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The question was popped, the answer was yes, and now you’re ready to plan your dream wedding. Which means it’s probably time to set up a meet-and-greet between your vision board and your bank account.

Wedding costs can add up quickly, and if you’re just winging it, it’s easy to get carried away. Using a wedding cost calculator as you work through the planning process can help you manage your money better and create a more realistic budget.

Read on for a breakdown of the costs you can expect as you prepare for your big day.

How Much Will My Wedding Cost?

The cost of a wedding depends on several factors, including where you live, your wedding date, and the size of your guest list. If you go all-out with a big bridal party, designer duds, and a reception for 200-plus, your bill could be significantly more than the current median of $10,000. If you decide to go with a simple ceremony at City Hall, on the other hand, followed by a modest dinner with a few friends, your total spend will likely fall way below the typical wedding cost.

What Does the Average Wedding Cost?

The most recent SoFi survey found that the median wedding cost is $10,000. But again, that number can vary widely.

Studies have found that couples who live in the South typically spend a bit less on their wedding, while those who live in bigger cities, particularly in the Northeast, can expect higher costs. Trying to match or exceed the standards set by others in your social group can also affect your bottom line.

The popular wedding website The Knot says couples who live in the South typically spend a bit less on their wedding, while those who live in bigger cities, particularly in the Northeast, can expect higher costs. Trying to match or exceed the standards set by others in your social group can also affect your bottom line.

Recommended: Is It Smart to Finance a Wedding?

What Goes into a Wedding Cost Calculator?

A wedding cost calculator uses average wedding costs to help couples break down the expenses they can expect to encounter as they plan their wedding. This budgeting tool can assist couples and their families in prioritizing how they want to spend their money. (Is a designer dress a must? Is a buffet or sit-down dinner a better choice? How many guests can you really afford?)

You also can use a wedding calculator/budget as a checklist to ensure you’ve covered all the details, so there aren’t any surprises (or unexpected wedding expenses) as you close in on the big day.

How to Calculate Wedding Costs

To keep things in perspective and set reasonable priorities, you may want to start by designating a certain percentage of your overall budget for each cost category. A $2,000 dress, for example, would be 10% of a $20,000 budget. A $10,000 reception (venue, catering, music, etc.) would take up 50%. That would leave you 40%, or $8,000, for the rest of your costs (the tux, flowers, photography, etc.).

Knowing the average costs for various categories can also help you fine-tune your budget and save for your wedding. Here’s a look at some of the most common wedding expenditures.

Before the Big Day

You can count on racking up some wedding bills long before you hear wedding bells. (Which is why it can be helpful to use a spending app as soon as you start planning.) Here are some costs you may incur early on in your preparations:

Save the Date Cards: If you want to let your guests know waaay ahead that your big day is coming up, sending “save-the-date” alerts can help. Postcards generally cost 20-55¢ each; refrigerator magnets can range from 30¢ to $1.60. (Costs per item typically go down when you order more.)

Invitations: Two major factors will affect the cost of sending out wedding invitations: An elaborate invitation or one that’s designed just for you will cost more than a standard design. And, of course, you’ll pay more for invitations and postage if you have a large guest list. (Don’t forget to put stamps on the RSVP cards included in each invite.) You could end up paying from $2 to $10 for each invitation and postage.

Wedding Planner: How much would you be willing to pay to hand over some of the stress of planning your wedding to a professional? U.S. couples spend an average of $1,500 for their wedding planner’s services, but your price may vary depending on your planner’s expertise and level of involvement, and the size of your wedding.

Marriage Ceremony

Though it’s what the big day is all about, and the reason friends and family have gathered, it can be easy to overlook the actual wedding ceremony when budgeting. Here are some costs to keep in mind:

Marriage License: This document, which authorizes a couple to marry, can cost anywhere from $20 to $150. You can get your exact cost by calling the issuance office in the county where you plan to marry. In some states, you may be able to lower the cost by taking a marriage preparation course.

Officiant Fee: The officiant is the person who is legally authorized to perform your ceremony. It can be the minister at your church or someone who performs weddings as a full-time or side gig. Officiant fees can vary from about $250 to $800.

Ceremony Venue: Unless you exchange vows at the same location as your reception, you’ll likely have to budget a separate amount for this venue, whether it’s your church, the beach, a private garden, or a public park. The cost will depend on the location and how long you use the space. (Even if it’s a public place, you may have to pay for a permit to hold your ceremony there, or a by-the-hour rental fee.)

Churches typically ask for a “donation,” which can be a mandatory amount or pay-what-you-wish deal. Unless you’re headed to the courthouse, be prepared to pay between $300 to $1,000-plus for a ceremony venue.

Decorations: The cost of decorating for your ceremony will depend on how elaborate you want to get — and what your venue will allow. Keeping it simple with a flower arrangement at the altar could be $60 to $450. But adding ribbons and flowers to the pews, petals in the aisle, or a flowered archway can bump this portion of your floral budget to over $1,000.

Ceremony Music: You’ll likely want to have some kind of live music at your ceremony — maybe a soloist, the church organist, a quartet, or a band. The cost for music can vary significantly depending on how big you go, and can range from $200 to $400 per hour.

Reception

The reception is typically the largest wedding expense and can include several subcategories — from food and entertainment to decorations and, of course, the cost of renting the venue where guests will gather to celebrate. According to WeddingCalculator.com, the average reception ranges from $4,000 to $20,000.

Some all-inclusive venues charge one price for catering, decorations, and more. If you have to hire multiple vendors, though, you’ll need to keep these separate costs in mind:

Venue: Depending on the size and location of the hall, country club, restaurant, etc., you can expect to pay $2,500 to $7,500 just to rent the space for your party.

Catering: The cost of feeding your guests will depend on what you serve (appetizers or a full meal) and how it’s served (buffet or by a waitstaff). Costs generally range from $30 to $80 per guest. You may have to pay extra to rent serving equipment or pay waitstaff at some venues.

Drinks: If you decide to offer an open bar with unlimited alcoholic beverages, you can expect to pay $10 to $20 per person per hour, or more.

Entertainment: Couples often argue over whether to hire a DJ or band — and cost can be the deciding factor. A DJ might charge $450 to $1,250, depending on their popularity, equipment, and how long they’re expected to keep the party going. A live band generally charges a bit more, from $750 to $1,500 for about two hours. (You may have to pay more if you have to rent sound or lighting equipment.)

Decorations: If you decide to add decorations to the venue (with ribbons, confetti, balloons, etc.), you will likely have to pay extra — from $100 to $1,000. A floral centerpiece for each table might incur a separate cost, so it’s important to be clear about what’s included in your package.

Recommended: Wedding Gift Etiquette

Wedding Cake

The cake you choose for your wedding is about much more than dessert. Cutting the cake is a fun tradition and it can be a great photo opp. Design, size, the number of tiers, and delivery can all impact the cost, but plan to pay $3 to $8 per person. The average cost of a cake is about $500.

Photographer/Videographer

If you’re hoping to capture the best moments of your wedding, you may want to make the photographer, and maybe videographer, one of your budget priorities. Depending on the package you choose, you can expect to pay from $1,500 to $3,000 for wedding photos. A videographer can cost $1,000 to $2,500.

Flowers

We covered the cost of using flowers to decorate for the ceremony and reception above. Here are some other costs to consider:

Bridal Bouquet: The bride’s flowers are in the spotlight throughout the day — in photos, during the ceremony, and even at the reception. For the bouquet of your dreams, you can expect to pay anywhere from $50 to $350.

Boutonnieres for the Guys: If the groom will be wearing a suit or tux, a boutonniere is almost a must, and it will run from $10 to $50. Multiply that price by the number of men in the wedding party if Dad and the other guys will get them, too.

Bridesmaids Bouquets: These smaller bouquets typically cost $25 to $100 each.

Corsages: Corsages, which can be a nice way to recognize special family members and friends, may cost $15 to $30 each.

Petals for Flower Girl: A bundle of rose petals for the flower girl to scatter can cost $20 to $25.

Bride’s Wedding Outfit

The bride’s ’fit — the dress, veil, shoes, jewelry, and more — often takes up a significant amount of the wedding budget. The bride’s wedding dress alone can cost, on average, $1,000 to $4,000. And that’s before alterations (typically $125 to $250).

Groom’s Wedding Outfit

The groom’s gear generally reflects the formality of the wedding, but most men still wear a tux or suit. Purchasing a new tux can cost $500 to $1,000. And tailoring may cost extra. Renting a tux can cost $200 or more.

Wedding Party Costs

Traditionally, members of the wedding party pay for their own outfits, but there may be other expenses you decide to cover if you want to help out with the cost of being in your wedding.

For example, if you’re hiring someone to do the bride’s hair and makeup (average cost: $300), and you choose to include the bridesmaids, you can expect to pay about $150 per person. As with most wedding-day costs, however, you’ll likely encounter a wide range of prices.

Transportation

If you and your wedding party hope to travel in style on your wedding day, you want to look into renting a limo, horse-drawn carriage, party bus, or some other type of transportation. Couples spend an average of $750 for wedding day transportation, but costs will vary based on location, how many vehicles you need, and how many hours you need them.

Wedding Insurance

Once you start budgeting for your wedding, you may decide it makes sense to purchase insurance to protect your investment. Wedding insurance can cover you for several worse-case scenarios. The cost of this type of special-event coverage depends on what you decide to include in your policy. The average cost of a wedding insurance policy is $275.

Total Wedding Cost Example

Until you start making calls and getting price quotes, it will be challenging to get even a rough estimate of how much your wedding will cost in total. But the sooner you start filling in some of the blanks on your budget, the sooner you’ll be able to prioritize where you want your money to go — and get a better idea of what the final bill will be.

Here’s an example of what a couple with a budget of $14,000 and a guest list of 50 might come up with.

How to Save Money on Your Wedding

How can you keep your dream wedding from totaling up to a nightmare cost? Here are a few ways to lower the bottom line:

Ask Friends and Family for Help

Do you know someone who’s great at taking photos? Is your cousin an amazing singer? What about a friend who’s a talented baker and cake decorator? If you can find people you trust to take the place of pricier pros, you may be able to reduce some costs — or avoid them entirely.

Eliminate Some of the Extras

If you can do your own hair and makeup, get yourself to the wedding, and/or design and print your own invitations (or go paperless), you may be able to cut some costs without asking for help.

Downsize the Guest List

This can be a tough one, but trimming your guest list is a sure way to trim costs. Consider asking your friends to leave their kids at home, or gently telling your guests that you’re keeping the plus-ones to a minimum.

Go Off the Beaten Path

Choosing an off-peak wedding date; an unusual (and therefore more affordable), wedding venue; or a wedding dress from a department store or consignment shop can save you big bucks.

Recommended: Free Credit Score Monitoring

The Takeaway

Wedding costs can get out of hand quickly, so it’s a good idea to start your planning with a realistic budget. Then, as you go through the planning process, you can use your budget tracker to stay on top of your actual costs — and stay in sync with your other financial goals. In our example above, wedding costs totaled $14,000 for an event with 50 guests. That number covered the invitations, ceremony, reception with wine bar and buffet dinner, DJ, flowers, cake, and the bride’s and groom’s formalwear.

With SoFi’s money tracker app, you can set budgets, categorize your spending, monitor your credit score, and keep an eye on any upcoming bills — all for free.

FAQ

What is a realistic budget for a wedding?

A realistic wedding budget will be different for every couple. The average wedding cost is about $29,000, but that amount can vary significantly depending on the size of the wedding, the location, and other factors.

Is $10,000 a reasonable wedding budget?

You may have to be pickier about splurges than a couple with more to spend, but by setting your priorities early and using a budget tracker, you can get a strong start on sticking to your $10,000 wedding goal.

How do I pay for a wedding I can’t afford?

There are a few different ways you can pay for a wedding if you don’t have enough cash in the bank. One popular option is to take out a personal loan to pay for wedding expenses. Another is to apply for a credit card with a 0% introductory interest rate, which will allow you to pay off the balance interest-free for up to 18 months. Or you might consider waiting until you’ve saved enough to pay all your costs without borrowing.

Photo credit: iStock/Arisara_Tongdonnoi

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*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Free money for college sounds too good to be true, but it’s a real thing. It comes in the form of scholarships and grants, which almost never have to be repaid.

Families may need to put in effort to find scholarships and grants, but the hustle can pay off.

Free Money for College‽

Yes, that’s right. Scholarships and grants are gifts that reduce the need to take out student loans.

The average student loan debt loads, rounded up, are as follows, according to EducationData researchers:

•   $37,700 for undergraduate students

•   $80,500 for master’s degree holders

•   $132,300 for doctorate holders

Depending on your perspective, that might seem like a lot or might seem manageable. But let’s say a borrower was eligible for free money and left it on the table: That, unfortunately, does happen.

Here are details about the two types of financial aid gifts.

What Are Scholarships?

The many types of scholarships include merit scholarships, which are not based on financial need.

Academic and athletic scholarships are well known, but merit aid also may be determined by community involvement, dedication to a field of study, or your ability to do a killer duck call or create promwear from duct tape.

Scholarships can also be based on a specific trait, like your race, ethnicity, or gender, if you’re a first-generation college student, or where you live.

Scholarships are awarded by companies, nonprofits, states, religious groups, employers, individuals, and professional and social organizations. A big source of merit scholarships is colleges themselves.

What Are Grants?

Grants are awarded by the federal government, state government, private companies, and nonprofits.

Almost all federal and state grants for college are need based, but some nonprofit and for-profit organizations offer need- or merit-based grants.

Students who plan to attend a community college, career school, or four-year college are smart to complete a FAFSA application each year. Information in the Free Application for Federal Student Aid determines what kinds of federal financial aid they qualify for, including grants.

Most states and schools use FAFSA information to award non-federal aid, so even higher-income families may benefit from submitting an application.

How Much Does Free Money for College Help?

Scholarships and grants can make a big difference in lightening the college debt load.

Take a look.

Finding Scholarships and Grants

With federal and institutional grants, you are automatically considered for need-based financial aid when you submit the FAFSA.

Finding private scholarships can take more time and effort.

Federal Student Aid recommends that students start researching scholarships the summer after their junior year of high school. An ambitious few start before that.

Researching Scholarships

Here are ideas to look for scholarships:

•   Consider using a database like Scholarships.com that lets you create a profile with all of your information, which could help you match with scholarships and grants.

•   Use the Department of Labor’s CareerOneStop site to sort more than 9,000 opportunities for financial aid.

•   Try more than one scholarship search tool. The nonprofit College Board also offers one.

•   Ask college financial aid offices about their scholarship availability and process.

•   See if your employer or your parents’ employers offer college aid.

•   Look for scholarships offered by foundations, religious or civic groups, local businesses, and organizations related to your field of interest.

You don’t have to be a scholar or standout athlete to get a scholarship. Students may have success finding non-academic scholarships for, like, an awesome duck call.

Finding those private scholarships and completing the essay and application will take time, however.

Recommended: Search Grants and Scholarships by State

Researching Grants

Grants are typically awarded in a federal financial aid package.

In addition to federal grants, schools may award institutional grants.

It’s a good idea to take a shot at free money by submitting the FAFSA each year when it becomes available or soon after.

The Sallie Mae “How America Pays for College” report found that 75% of families were not aware that the FAFSA is available on Oct. 1 and that 36% did not file an application because they thought their income was too high to qualify for aid.

Other Options to Help Pay for College

There are many ways to pay for school, and students and their parents may use a combination of methods to cover the cost of attendance, an estimate of the total cost of attending a particular college for one year.

Paying for College With Student Loans

Most students leave school with debt, thanks to all the costs of college, which go well beyond tuition and fees.

When it comes to private vs. federal student loans, most students first go for federal student loans.

For one thing, an undergrad might qualify for Direct Subsidized Loans. The government pays the interest on those loans as long as the student is enrolled at least half-time. The interest is also covered for six months after the student leaves school, graduates, or enters a period of deferment.

For another, borrowers may qualify for an income-based repayment plan, Public Service Loan Forgiveness, or federal deferment or forbearance down the road.

Not all students or parents will be able to rely solely on federal aid to cover all their bases, though, and that’s where a private student loan could come in handy.

Private student loans don’t come with all the borrower protections and programs that federal student loans do, but they can be used to cover any remaining school-certified costs, here or abroad, from transportation to books and lodging.

The interest rate may be competitive with federal student loan rates. Also, most federal student loans have loan fees — a percentage of the total loan amount — whereas a private student loan may have no fees.

Federal Work-Study

The federal work-study program allows students to earn money that can be used to pay day-to-day expenses. Students who demonstrate financial need may be eligible for jobs on or off campus.

Not all colleges participate in the program.

Does a Student Ever Have to Repay a Grant?

Federal Student Aid says the only time you might have to repay all or part of a federal grant is when:

•   You withdrew early from the program for which the grant was given to you.

•   Your enrollment status changed. If, for example, you switch from full-time to part-time enrollment, your grant amount will be reduced.

•   You received outside scholarships or grants that reduced your need for federal student aid.

•   You received a TEACH Grant, but you did not meet the service obligation. In that case, the grant could be converted to Direct Unsubsidized Loans.

If you don’t meet the expectations of a scholarship, such as GPA or credit-hour minimums, you could lose the gift and have to pay out of pocket.

When it comes to sports, the head coach decides whether an athletic scholarship will be renewed. Injury or poor academics can sack an athletic scholarship.

NCAA Division I and II colleges alone award more than $3.7 billion in athletic scholarships each year. But only a tiny fraction of high school students are offered athletic scholarships, and an even tinier number get a full ride.

Recommended: FAFSA Tips and Mistakes to Avoid

So Who Wants Free Money for College?

Changes to the federal application for student aid are afoot. What hasn’t changed is the benefit of filling out the FAFSA on or soon after Oct. 1 for the next school year. Funding is limited and often doled out on a first-come, first-served basis.

And, to reiterate, other student aid programs piggyback off the FAFSA.

The FAFSA considers student income, parent income and assets, and family size to calculate the expected family contribution (EFC).

The EFC is used to determine whether a student qualifies for federal grants like the Pell Grant, for low-income families; federal student loans; or work-study. The maximum Pell Grant award for the 2023-2024 year is $7,395.

Some FAFSA changes will be launched this year. Starting with the 2023-24 award year, for example, students incarcerated in federal and state correctional facilities will be eligible for Pell Grants.

The “Student Aid Index” will replace the “expected family contribution” starting with the 2024-25 award year, to clarify the misunderstood EFC.

The Takeaway

Free money for college is a real thing. Grants and scholarships are worth seeking out because they reduce the need to take out student loans. But if you still need to borrow, there’s no shame in that game. Most students do.

If you’re a student or parent and don’t anticipate being able to cover every cost of college in any given year, consider a SoFi Private Student Loan.

SoFi offers undergraduate, graduate, and parent student loans — with a variety of repayment options and no fees whatsoever.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Opting to buy a used vehicle rather than the newest model on the lot can be a great way to save some money.

Used cars often cost significantly less than new cars. In addition, older cars are generally cheaper to insure (since they are worth less than new cars).

The process of shopping for, and financing, a used car, however, can feel intimidating. To demystify the process, we’ve got nine simple strategies that can help you find a reliable used car that fits your lifestyle and budget.

1. Setting a Budget for a Used Car

Before you start researching used cars, you may want to first think about how much you can afford to spend on a car and how you will pay for it.

If you will be paying cash, you may want to consider how much of your savings you can realistically put towards a car. If you don’t have quite enough, or the purchase would completely gouge your savings, you may want to spend a few more months saving up for a car.

If you will be getting a loan for the car, you’ll want to think about what would be a comfortable monthly payment.

One rule of thumb is to put at least 10% down and finance the car for three years. You may also want to try to keep your total monthly auto expenses no higher than 20% of your monthly take home pay.

You can use an online auto loan calculator to get a rough idea of how much you might need to spend each month on financing.

2. Getting Financing Before You Start Shopping

If you plan to get a loan to buy the car, it can be a good idea to get a pre-approved car loan from a bank, credit union, or another lender before you start shopping.

While you may opt to go with financing offered by a car dealership, having a pre-approved car loan offer in your back pocket can give you a great negotiating tool.

Dealers tend to mark up the interest rate to make a profit, but if you already have a deal in place, they will know they need to beat it in order to get your business.

Even if you’re going to buy a car through a private sale, having a pre-approved loan in place will allow you to jump on a great deal as soon as you find it.

Recommended: Buying a Car with a Personal Loan

3. Choosing Your Ideal Car

Now that you have a car buying budget in mind, you may want to look into what types of cars you can get for that money.

Do you need a truck, SUV, or sedan? You can save money outright by buying a smaller car and also down the line if it’s good on gas mileage.

If safety is a top priority, you may want to check out the Insurance Institute for Highway Safety Ratings to see which cars perform the best in crash tests.

You can also narrow the field by making a list of must-have features, and then searching for cars that have them using a search tool like Edmunds Car Finder .

Once, you’ve narrowed your list to three target models that you can research in more detail. You may also want to read reviews about the cars you’re interested in on sites like Kelley Blue Book and J.D. Power. .

Recommended: How to Save Up for a Car

4. Shopping for a Used Car

Once you know how much you can spend and what kind of car is going to be a good fit for you, you can actually begin shopping for a used car. There’s no need to start driving to car lots all over town–you can browse through tons of vehicles online.

Good places to look include: used car superstores like Carmax or Carvana, used car dealerships, as well as new car dealerships (which often also sell used cars, though not always at the lowest prices).

You may also want to look at listings from local private party sellers, which you can find on Craigslist, eBay Motors, Facebook Marketplace, and Nextdoor.com.

5. Researching the Car

Once you’ve pinpointed a vehicle you might want to buy, it can be a good idea to find out as much as you can about the vehicle’s history.

You can get a vehicle history report from a company like Carfax or Autocheck , which can tell you if the car has any red flags, such reported accidents or flood damage, as well as information on the car’s maintenance and service history.

To get a report, you’ll need to get the car’s vehicle identification number (VIN) or license plate number from the seller. There is typically a fee for running a report (around $25) but many dealers will provide the report for free.

You may also want to run the VIN number through the United States Department of Transportation Recalls site to check for any safety recalls. If there have been any recalls, it’s a good idea to make sure that the issue has been fixed.

6. Going for a Test Drive

It can often be helpful to try before you buy, especially when it comes to buying a car. A car dealership will typically let you take a few cars for a drive so you can get a sense of how they feel.

You may want to call ahead before visiting a dealership to make sure they have the car on the lot that you’re interested in so you can see it that day.

A private seller will also likely allow you to take the car for a brief spin to see how you like it.

Some things to consider when going for a test drive:

•   How well the car accelerates and corners.
•   If the breaks are responsive.
•   If there are any unusual noises or vibrations that could indicate a mechanical issue.
•   How well the car fits you–is there enough leg room? Can you comfortably reach all of the controls?

7. Inspecting a Used Car

Even if you’re far from a car expert, it can be a good idea to do a visual inspection of the car. Is the car’s body and paint in good shape? Are the lights all working? Are there signs of cracks or water inside the lights?

You may also want to turn on the air conditioning and heating, radio, and navigation system and make sure they are all working properly.

When examining the interior, you’ll want to make sure it is in decent condition and there aren’t any unpleasant smells–a moldy smell can indicate flood damage and cigarette smells can be hard to get rid of.

8. Getting a Mechanic to Inspect the Car

Unless you are buying a certified used car with factory warranty coverage from a dealership, you may want to consider getting a car you are close to buying inspected by an independent auto mechanic.

While this does involve an investment of some cash (typically $100 to $200), it can potentially save you from dealing with a costly repair soon after you buy the car.

The inspection report may also give you some bargaining power when haggling over the price of the car.

9. Negotiating the Price of a Used Car

It’s rare that you’re going to come across a used car price where the seller is unwilling to budge, even a little.

Before you negotiate a car deal, however, you’ll want to have all your research ready, including how much the average make and model car for a particular year goes for, and any concerns or issues that came up during your personal and professional inspection.

If you’re negotiating with a dealer, it can be a good idea to keep the focus on total cost of the car, rather than bring a trade-in or financing into the mix.

Dealers may want to merge all of the numbers into one deal, which can be confusing–and also make a not-so-good deal look better.

When discussing price at a dealership, you may also want to make sure you are talking about the out-the-door price, including all fees (so there aren’t any surprises).

The Takeaway

Buying a used car can be a smart buying decision. To make sure you get a car that suits your needs and budget, however, you’ll want to research your options, come up with a target price range, and line up financing before you shop.

When shopping for used cars, it’s a good idea to learn a car’s history, test drive the car, and also have it professionally inspected.

Knowing the value of the car in the open marketplace can help you negotiate a good price. If you don’t like the deal, there’s nothing wrong with walking away.

Saving up for a new (to you) set of wheels? You may want to consider opening a bank account online with SoFi.

SoFi Checking and Savings allows you to separate your savings from your spending, while still earning competitive interest on all your money.

And with SoFi Checking and Savings’s “vaults” feature, you can create different vaults for different goals, including a “car savings” vault.

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¹SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc’s service. Vehicle Identification Number is confirmed by LexisNexis and car values are provided by J.D. Power. Auto Tracker is provided on an “as-is, as-available” basis with all faults and defects, with no warranty, express or implied. The values shown on this page are a rough estimate based on your car’s year, make, and model, but don’t take into account things such as your mileage, accident history, or car condition.

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You can buy a car with a credit card in certain circumstances, or at least cover a portion of the purchase, such as the down payment. However, it’s likely not a good idea. That’s because you’ll face high credit card interest charges and potentially fees, and you’ll drive up your credit utilization (that is, if your credit limit is even high enough to cover a car purchase).

Before swiping your card for a new set of wheels, pause to ask yourself whether this is really the best way for you to purchase your vehicle. There are alternative options to help you purchase a car that may not cost you to the same extent.

Recommended: What is the Average Credit Card Limit?

What to Know About Buying a Car With a Credit Card

In short, the benefits of using a credit card to buy a car will likely outweigh the perks. That being said, it is possible to do — assuming you can find a dealership that will accept credit card payments for car purchases. Not all dealerships do, and many that do will tack on a fee for credit card payments.

Perhaps the biggest draw to buying a car with a credit card is the potential to earn rewards. You might also be able to take advantage of a promotional offer that features 0% interest for a limited period of time. But be sure to consider those perks against the risks. If you don’t pay off your full balance before interest kicks in, you’ll be paying at a high rate — much steeper than car loans, for instance. You also could do damage to your credit if you’re late on payments or if your automobile purchase eats up too much of your credit limit.

Buying a Car With a Credit Card

If, after considering the drawbacks, you decide you want to use a credit card to buy a card, here’s a step-by-step look at how to do so.

1. See if the Dealership Takes Credit Card Purchases

You’ve decided how much you want to spend on a new car, and you’ve negotiated a fair price with a dealer. But before slapping down your plastic to purchase a new or used car, you’ll first need to check with your car dealership to verify that they accept credit card purchases. Additionally, you’ll need to find out which cards they accept and how much of the total purchase price they will allow you to charge.

If you go to a dealer that won’t accept credit card purchases, or that limits the amount, you’ll have to decide whether to pay another way or to go to another place that sells the car you want and allows credit card purchases.

2. Check Your Credit Limit To Determine if It’s High Enough

If you’ve selected a car at a dealership that takes credit card payments, your next step is to check your credit limit to determine whether it’s high enough to use one card. You may need to spread out the purchase across multiple cards.

If your combined limits aren’t enough, you could pay the difference with a cashier’s check and still reap some of the rewards available through credit card use. Or, you could ask your credit card companies to increase your credit limits.

3. Notify Your Credit Company

It makes sense to notify your credit card companies that you intend to use your credit cards to make a large purchase. If you don’t regularly make large purchases on your credit cards, the transaction might get flagged as potentially fraudulent and could get declined.

4. Get Strategic With Credit Card Rewards and Promos

At a car dealership that does let you pay for a car with a credit card — or at least a portion of it — you might consider using a card that offers credit card rewards. If you have cash to pay the charge before it starts accruing interest, you’re basically getting a no-interest, short-term loan while taking advantage of credit card perks.

5. Determine How You’ll Pay Off Your Balance in Time

Before handing over your credit card to buy a car, make sure you know how you’ll pay off your balance. Ideally, you’ll pay it off in full by the statement due date, so as to avoid accruing interest on what’s likely already a hefty charge. Or, if your credit card has a 0% introductory APR offer that you’re taking advantage of, determine how you’ll pay off the full balance before the standard interest rate kicks in and interest charges start accruing.

If you’re not sure you can pay off your car before interest kicks in, you might reconsider whether you realistically can use a credit card to buy a car. Instead, you might consider ways to save money on your car purchase, such as buying a high-mileage car or weighing the cost of leasing vs. buying a car.

Recommended: What is a Charge Card?

Why Some Car Dealers Don’t Accept Credit Cards

On the surface, it might seem odd that auto dealers wouldn’t accept credit cards. Afterall, they want to make a sale, right? Of course they do, but, like other merchants, auto dealers must pay credit card processing fees for each credit card transaction they make. These fees tend to be around 2%, and they can add up pretty quickly when you consider that cars can cost in the tens of thousands of dollars. By rejecting credit cards, dealers can save themselves the expense and hassle of paying these fees.

If a dealer that normally doesn’t allow credit card purchases makes an exception, expect them to tack on convenience fees of 2% to 4% to help them cover the cost of the transaction. Pay close attention to these fees because they may offset any benefit you might gain from using a rewards card.

How Much Will Buying a Car With a Credit Card Cost You?

The cost to buy a car with a credit card can exceed the vehicle’s sticker price. For one, it’s likely that you’ll see a convenience fee added to your bill. Some dealerships may have this already baked into their prices, but for others that don’t commonly accept credit cards, they’ll add it on themselves to cover their processing costs. Typically, convenience fees run anywhere from 2% to 4% of the purchase amount, which may be enough to offset any credit card rewards you’d earn.

Second, your costs could increase thanks to interest charges. If you buy a car with a credit card and then don’t immediately pay off the full statement balance, interest can start to accrue. Average credit card interest annual percentage rates (APRs) are around 16.44%. That can start adding up fast on a car purchase that’s likely in the tens of thousands of dollars.

Pros of Car Buying With a Credit Card

Under certain circumstances, using a credit card to buy a vehicle may be a strategy you’d consider, especially if you have enough money to pay off the balance in full when your statement comes. Here’s a look at the upsides to buying a car with a credit card.

Fast and Easy Way to Buy a Car

With a credit card, you’ll have a fast and easy way to purchase your car of choice. You can skip the hassle of filling out loan paperwork and waiting to find out if you’re approved.

Potential to Earn Rewards

By purchasing a car with a credit card, you may earn rewards — something you wouldn’t get if you simply used a cashier’s check to buy the car. But before you get too swept up in your purchase’s rewards potential, see if the amount you’ll earn in rewards will offset how much you may end up paying in fees or interest.

Take Advantage of a Zero-Interest Promo

You may have slightly longer to pay off your purchase if you use a no-interest credit card. Often, these 0% interest offers last for a certain period of time, usually anywhere from six to 21 months. In order to avoid interest payments, you must finish paying off your vehicle in that time period. Still, it offers a little leeway.

Keep in mind that this strategy may be riskier than paying off your full balance immediately though. If, for some reason, you can’t pay off the balance within the introductory no-interest period due to unforeseen circumstances, the card will revert to its regular rate, which may be quite high. Should that happen, the situation can go downhill from there. Some credit card companies will then charge the full interest rate on the entire purchase, not just on the remaining balance.

Recommended: When Are Credit Card Payments Due?

Cons of Car Buying With a Credit Card

In contrast to the few upsides, there are a number of major drawbacks to turning to your credit card to make a car purchase.

High Credit Card Interest Rates

The biggest reason not to buy a car with your credit card is that credit card interest rates are typically much higher than other available options. The average credit card APR is 16.44%. In contrast, the average interest rate for an auto loan to purchase a new car is close to 4%, while for used cars it’s over 8%.

Credit Card Fees

You also might get stuck with some costly fees by buying a car with a credit card. For starters, there’s the previously mentioned fee that the dealership will likely charge you for the convenience of using your credit card. Convenience fees typically run 2% to 4% of the purchase amount.

That’s not the only fee you might run into either. For example, let’s say that your strategy is to purchase a car on your current credit cards, then transfer the balance to a zero-interest credit card. Besides the challenges listed above, you may add balance transfer fees to the mix. These fees can be as high as 5%, which, on a $20,000 car, is $1,000.

Potential to Harm Your Credit Score

Another major downside of purchasing a car with a credit card is that it can majorly increase your credit utilization, which accounts for 30% of your FICO score. With the price of a car, it can be easy to push your credit utilization ratio way past the recommended 30%, which could translate to negative effects to your credit.

Further, if you miss payments or are late making them, that could lead to further damage to your credit score.

Recommended: Does Applying For a Credit Card Hurt Your Credit Score

No Addition to Your Credit Mix

Here’s something else to consider: Having different kinds of debt can actually help with your credit score. So using an installment loan, such as a traditional auto loan, to buy your car instead of a credit card may be helpful to your overall long-term financial situation. And if you have a good enough credit score to get approved for an auto loan with lower interest rates than the average credit card interest rate, you’ll come out ahead.

Other Options for Buying a Car

While technically you can pay for a car with a credit card, it might not be your best option. Here are a couple of alternatives to consider.

Auto Loan

If you decide to finance some or all or all of your auto purchase, you can apply for a car loan through the dealership or other lenders. Auto loans are typically secured loans that use the vehicle as collateral. So, if you fail to make payments, your lender has the option to repossess the vehicle to cover some of your debt.

Dealers are often able to get same-day financing approved, but there may be some pressure to buy while the salesperson takes advantage of your excitement. Banks and private lenders may take longer to approve an application, but sometimes offer better deals on terms or interest rates. Taking emotion out of the equation when buying a car will allow you to compare rates and terms to get the best deal for your financial situation.

Personal Loan

You may also want to consider buying a car with a personal loan, which is an unsecured loan that’s not backed by collateral. Personal loans can be used to cover many expenses, including the cost of buying a car. Because they are unsecured, interest rates on personal loans may be higher than other auto financing options, depending on the applicant’s creditworthiness.

The Takeaway

While you can buy a car with a credit card, you may not necessarily want to now that you’re aware of all of the potential pitfalls. But if you find a dealership that accepts credit card payments and you decide it’s the best path for you, make sure to take the necessary steps of checking in on your credit limit, alerting your credit card company, and making a plan for prompt repayment.

It might be better to select another option to cover your car purchase, and reserve your credit card for other spending. With the SoFi credit card, for example, you can earn generous cash-back rewards that you can then use to invest, save, or pay down eligible SoFi debt.

FAQ

Do car dealers accept credit cards?

It depends. Many dealers won’t accept credit cards due to the processing fees they’d incur, but some do. In those cases, dealers may pass the cost along to the consumer in the form of a convenience fee.

Can you use a credit card for a car down payment?

It’s more common for dealers to allow you to use a credit card to use a credit card to pay for a portion of your purchase, such as your down payment, as opposed to the entire car purchase. Still, some dealers won’t accept credit cards at all.

Is it better to pay for a car with a credit card or loan?

It’s likely better to use a loan to pay for a credit card. That’s because loans tend to have significantly lower interest rates than credit cards.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.



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