Can You Make a Car Payment With a Credit Card?

You can make a car payment with a credit card at the discretion of your lender or if you use a third-party payment platform. However, even if you can pay your monthly loan with a credit card, it may not be worth the extra fees and hassle. Alternative payment methods exist that can save you money and still get your bills paid. 

Fulfilling your monthly car payment can be done with a credit card. Below are several ways to use one or more credit cards to make monthly car loan payments. 

1. Rewards credit cards

Many rewards credit cards give back each time you spend money, whether cash back, travel rewards, or discounts. However, using them to make your car payment can come with monthly fees. The trick is to find a rewards credit card with benefits that far outweigh the transaction fees (2% to 3%) lenders may charge to run a credit card.

2. Balance transfer 

Credit card companies know that finding a card with a low interest rate can help you pay off your debt faster. Many offer credit cards designed to transfer your balance from another card and pay it off before the low (or no) introductory annual percentage rate (APR) expires. The longer the intro APR terms on a balance transfer credit card, the better. 

If you’re close enough to paying off your car loan that you (a) have the credit limit available and (b) have the funds at the ready, you can transfer the remainder of your car loan to a balance transfer card and save on interest. However, you should weigh the pros and cons of any existing prepayment penalties, balance transfer fees (ranging from three to five percent), and credit card perks. 

3. Cash advance

Paying your car payment with a cash advance is a red flag financially, but it can be necessary depending on your financial situation. Cash advances come with sky-high APRs, stiff cash advance fees, and no grace period to recoup your losses. You’re also borrowing money against your available credit limit, increasing your debt and your credit utilization, which can negatively affect your credit score. 

4. Money order or transfer

Money orders rank similar to cash advances and could even be considered the same by some credit card issuers. Transferring money with a money order really only exchanges transaction fees placed on credit card use with those (up to 6% or more) of initiating and sending a money order. 

5. 0% intro APR credit cards 

If you can find and qualify for a credit card with a 0% introductory interest rate, you may be able to cover the cost of a monthly car payment, including steep fees. Most 0% APR credit cards come with 12 to 21-month terms, giving you plenty of time to chip away at your balance. However, you should keep up with your payments, as a single missed payment could negate your introductory rate. 

6. Third-party payment platforms

Some lenders allow you to make your monthly payment via a third-party payment platform or mobile payment system. These third-party payment processors, such as PayPal, Zelle, and Venmo, will charge a transaction fee. The exact fee amount may be more or less than what the lender would charge you for paying with a credit card. 

By now, you probably know what credit score you need to buy a car and how much your credit score increases after paying off a car. However, paying off a car loan with a credit card is a different story. Below are the advantages and disadvantages of auto loan credit card payments. 

Benefits 

• Earn credit card rewards
• Save on interest charges
• Keep extra funds in your checking or savings account
• Additional time to strategize

Risks 

• High transaction fees that may rival rewards
• Can lead to a spiral of credit card debt if you’re not careful
• Must pay off balance to avoid higher interest rate
• Increases credit utilization ratio 
• Minimal debt reduction  

The following credit cards offer perks that reward you if you need to make your car payment with plastic: 

• Chase Freedom Unlimited: This Chase card gives you 15 months of 0% intro APR on purchases and balance transfers. Plus, it comes with no annual fee. 
• Wells Fargo Active Cash Card: Similar to the Chase Freedom Unlimited credit card, this Wells Fargo cash card offers 0% APR for the first 15 months of card ownership, with no annual fee. A variable APR ranging from 20.24% to 25.24% applies after the 15 months. 
• American Express Blue Cash Everyday Card: AmEx joins the pack with its own 15-month terms with no interest on purchases and balance transfers. This card has no annual fee and comes with a comparable variable rate to other cards on our list.
• Discover it Cash Back: Discover’s credit card has no annual fee and 0% intro APR for purchases and balance transfers made in the first 15 months. Discover’s variable APR starts at 17.24% and climbs to 28.24%.

Remember, applying for these credit cards can deduct a few points from your credit score. Keep this in mind as you consider which credit cards work best for your situation.  

Besides credit cards, you can make your car payments via the following payment methods: 

• Debit cards
• Personal check
• Money order
• Checking or savings account transfer

Some lenders allow you to submit payment through a third-party payment processor. If this is the case, you may be able to pay for your car payment with a credit card. Check terms and conditions to determine what your lender allows.   

Making your car payment with a credit card isn’t typically the best choice, but it’s helpful in case of emergency. The biggest drawback to making your monthly auto loan payment with a credit card lies in the hefty transaction fees that come with swiping your plastic. Most lenders pass those fees onto you for the inconvenience of running a credit card. 

However, paying with your credit card can make sense in some situations. You may need to use a credit card because it’s all you have if the fees leveraged against your using a credit card total less than fees you’d pay with another payment method (such as a payday loan), if the lender approves and doesn’t charge any fees, or if you want to spend a hefty amount to work toward a bonus. It’s up to you to weigh the pros and cons accordingly.