Whether you can pay your car loan with a credit card depends on your lender
Most car lenders do not accept credit card payments directly. They want money from a bank account, check, or their own payment portal. However, you have options: you can use a third-party payment service that accepts credit cards, transfer money from a credit card to your bank account and then pay your lender, or use a cash advance to fund the payment yourself. Each route has different costs and timing, so the right choice depends on why you want to use a credit card in the first place.
Before you try any of these methods, call your lender's customer service line and ask whether they accept credit card payments through any service. Some lenders have partnered with payment processors and will take credit cards directly through their website or phone line. If they do, use that route — it is the simplest and often the cheapest.
Key Takeaways
- Most car lenders do not accept credit cards directly, but some use third-party processors that do.
- Payment services like Plastiq and Stripe charge a fee (usually 2 to 3 percent) to convert your credit card payment into a bank transfer to your lender.
- A credit card cash advance lets you withdraw money to pay your lender, but comes with a higher interest rate and an upfront fee.
- Paying your car loan with a credit card only makes financial sense if you are earning rewards that exceed the processing fee.
- Your lender's customer service line can tell you in one call whether they accept credit card payments through any method.
Using a third-party payment processor
A payment processor is a service that accepts your credit card, converts it to a bank transfer, and sends the money to your lender. The most common options are Plastiq, Stripe, and Square Cash. You visit their website or app, enter your car loan account details and credit card information, and the processor handles the transfer. The money usually reaches your lender within one to three business days.
These services charge a processing fee, typically 2 to 3 percent of the payment amount. On a $500 car payment, that is $10 to $15. On a $1,000 payment, it is $20 to $30. The fee is charged to your credit card at the time you make the payment, so your total credit card charge is the payment plus the fee. Before you use a processor, check whether your credit card offers rewards (cash back, points, or miles) that would cover or exceed the fee. If your card gives you 2 percent cash back and the processor charges 2.5 percent, you lose money.
Not all processors work with all lenders. When you log into the processor's website, you will enter your lender's name and account number. If the processor does not recognize your lender, it cannot send the payment directly. In that case, you would need to use a different method.
Transferring money from your credit card to your bank account
Some credit card issuers allow you to transfer money from your credit card to your checking or savings account. This is different from a cash advance — it is a balance transfer to your own bank account. You then pay your car lender from that bank account using their normal payment methods. This works if your credit card issuer offers the feature and if you have the time to wait for the transfer to clear.
The cost and timing depend on your card issuer. Some charge a fee (usually 3 to 5 percent) and some do not. Some transfers arrive within one business day; others take three to five. Call your credit card issuer's customer service line and ask whether they offer account transfers and what the fee and timing are. If they do, ask them to walk you through the process before you attempt it.
This method is slower than a payment processor because the money has to move from your credit card to your bank account first, then from your bank account to your lender. If your car payment is due soon, this route may not work.
Getting a credit card cash advance
A cash advance is a loan against your credit card. You withdraw cash (usually at an ATM or through your bank) and use that cash to pay your lender. The cash advance itself is not the same as a regular credit card purchase — it has its own interest rate and fees.
Cash advances typically charge an upfront fee of 3 to 5 percent of the amount you withdraw, plus a higher interest rate than regular purchases (often 20 to 30 percent annually, depending on your card and creditworthiness). On a $1,000 cash advance, you might pay $30 to $50 just to withdraw the money, then pay interest on the full $1,000 from the day you withdraw it. Interest on a cash advance usually starts accruing when ready — there is no grace period like there is for regular purchases.
This method is expensive and should only be used if you have no other option. It makes sense only if you are in a situation where you must pay your car loan when ready and cannot use any other method. Even then, call your lender first to see whether they will accept a late payment or work out a temporary arrangement.
Paying through your lender's website or app
Most car lenders have a customer portal or mobile app where you can make payments. Log in with your account number and password, and you will see payment options. These usually include bank transfer (ACH), check, or automatic withdrawal from your bank account. Some lenders also list third-party payment services they have partnered with, which may include credit card options.
If your lender's portal shows a credit card option, use it. This is the path your lender prefers, and it is usually the cheapest. If it does not, you will need to use one of the methods above.
When paying with a credit card makes sense
Paying your car loan with a credit card only makes financial sense in specific situations. The most common is when your credit card offers rewards that exceed the processing fee. If your card gives you 3 percent cash back and the processor charges 2.5 percent, you come out 0.5 percent ahead. On a $1,000 payment, that is $5 in your pocket.
Another situation is when you are trying to meet a spending threshold for a sign-up bonus. If you just opened a card that requires $3,000 in spending within three months to earn a $300 bonus, paying your car loan with that card could help you reach the threshold. The processing fee is still a cost, but the bonus might make it worthwhile.
Do not use a credit card payment to carry a balance or go into debt. If you cannot afford to pay off the credit card charge in full when your bill arrives, the interest you will pay will far exceed any rewards or benefits you gain.
What to do if your lender refuses credit card payments
Some lenders have policies against credit card payments and will not work with third-party processors. If your lender falls into this category, you have two options: pay through their normal methods (bank transfer, check, or automatic withdrawal), or use a cash advance or account transfer as described above.
If you are trying to pay with a credit card to earn rewards, and your lender will not accept credit cards through any method, the rewards are not worth pursuing. The processing fees and cash advance costs will eat up any benefit. Stick with your lender's standard payment methods instead.
Frequently Asked Questions
Will paying my car loan with a credit card hurt my credit score?
Paying on time through any method — credit card, bank transfer, or check — will not hurt your score. What matters to your credit is whether you pay by the due date. However, if you use a credit card and then carry a balance on that card, the higher credit utilization could lower your score temporarily.
Can I use a debit card to pay my car loan?
Yes. Most lenders accept debit card payments directly through their website or phone line, or through their customer service representative. Debit card payments usually have no fee and are processed the same day or next business day.
What happens if the payment processor fails to send my payment?
The processor is responsible for delivering the payment to your lender on time. If it fails, the processor should refund your fee and cover any late fees your lender charges. Before you use a processor, read its terms of service to understand what happens if a payment fails. Keep records of every payment you make through a processor.
Can I set up automatic credit card payments to my car loan?
Most lenders do not allow automatic credit card payments because they want to pull money directly from a bank account. Some third-party processors offer automatic payments if you set them up in advance. Check with your processor's website to see whether this feature is available.
Is there a limit to how much I can pay with a credit card?
Your credit card's spending limit applies to credit card payments just like any other purchase. If your car payment is $800 and your card limit is $500, you cannot make the full payment with that card. You would need to use a different card or payment method for the remainder.