In a crunch, you may look to your credit card to make your monthly car payment. Or, you may think of charging your car payment to earn some extra credit card rewards. There are a few options for paying your car note with your credit card, but the process isn't as simple as regular everyday purchases. Before you try to make your car payment with your credit card, there are some caveats to consider.
- Most auto lenders don't directly accept credit cards for car payments.
- Workarounds like using a cash advance or balance transfer to make a car payment may lead to additional fees.
- Your available cash advance limit plays a role in using your credit card for a loan payment.
Can You Pay a Car Payment With a Credit Card?
Most lenders don't accept credit cards for car payments. The rare lenders that do take credit cards may charge a fee for the transaction, increasing the overall cost of your loan payment. If you were hoping to earn credit card rewards on your car payment, the additional fee may offset the benefits of the rewards.
There are other ways to effectively make an auto loan payment with a credit card, but they come with costs of their own. Understanding the options can help you decide whether putting your car payment on your credit card is worth it.
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.
Paying With Plastiq
Plastiq is a payment platform that lets you pay almost any merchant with a credit card—for a fee. Once you sign up, you can add your credit card to your account, then set up a payment to your auto lender, even if your lender isn't signed up to receive payments through Plastiq. Choose the date you'd like to pay and how you'd like to pay: check, bill pay transfer, ACH transfer, or wire transfer.
Fees vary depending on your payment method. For example, payments made via check and regular ACH transfers are charged 2.85%. By comparison, the fee for an expedited ACH transfer (two business days vs. three) increases to 3.35% and $15.
In addition to the fees charged by Plastiq, you may also be charged fees related to the cash advance, depending on how your credit card issuer treats the transaction.
American Express can't be used to make car payments through Plastiq.
Using a Payment Service for Bill Pay
If your auto lender accepts payments through a payment platform like PayPal, you can set your credit card as the funding source to complete the transaction. With PayPal, using a credit card to make a commercial transaction costs nothing extra to you.
Another option is to make your payment using Cash App, which is a bit more versatile than PayPal, but more costly. The app allows you to pay bills using the routing and checking number associated with your Cash App account, which means your lender doesn't have to have a relationship with Cash App. However, you may be charged a 3% fee for payments using a linked credit card, so paying this way may only make sense if you’re in a financial bind for a short time.
Payment services may have rules against using the service to send yourself a cash advance, which may prevent you from using your credit card to fund your balance.
Some lenders accept payment through MoneyGram or a wire transfer. You'll pay a fee for the transfer—as high as $60 for an in-person credit card transaction through Western Union on a payment of $550, for example.
Using a Balance Transfer
With a high enough credit limit, transferring your auto loan to your credit card is an option. You'll pay a balance transfer fee—either a percentage of the transfer (generally 3%) or a flat fee—but if you can take advantage of a 0% promotional offer, you can avoid paying interest on the balance. Of course, that means you'll have to pay off the balance by the time the promotional APR expires to take full advantage of the offer.
While transferring your balance to a credit card could save you money on long-term interest costs, it may not necessarily solve a cash crunch, particularly if you have to increase your payment to pay off the balance before the promotional period ends.
Should You Make Car Payments With a Credit Card?
Making your car payment with your credit card may help bridge a gap in your income for a few months, but it's generally not a good long-term solution. Since most auto lenders don't directly accept credit card payments, you'll have to pay a fee with most of the alternatives. You might even find yourself paying a fee to the service provider and your credit card issuer.
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.
Frequently Asked Questions (FAQs)
What should you do if you can’t make a car payment?
You may have a grace period for a few days after your due date during which you can make your payment and avoid a late fee. Check your loan documents for your grace period. Or, if you need more time to pay, you may be able to defer the current month's payment and add it to the end of the loan. Contact your lender to find out the payment options available to you.
When do you make your first car payment?
Your first car payment's due date varies depending on the lender but may fall between 28 and 90 days after the purchase date. A welcome packet or billing statement will be mailed to you ahead of the due date letting you know when and how to make your first payment.
How much of a down payment should you make on your car?
Generally, your down payment should be 10% to 20% of the purchase price. This allows you to avoid owing more than your vehicle is worth as it depreciates. A larger down payment also lowers your monthly payment and your total borrowing cost.