Can You Buy a Car with PayPal Credit?


There are many different ways you can pay for a new or used car such as paying in full with cash, hire purchase, personal loans and leasing, but if you have a PayPal account and the PayPal Credit facility have you ever wondered if you can buy a car with PayPal Credit?

You can purchase a car using PayPal Credit as long as the seller offers PayPal as a payment option. However, when it comes to buying something as expensive as a car you will be severely limited to what you can purchase as typical credit limits are between $250 and $3,000.

What is PayPal Credit?

PayPal Credit is a rolling line of credit that operates in a similar way to a credit card but there are some major differences between a traditional credit card and PayPal Credit you need to be fully aware of. As long as a seller accepts PayPal as a form of payment for goods you can use PayPal Credit to pay for it.

The amount of money you spend will be added to your PayPal Credit account balance just like it would be with a credit card. You will have to pay at least the minimum amount each month which is usually $5 or 2% of the outstanding balance, whichever is the greater amount.

PayPal Credit is a flexible, pre-approved way of paying for goods but you do not have a physical card and it’s not as widely accepted as most traditional credit cards such as Visa or Mastercard.

What’s the difference between PayPal and PayPal Credit?

PayPal Credit is a separate service offered through the PayPal brand in partnership with Synchrony Bank, which means it operates in a very similar way to most credit cards. You’ll need to have a PayPal account to be able to access PayPal Credit, so think of it as an add-on feature to your normal PayPal.

You can still use PayPal in the normal way where the money comes out of your bank account or from a credit card you have registered with PayPal without using PayPal Credit, but it isn’t possible to make use of PayPal Credit without using PayPal. PayPal Credit is basically a credit card but without a physical card that you can put in machines and use in stores.

Where can you buy a car with PayPal Credit?

While you will be limited to buying from auto dealerships and traders who have credit card facilities to be able to buy a car with a traditional credit card, PayPal Credit allows you to buy from private individuals as long as they have a PayPal account. Most dealerships will have PayPal accounts so you can buy from them using PayPal Credit as well, but as you’ll know if you’ve read some of my other articles on buying used cars, buying from a private seller will often mean you get a cheaper car.

If you’re looking to buy a car from someone through eBay for example, using PayPal Credit or even just your regular PayPal facility is a quick, easy and attractive way of concluding a transaction.

If you want to know where you can buy great used vehicles for knock-down prices then check out government auctions. You’ll be amazed at just how cheap you can get cars, trucks and SUVs if you know where and when to look for them.

Can you use PayPal Credit to buy a new car?

It’s unlikely you’ll ever be able to buy a new car with PayPal Credit as the price of a brand-new vehicle will be massively higher than your PayPal credit limit. When you first successfully apply for a PayPal Credit account your credit limit could start off at as little as $250, and even if you have a strong credit history, you’ll only get a limit of a few thousand dollars which is never going to be enough to pay for a new car.

You could, of course, use PayPal Credit to pay your deposit which could be useful in some cases. On the other hand, there are more affordable ways to borrow money than PayPal Credit. And if you’re having to fund your new car deposit with PayPal Credit, you’re probably going to be financing most of the rest of the purchase price too, so why not try and use that facility for the whole balance?

Will used car dealers accept payment by PayPal Credit?

A lot of car dealers won’t accept credit cards for large sums because they get charged to process those payments and those charges can knock a big hole in their profit margins. You’ll find if you read my articles about how much dealers make on new car sales and used car sales that margins are often not as large as many people believe, so something like a 2% charge from a bank for accepting a credit card isn’t something most dealers will be prepared to swallow.

Even if you have a $15,000 credit limit on your credit card or your PayPal Credit account (unlikely) a dealer will probably only accept payment for that kind of money if you also pay extra to cover their charges. I once bought a used Saab 9-3 convertible for $6,999 and I paid with a credit card but I also had to pay an extra $139,98 on top to cover the dealer’s extra cost for accepting that payment method.

Is PayPal Credit an expensive way to buy a used car?

PayPal Credit can be an expensive way to buy a used car but the good news is it can also be the cheapest possible way to pay too. Just as most credit cards offer a period of interest-free borrowing as long as you pay off the balance in full before the due date, PayPal Credit does the same. The good news is while most credit cards only offer one month of interest-free borrowing PayPal Credit offers between four and six months.

Even if you don’t pay the full balance off before interest starts to be applied to your balance, PayPal Credit’s interest rate for new accounts is 23.99% which isn’t too far away from most credit cards.

If you’re looking to buy a used car for something like $1,500 and you’re going to pay it off in a few months then PayPal Credit could be a good option for you.

Should you use PayPal Credit to buy a car?

There’s no reason why you shouldn’t use PayPal Credit to fund a used car purchase as long as your PayPal credit limit is high enough to fund the purchase and the seller is happy to accept a PayPal payment. However, I have to ask why and under what circumstances you’d choose to use PayPal Credit over other more traditional forms of finance?

For a start, you’re going to be severely limited in terms of the amount of available credit as PayPal Credit limits are not particularly high in most cases. And although PayPal Credit offers a good period of interest-free credit you can get a much longer interest-free period by doing a balance transfer between two cards.

If you already have a credit card you can get another one that offers an interest-free period of up to two years and sometimes even longer if you transfer an outstanding balance from another card. If you desperately need a car and you can’t pay a couple of thousand dollars outright then two years of interest-free borrowing is hard to turn down. And don’t forget, you don’t have to use the whole two years and you can pay it off quicker anyway if you have the opportunity.

Of course, if you’re someone who has no other form of credit and you find yourself in a situation where you can’t get another form of credit and you need a cheap used car desperately, then if PayPal Credit is all you have then go ahead. It’s certainly better than borrowing money from some of the less-creditable, shady, and sometimes downright illegal sources that people in that kind of situation sometimes have to turn to.

In most situations I can imagine, however, there are plenty of other more suitable ways of funding the purchase of a car. Especially as most cars you should be looking at buying if you want any sort of reliability will probably cost considerably more than the majority of PayPal Credit account credit limits will allow you to buy.

Sean Cooper

Former retail auto industry professional for almost a decade and an automotive writer and journalist for the last 8 years

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