Can You Pay Your Car Payment with a Credit Card? (And is It Worth It?)

CREDIT CARDS - CREDIT CARD BASICS
Making a car payment with a credit card might not be worth it because of additional fees.
Updated Nov. 27, 2023
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You can pay your car payment with a credit card if your lender allows you to or if you use certain third-party payment platforms. But many lenders don’t provide this option. And using a credit card to make a car payment might not make sense because of fees and potentially higher interest charges.

Let’s explore some of the different ways you might be able to pay your car payment with a credit card and see whether it could make sense for you.

In this article

Can you pay your car payment with a credit card?

Using credit cards for as many expenses as possible can be an excellent way to earn rewards on purchases you’re already planning to make. As long as you pay your balance off before the due date each billing cycle, it’s an easy way to collect points, miles, or cash back that you can redeem for travel, statement credits, and more.

Compare this with using a debit card attached to your bank account, where you might not be earning any rewards or additional benefits.

Considering that auto loan payments are often one of your largest monthly expenses, it makes sense to wonder if you can take advantage of using a credit card to make your payments. That could mean earning loads of rewards each month for something you have to pay anyway.

It may not end up being that cut and dry, but here are a few different ways you might use a credit card to pay a car payment.

Paying directly to your lender

Not all lenders accept credit cards to make car payments. Lenders don’t want to pay the processing fees for credit card transactions, so they either won’t accept credit card payments or they’ll pass the fees onto you.

That means if your lender does accept credit cards as a payment method, you might be on the hook for some additional fees. These fees could completely negate any value you might receive from using a credit card to earn rewards.

Check to see whether your lender accepts credit cards to make your car payments. Chances are they won’t, but it doesn’t hurt to check.

If they do accept credit cards, check to see whether there are any additional fees involved. If there aren’t any, you may have found yourself in quite the fortunate financial situation, where you can earn rewards on your car loan payments without an additional cost.

If there are fees, you have to calculate the cost of the fees compared with the potential value of the rewards you might earn. In most cases, the value of the rewards wouldn’t be enough to offset the fees unless you’re spending toward a credit card sign-up bonus.

Tip
Note that you might be able to use a third-party payment platform such as Plastiq to make car payments with a credit card. Plastiq typically charges around 3% to make credit card payments, so it might not be worth using in many situations. Also, Plastiq doesn’t support car payments with consumer (non-business) Visa credit cards.

Using a balance transfer

You might be able to pay off a car loan using a balance transfer credit card, depending on your credit card company. A balance transfer is when you move existing credit card debt from one credit product to another. This could involve moving debt from a loan or a higher interest rate credit card onto another credit card.

You might want to do a balance transfer if you have a credit card with a lower interest rate than the overall interest rate of the debt you’re transferring. This could help you save money on interest charges as you work to pay off your debt.

It’s often best to use a credit card with a 0% introductory APR balance transfer offer because you can avoid interest charges on the balance for a certain amount of time.

If you’re thinking about going this route, check with your credit card issuer to see if it will allow you to pay off your car loan with a balance transfer. If it will, you could save money on your car payments by lowering the interest rate of your debt. Check out our recommendations for the best balance transfer cards.

Keep in mind that you generally have to pay a balance transfer fee to do a balance transfer. And once a 0% intro APR offer period ends, your credit card interest rate will typically skyrocket. Carrying a high balance could also increase your credit utilization ratio and negatively impact your credit score.

Cash advance

You could use your credit card to take out a cash advance to make a car payment. A cash advance is a way to borrow money against your available credit limit. They typically come with hefty fees and a high APR that begins immediately after you do a cash advance. There’s no grace period before you start accruing interest as there is with a regular credit card purchase.

This means interest would immediately start accruing on the money you’re borrowing, often at a very high rate.

Cash advances generally aren’t a good idea. You could likely use one to make a car payment, but the fees and high interest rates clearly favor the lender over you. It typically makes sense to consider doing a cash advance only in an emergency.

Money transfer

You might be able to use a service such as Western Union to pay for a money transfer or money order to cover your car’s monthly payment. But you would have to check to see whether there are any fees involved. It’s common for money transfer services to charge fees for all transactions.

Using a money transfer service to make a car payment with a credit card probably isn’t a good idea because the fees associated with these types of services can be expensive.

For example, we checked the Western Union service for paying bills online and there was a fee of more than $30 to make a $500 payment to “CHASE AUTO FINANCE.” That’s about a 6% transfer fee.

Should you pay your car payment with a credit card?

No, you typically shouldn’t pay your car payment with a credit card. This is because the available strategies for doing so often involve fees and/or high interest rates. But it could depend on the situation, so it’s important to review your circumstances to see whether it might make sense for you.

Here are a few situations where it might make sense to pay your car payment with a credit card:

  • It’s an emergency situation and you have no other options
  • It’s an emergency situation and using a credit card is your best payment option compared with something like a payday loan that might have higher fees
  • Your lender allows credit card payments and there aren’t any fees or the fees are low enough to warrant using a card
  • You’re spending toward a valuable credit card sign-up bonus that can easily offset transaction fees

FAQs

Can I pay my Capital One car payment with a credit card?

Many lenders don’t allow you to make car payments with a credit card, but you would have to check to make sure. If a lender does allow credit card payments, there might be additional processing fees attached. In some cases, this type of credit card payment could code as a cash advance, which typically has hefty fees and interest rates.

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

Loans typically have lower interest rates than credit cards, which could help you save money on monthly interest payments. But it depends on the situation. A credit card could make sense if you have a low-interest credit card, your lender allows credit card payments, and there aren’t additional fees to worry about.

Is it possible to use a credit card to pay for car insurance?

Many car insurance providers allow you to use credit cards to pay for insurance without any additional fees. This is an easy way to earn points, miles, or cash back with a rewards credit card. Or it could make sense to use a 0% intro APR credit card if you have an upcoming large car insurance payment.

Bottom line

Although you can technically pay your car payment with a credit card depending on your lender, it might not be the best move unless it’s an emergency. This is because you would likely have to pay additional fees or the purchase could code as a cash advance, which would typically negate any rewards you might earn on the purchase.

If you’re tempted to use a credit card because you’re having trouble affording your car payment, you may want to consider refinancing your auto loan.

In some cases, it could make sense to transfer your car loan balance to a balance transfer credit card. If your lender allows this and the fees aren’t too high, you might be able to save money with a 0% intro APR offer. Check out our recommendations for low-interest credit cards.

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Author Details

Ben Walker, CEPF Ben Walker, CEPF, is a Senior Credit Cards Writer at FinanceBuzz. For over a decade, he's leveraged credit card points and miles to travel the world. His expertise extends to other areas of personal finance — including loans, insurance, investing, and real estate — and you can find his insights on The Washington Post, Debt.com, Yahoo! Finance, and Fox Business.

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