Can You Pay a Car Payment With a Credit Card?

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The Bottom Line

Using your credit card to make your car payment may benefit you if you can use a no-interest balance transfer to save on interest. Otherwise, there’s almost no upside to using a credit card for your car payment. If you can’t afford your car payment, contact your lender to learn about your options.

When does it make sense to pay off a loan with a credit card?

The core question to answer is whether you will pay less interest when you pay down a loan with a credit card, or whether you’ll end up paying more. And that really depends on whether you think you can clear your zero percent card’s balance before its promotional period ends and its Annual Percentage Rate (APR) shoots up sometimes into the double digits.

Another thing to consider is whether your credit card and loan APRs are fixed or variable.

Your credit card APR might be lower than your loan right now, but if it’s a variable APR, (rather than a fixed APR) there’s a chance that it could increase based on changes to your credit score, prime rates and more.

Something else to consider is your credit score. If your income is volatile and there’s a chance you might be late with a credit card payment in the time it takes to pay off the loan, then your credit score could drop. And if that happens, your APR could increase, causing you to pay more in interest over time.

How to calculate a credit cards monthly payments

Before you decide to transfer your car loan to a credit card, calculate how much your new payments will be.

To calculate your monthly payments at zero percent interest, divide the amount left on your loan by the terms of your intro APR offer. If you have to pay a balance transfer fee, add that to the loan amount.

If you owe $5,000 on your car, with a three percent balance transfer fee, add $150 to the $5,000. Then divide $5,150 by 18 months, for example, if those are the terms of your intro APR. You’d pay $287 per month, avoiding interest entirely.

If you intend to own your car for several years, extending your loan by nine months to free up working capital to pay down higher-interest debt, put in a high-interest savings account, or even pay for emergency expenses can be a wise choice.

Paying With a Convenience Check or Cash Advance

While you likely won’t be able to use your credit card to make a car payment as a regular transaction, you may be able to use a convenience check or cash advance to make the payment.

If you opt to use a convenience check, you can write it to yourself and deposit it into your bank account, then make your car payment as normal. Or you can make the check out to your lender and mail the payment.

To make your car payment with a cash advance, you'd need to perform a cash advance at an ATM. Then, you could deposit the cash into your bank account and make your payment normally. Or, you could purchase a money order and mail it to your lender.

Read your credit card’s terms for cash advances. Whether processed with a convenience check or via ATM, most incur a cash advance fee based on the amount of your advance. The transaction may also be charged a higher interest rate than other transactions. And you won’t get a grace period, so interest begins accruing immediately.

Your cash advance limit may be lower than your regular credit limit.

3. Your credit will likely take a hit

When you use your credit card to pay for anything, you are adding to your credit utilization rate. The general rule of thumb is to not use more than 30% of your credit limit, but putting a big down payment for something like a car can easily make your utilization rate jump.

If you don't pay that big car purchase off immediately, this higher utilization rate will ding your credit score and a lower credit score could mean that you end up being charged more for auto insurance.

Of course, any payment activity — whether it's on your credit card or your car loan — gets factored into your overall credit history. If you're ever late on these payments, or worse you miss them entirely, your credit score will drop.

Getting an auto loan vs. getting a credit card

If you have poor-to-average credit, it’s easier to get an auto loan than a credit card. Car dealers will often make deals with banks to extend credit to customers with credit scores of 640 and below. Even if you have declared bankruptcy, you can find a car loan—but the interest rates will be high.

Similarly, you can get a secured credit card if you have a low credit score. But the best zero percent APR credit card offers are typically extended to those with a credit score of 720 and above.

If your credit score was below 720 at the time you purchased your vehicle, but you’ve since qualified for a zero percent APR credit card, your payments will be less than your car loan for the duration of the zero percent offer. You’ll save on interest charges, too.

How can I use a credit card to make my car payment?

Whether you can make a car payment with a credit card depends on your lender. Some only accept certain payment methods, such as checks, debit cards, electronic checks or fund transfers from a bank account, or money orders. Others accept credit cards, but they may require you to make the payment through a third-party payment processing company that charges a transaction fee.

There are other ways you may be able to make a car payment with a credit card, but they could cost you.

Cash advance

A cash advance — borrowing money against your credit card’s limit — is another way you can use your credit card to make a car loan payment. You can get a cash advance several ways, including withdrawing cash at an ATM or a bank branch. Keep in mind that if you use an ATM, you might be charged an ATM fee. And with a cash advance, your credit card issuer will likely charge a cash advance fee and a higher interest rate than it would on purchases.

Check for auto loan refinance offers View Estimated Loan Terms

Money transfer

Some lenders accept payments through money transfer services such as Western Union or MoneyGram. You may be able to fund the transaction using a credit card, but keep in mind that your credit card issuer may treat it as a cash advance. That means you’d be subject to credit card interest and cash advance fees on top of any fees charged by the money transfer service.

These costs can add to your loan payment

The costs associated with using a money transfer service or getting a cash advance can add up. Let’s say your monthly car loan payment is $300. You decide to use a money transfer service to make your payment, and the service charges a transfer fee of $21.50. Your credit card issuer treats the transaction as a cash advance and charges a cash advance fee of $10 or 3% of the transaction, whichever is greater. That means you’d end up paying an estimated $331.50 — an additional 10.5% of your monthly car loan payment, plus interest — on your cash advance if you don’t pay the full amount before the next billing period.

How Might Paying Car Payments With Credit Cards Affect Your Credit Score?

As mentioned previously, making car payments with your credit score could ding your credit score by increasing your credit utilization ratio, or how much of your available credit you’re using. Car buyers in the U.S. spend an average of $563 on car payments each month, according to data from Experian. This could end up accounting for a big chunk of your available credit, depending on your limit. 

Pros of Paying a Car LoanWith a Credit Card

By transferring your auto loan’s balance to a 0% APR credit card, you could save hundreds in interest charges. Not only that, but you get to pay off your car faster, too. It’s important to note that this method transforms your auto loan from a secured loan into an unsecured loan as revolving credit. As a secured loan, your car served as collateral, meaning it could be repossessed if you failed to make payments. But with your car payments on a credit card, you no longer risk losing your car.

Having your auto loan transformed to revolving credit also offers its own perks. Revolving credit means you can carry over a balance from statement to statement. This alone doesn’t incur a penalty as long as you pay at least the minimum amount on your statement. This kind of flexibility in repayment can be a huge asset to you.

However, while carrying a balance and paying the minimum keeps you afloat, that’s how many people end up in serious credit card debt. Before you know it, you could owe even more than your original loan was worth because you failed to pay it off fast enough. If you use this method, you should be sure that you can afford to pay off the entire loan before the 0% period ends. That way you can avoid a huge interest hit.

Drive Green

When you decide to go green, you qualify to receive an auto loan rate as low as 2.25% APR1 loans that will spare the planet and your wallet.  “Green Cars” are vehicles with a combined EPA rating of 28 MPG or greater or electric vehicles.

Visit fueleconomy.gov under the U.S. Department of Energy for listings of qualified vehicles.

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1Annual Percentage Rate effective 05/01/2021; subject to change, subject to term and credit approval; requires eStatements and/or Credit Card eStatements and financing of a qualified new vehicle (current model year only) with a combined EPA rating of 28 MPG or greater or a qualified new (current model year only) electric vehicle. This rate is only available on loans secured directly from Suncoast Credit Union; loans secured through a dealer will not receive this low rate. Existing Suncoast loans not eligible for refinance at this rate. Only qualified refinances from other financial institutions are eligible to receive this rate discount.

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