Often, if using your credit card means incurring a fee, its better to pay another way. Why spend more than you need to? But in some cases, the fee might be outweighed by rewards.
That was the case for Keith Rosso, 29, and his wife Liz, who recently bought a Tesla Model 3 with a credit card. The total cost, including taxes and fees, was $58,857.
“If you use credit cards responsibly, making a large purchase to earn tons of points is an easy win,” Rosso writes in Million Mile Secrets.
It’s fun to buy a new car, but the process can be a little tricky when it comes to technology-focused brands like Tesla. Tesla doesn’t have traditional dealerships; instead, they sell directly to customers through their website and company-owned stores. So, can you really give just one credit card to pay for a $50,000 car?
You can use a credit card to buy a Tesla, but there are a few things you need to know. Tesla only takes credit cards for the deposit on the first order, not for the whole balance. But third-party services will charge your card for a fee. Not many credit cards have limits high enough to cover a Tesla if you don’t plan ahead.
So while it is possible to buy a Tesla with a credit card, it involves extra steps and additional costs In this article, we’ll break down exactly how Tesla’s purchasing and financing works compared to traditional dealers, look at the credit card options, and explain how third-party services can make it happen.
How Does Buying From Tesla Work?
Tesla is unique since they manufacture, sell, and service their own vehicles. There are no third-party Tesla dealerships. This means the buying process looks a bit different than what you may be used to.
You can use a credit or debit card to put down a $100 deposit on Tesla’s website when you place an order for a car. Then, when it’s time to take delivery, the rest of the money must be paid.
Tesla requires the full payment upfront, either from your own funds or via a bank loan. They do not offer in-house financing where you can drive off the lot before the bank officially approves the loan.
Tesla won’t let you take the car until the full balance is paid, which is different from most dealers. You must either have a cashier’s check on hand or have the bank wire the money to Tesla before the delivery day.
Do Traditional Dealers Accept Credit Cards?
Before we dive into Tesla’s specific credit card policy, it helps to understand how other dealers handle card payments. The answer is that most welcome credit cards, even for auto loans of $40,000 or more.
It’s relatively common for people to pay for used car purchases with a credit card. And most franchised dealers will let you put the full amount of a new car on a card if you want. The only hesitation may come from the finance manager since auto loan rates are often lower than credit card interest.
But from the dealer’s perspective, they get paid either way. And manufacturers’ captive finance companies like Ford Credit or Toyota Financial will happily fund a sale made with a credit card.
So traditional dealers are certainly prepared to handle credit card payments, which makes Tesla’s rigid policy stand out even more.
What Does Tesla Allow You to Buy With a Credit Card?
While you can’t use a card for the full balance of a Tesla vehicle, there are some exceptions. Here are the Tesla products and services you can purchase directly using a credit card:
- Initial order deposit
- Upgrades added after ordering
- Charging accessories
- Parts and accessories from their shop
- Monthly subscription services
So all of the “extras” that Tesla offers can be paid for with a typical credit or debit card. You just can’t use one for the bulk of the vehicle purchase price.
Tesla also allows you to pay for up to half of a used Tesla listed in their inventory with a credit card. But the remainder must be a bank transfer or cashier’s check.
How Do I Buy an Entire Tesla on a Credit Card?
If you really want to finance your new Tesla 100% on a credit card, it is possible using third-party services. Companies like Plastiq will charge the purchase to your credit card for a processing fee, usually around 3%.
The service essentially transfers the money from your credit card to Tesla, absorbing the cost of the fee. So for a $50,000 Model 3 purchase, you would pay an extra $1,500 or so for the convenience of using your card.
While not the cheapest option, some consumers may value consolidating the auto loan within their overall card accounts and earning the additional rewards points. Just be aware of the high ongoing interest charges compared to most auto loans.
What Kind of Credit Limit Do I Need for a Tesla?
Before pursuing a credit card purchase, double check that your card has a high enough limit to handle the transaction. When you factor in taxes and fees, expect to need at least a $50,000 limit for the least expensive Tesla models.
Cards like the Chase Sapphire Reserve and Capital One Venture cater to upscale clients with limits exceeding $40,000 or even $50,000. But you’ll likely need a combination of cards to cover the full vehicle cost unless you request an increase.
Don’t forget to contact the credit card company before attempting the purchase. Let them know the amount and date so that the charge is expected and less likely to trigger a fraud alert.
Should I Buy a Tesla With a Credit Card?
Just because you can pay for a Tesla with a credit card doesn’t necessarily mean you should. Here are some pros and cons to weigh when considering using a card:
Pros
- Convenience of managing only one monthly payment
- Ability to earn significant rewards points
- Delayed payment of the balance over time
Cons
- High credit card interest rate compared to auto loans
- Processing fees from third-party services
- Need for excellent credit and high card limits
For certain wealthy individuals who routinely put large purchases on credit and pay in full each month, buying a Tesla on a card may make perfect sense. But for most buyers, going through Tesla’s standard loan process will be the more affordable option.
The Bottom Line
While Tesla doesn’t directly accept credit cards for purchases, you can pay for the full amount through a third-party service for a 2-3% fee. Just make sure your credit limit is high enough, notify the card issuer in advance, and weigh the pros and cons before deciding if it’s the right move financially.
The buying process may be nontraditional, but with the right planning and some extra costs, it is possible to hand over nothing but a single credit card to fund your new Tesla. For most people though, getting approved for a standard auto loan beforehand is the recommended route.
Read more about electric vehicles, batteries and chips from CNBC Pro
Purchasing the car through Plastiq qualified for that 3-point reward rate, although Rosso notes that theres no guarantee that will always be the case. The Ink Business Preferred may one day only reward Plastiq purchases with 1 point per dollar.
The 2.5 percent fee came out to about $1,470, while the purchase earned him nearly 180,000 Chase Ultimate Rewards points. At minimum thats $1,800 in value, but it could be worth even more when redeemed for travel. If Rosso transfers the points to the right hotel or airline rewards programs, he estimates that theyll be worth as much as $5,000.
In short, the rewards easily make up for Plastiqs fee.
How he did it
Although Tesla wouldnt let Rosso purchase the car directly with his credit card, they accepted the payment through Plastiq, a third-party service that charges a 2.5 percent fee.
“The trick with my Tesla purchase is the card I used, [the] Chase Ink Business Preferred, earned 3X points for the purchase,” Rosso tells CNBC Make It. Ink Business Preferred cardholders receive 3 points on every dollar spent in a range of categories designed to benefit small-businesses owners. Those categories include travel, shipping, advertising and internet, phone and cable services.
Tesla Down Payment with a Credit Card? This Method Might Work
FAQ
Can you buy a Tesla with a credit card?
But Tesla isn’t like a dealership—they don’t even have dealerships—so its a little trickier to pay with a card. Tesla accepts credit and debit cards for almost everything except the full balance of a car. You can only use a credit card to pay the deposit—the rest of the balance must come from a wire transfer or from a bank loan.
What if Tesla does not accept credit cards?
1. Consider using a third-party service to transfer the balance onto a credit card for a fee if Tesla does not accept credit cards for the full purchase price of a car. 2. Be prepared to make full payment before Tesla delivers the car, as this is a requirement.
How much credit card do you need to buy a Tesla?
Credit Card Limits for Car Purchases Given the generally high price of Tesla vehicles, along with the added fees that come with any car purchase, it’s safe to say that you’ll need a credit card with a limit of at least $40,000 to $50,000 to be safe.
Can a credit card cover a Tesla?
Very few credit cards have a high enough limit to cover the full cost of a Tesla, and those that do may be hesitant to expand the entire card balance at once. However, it can be done using some cards and services. Resource information used in this article from reputable finance guides and Tesla itself.
Can I lease or finance a Tesla?
Leasing and financing are contingent on credit approval and not available in all states. After placing your order, use the same email address and password you used to place your order and sign in to your Tesla Account.
Can you buy Tesla products without a third-party service?
One example is that many of Tesla’s paid upgrades can be bought through the website with any major credit card. Additionally, virtually all Tesla accessories can be purchased with a card through the website. Here’s a short list of items that you can buy from Tesla without going through a third-party service.
What form of payment does Tesla accept?
What kinds of payments does Tesla take? Tesla only takes wire transfers, manager’s checks, cash deposits, and loans through a Tesla Preferred Partner or two. Confirm your preferred payment method in your Tesla Account under ‘Payment Method’ or directly with your advisor.
Can I pay for Tesla charging with a credit card?
You can pay at any Supercharger using the Tesla app by adding a payment method to your Tesla Account. At a limited number of sites, you can pay directly at the Supercharger using a major credit card, a mobile payment service or text-to-pay.
Can you buy a Tesla with Amex?
Tesla Shop accepts the following payment methods: American Express. Discover. Mastercard.