Barrie: Credit Card Downpayments are Not Cash Downpayments

July 21, 2026

By Barrie Charapp Beaty
Charapp & Weiss, LLP
bbeaty@cwattorneys.com

For years, it was old adage that the finance sources either did not permit or limited the amount of downpayment that consumers could put on a credit card for motor vehicle purchased that were financed.  Times have changed.  With the average cost of new motor vehicles around $50,000, making monthly payments affordable has become a real numbers game.  Many consumers have been putting larger downpayments on credit cards, and what used to be an industry no-no, is now turning to the means to an end.  However, are dealers accurately taking the credit card deposits?

Let's look at what dealers should be doing to ensure that credit card deposits are legal and accurate.

    1. Ensure your master lending agreement permits credit card deposits. Everyone should make sure that the master lending agreement allows for a deposit.  Ensure there is no language banning credit card deposits.  If there is no outright ban, ensure the lending source does not have limitations on the amount of the deposit such as $2,500.
    2. Ensure that you are accurately reflecting the credit card downpayment on the RISC. The retail installment sales contract should not list the credit card downpayment as a “cash downpayment.”  Stating the credit card downpayment as a cash downpayment does not accurately the transaction and could be a violation of the lending agreement.  For example, stating “cash downpayment” would be a violation of the following representation and warranty in this lending agreement - “The Contract was completely filled in at the time the Buyer executed the Contract and he accurately reflects the terms and conditions of the purchase of the Collateral;” Many dealers are using the new retail installment sale contracts have open lines under “Cash” in paragraph 2 that state “Other” that should be utilized.  Dealers should be writing credit card downpayments on the “Other” lines of the RISC.
    3. If you do not have an “Other” line, the cash downpayment line should not be filled out if its credit card downpayment. You should write it in the contract that the downpayment is a credit card downpayment and not a cash downpayment.
    4. Dealers should have notes to the lender that the downpayment is not cash, but credit card. You should also be sending the credit card transaction receipts to the lending source as part of the deal package to the lender.