Cryptocurrency, commonly referred to as "crypto," is one of the most talked-about topics today for many reasons, including its volatile nature and the lack of regulation governing this digital currency. However, many people are still firm believers, and some crypto owners use the currency to purchase luxury items, such as cars. But is buying a vehicle with crypto a good idea?
Can I Buy a Car With Cryptocurrency?
It is possible to buy a car with digital currency, including bitcoin, ethereum and litecoin, among other cryptocurrencies. However, most car dealerships don't accept it, so your purchase options will be limited. The dealerships that accept crypto tend to be high-end, so it's not a suitable payment method for people looking for affordable cars and cheap auto insurance. If you're seeking a luxury car, however, you'll have better luck finding a dealer that accepts payment in cryptocurrency.
Is Buying a Car With Cryptocurrency a Good Idea?
There are several reasons someone might want to pay for a vehicle using cryptocurrency. But for most people, buying a car with crypto isn't a good idea as the cons outweigh the pros.
Pros
Spend your existing crypto: If you already have a lot of crypto banked, why not spend it on a car? This is, after all, one of the largest financial purchases most people make, second to their homes. Good for luxury vehicles: If you want a luxury vehicle, you'll have a greater chance of finding a car that you can buy with crypto. Cons
Volatile value: Compared to car prices, crypto values are very volatile. For example, if you pay for a car in crypto and the currency's value increases, the dealership gains money while you gain a depreciating vehicle. You'll lose even more money than you would with regular cash unless the crypto value decreases after buying your new car. Limited options: Very few dealerships accept crypto as payment, so your car options will be severely limited if you choose to pay with crypto. Makes private purchases even riskier: Private car purchases already come with much more risk compared to buying from a dealership, but when you pay with crypto, those risks get even higher. For example, the seller could claim that they never received your crypto payment; it all depends on that person's level of honesty. Capital gains tax: You may owe more money on your tax return if the amount you initially paid for the crypto increases. TIP: When you purchase crypto, set aside money for the taxes you'll owe on your next return.
How to Buy a Car With Cryptocurrency
If you decide buying a car with crypto is for you despite the disadvantages, follow these steps to secure your new vehicle:
Find a seller who accepts crypto: You can use online marketplaces like Car for Coin, BitCars, Crypto Exchange or Import Marques. Some local dealerships or a private party may be an option too. Decide on your crypto payment method: One option is to use a crypto debit card, which works the same as a regular debit card, but instead of pulling funds from your bank account, it pulls from your crypto wallet. Some major credit card companies have crypto debit cards, such as Mastercard's BitPay and CryptoWallet and Visa's Coinbase and Crypto.com cards. Technically, although this isn't paying with crypto, another option that opens you up to all dealerships is to cash out your crypto, transfer the funds to your bank account and then use that money to buy the car. But note that you'll have to pay fees when converting your crypto to cash. Coinbase, for example, charges a 1 percent fee in addition to its standard network fees.
Make a down payment: Once you've found a crypto-accepting seller and decided how exactly you'll facilitate the payment, the process will work the same way it does with any car purchase. Most buyers need car loans, so you'll pay a down payment and then pay for the rest of your car over time. NOTE: No auto manufacturer accepts crypto at all of its dealerships. To find out if a particular dealership accepts crypto, call directly and ask or check its website.
Cars You Can Buy With Cryptocurrency
Here are some manufacturers whose vehicles you can potentially purchase with crypto:
Aston Martin Audi Bentley BMW Bugatti Ferrari Honda Hummer Jaguar Lamborghini Land Rover Lexus Maserati McLaren Mercedes Benz Mini Nissan Polestar Porsche Range Rover Rolls Royce Tesla Toyota Volkswagen Volvo Keep in mind that auto dealerships that accept crypto tend to be higher end, meaning they may require classic car insurance. That will add to your overall expense.
