While it may seem strange to some, buying a car with your debit card is more common than you think. The convenience of only carrying a card with you has been with us for many years but seldom do we consider using it for purchases as large as a vehicle. If you're buying a car cash, then you may be wanting to know if you can forego some of the unnecessary headaches that come with making a once-off payment.
Related: Can you buy a car on a credit card?
Wanting to use your debit card to pay for a car can come as a result of a few instances. Perhaps you've been paid out by insurance for your written-off car and that money now sits in your account. Maybe you're really good at saving and you have the money on hand, ready for that purchase. Either way, using your debit card can make the transaction so much easier. Or can it?
Can you use a debit card?
The short answer is yes, you can. But it comes with a few conditions that you need to know about before you walk into that dealership to make the transaction.
The first thing to do is to ask the dealership if they will accept a debit card transaction. Some will and some won't, for a variety of reasons. One thing is for sure, most will not accept a credit card payment. Credit cards result in a handling fee that the dealership will have to cover so many will be reluctant to accept credit cards. They may do so, but be prepared to cover their transaction fees, which could be as much as 5% of the transaction amount.
You may need to contact your bank to raise the limit of your card for this transaction. Often this can be done through the online banking app or simply by giving your bank a call to ask them to raise it. Don't forget to drop it again afterwards to prevent large losses in the event that your card goes missing.
In order to avoid complications down the line, keep the slips safe for the next tax season. It will also be useful to keep any documentation from the insurance regarding the payout and claim as proof of the transaction and source of the money.
