit card can exclude you from eligibility. You may pay more for the car in the long run, depending on the circumstances.  

Keep these pros and cons in mind as you consider how to pay for your car purchase.

Dealerships accept various forms of payment, including: 

• Cash
• Credit card
• Money order
• Wire transfer
• Cashier’s check
• Personal loan
• In-house or third-party financing
• Personal check
• ACH payment
• Partial trade 

It’s rare for a dealership to take a trade-in as straight-across payment for another vehicle. Even then, you still owe the dealership any associated fees. If you still owe money on your trade-in, you must also pay the dealership the difference. 

Not all dealerships offer every one of the payment methods above. If you’re curious about which payment methods a particular dealership accepts, ask to speak to the financing department. Inquire about what fees come with various payment methods to weigh your best options. 

Cash is often the best way to pay for a car. You can avoid paying interest altogether if you have enough cash to pay for the purchase, sales tax, and any additional fees. You can also prevent a hard credit check and the risk of ending up underwater on the car. 

It’s more challenging to figure out how to get out of a car loan than paying cash for a car. With a loan, you could face defaulting and repossession, which can stain your credit report for up to seven years after the fact. When you pay cash, you own the car outright.

In times when it’s not feasible to pay for a car purchase, subscribing to a car instead can offer a convenient and affordable solution. FINN car subscriptions come with a monthly payment incorporating depreciation, registration, car insurance, and maintenance. You can use your debit card to make monthly payments, no matter which car you choose.