Can You Make a Car Payment With a Credit Card?

Can You Pay an Auto Loan With a Credit Card?

You typically can't pay an auto loan directly with a credit card, but you may be able to do so indirectly using the methods below.

Third-Party Payment Processor

You may be able to use a third-party payment processor such as Plastiq to pay your auto loan with a credit card, but this involves fees. For example, Plastiq charges a minimum fee of 2.9% of the amount paid and may impose additional fees. Depending on your payment amount, fees can add up quickly, potentially outweighing any benefits from credit card rewards.

Cash Advance on Your Credit Card

You could get a cash advance on your credit card and use the money to pay your auto loan. However, you'll be charged a cash advance fee—typically 3% to 5% of the amount advanced. Instead of the grace period credit card purchases enjoy, interest on the cash advance starts accruing right away. In addition, the annual percentage rate (APR) on a cash advance is typically higher than the APR on purchases. All of this makes cash advances a costly way to pay your auto loan.

Balance Transfer Credit Card

If you have good credit, you may qualify for a credit card that features an introductory 0% APR on balance transfers for a limited time, typically up to 21 months. You could transfer your auto loan balance to the credit card and avoid interest by paying off the loan balance before the promotional period ends. With the average APR for a new car loan at 6.61%, according to Experian data from the third quarter of 2024, a 0% APR may sound tempting.

Many balance transfer cards don't allow transferring loan balances. Even if yours does, its balance transfer limit may not be high enough to accommodate your loan balance. You'll also pay a balance transfer fee, typically 3% to 5% of the amount transferred. If you can't pay off the balance before the introductory rate ends, any remaining balance starts accruing interest at the card's standard APR, which can quickly add up.

Your card may also have a penalty APR that kicks in if you miss a payment during the promotional period. You'll lose your 0% APR and pay a penalty APR higher than the card's standard APR going forward.

Learn more: Expenses You Should Not Put on a Credit Card

Benefits of Paying an Auto Loan With a Credit Card

Paying an auto loan with a credit card generally isn't a good idea, but there can be some benefits.

• Credit card rewards: You could earn rewards such as cash back, miles or points by using a credit card to pay your auto loan. Paying your auto loan with a credit card could also help you qualify for a welcome bonus on a new credit card. Some cards offer extra miles, cash back or points for spending a certain amount within the first few months of opening the account. Keep in mind that using a balance transfer or cash advance to pay your car loan with your credit card won't earn any rewards.
• Lower interest rate: You could save on interest by using a credit card with an intro 0% APR on purchases or balance transfers to pay your auto loan. Be sure to weigh the potential savings in interest against the cost of any fees you may be charged for using your credit card.

Drawbacks of Paying an Auto Loan With a Credit Card

Paying an auto loan with a credit card has several drawbacks to be aware of.

• Fees: You can rack up a raft of fees when using a credit card to pay your auto loan. Your lender may charge convenience fees or surcharges. You could also be hit with third-party payment processor fees, balance transfer fees or cash advance fees, depending on how you use your credit card to pay. These fees can easily exceed the value of any credit card rewards you earn.
• High interest rates: Credit card APRs are typically much higher than auto loan APRs. As of November 2024, the average APR on credit cards was 22.80%, according to the Federal Reserve. That's more than triple the average APR for new car loans Experian data reported in the third quarter of 2024—6.61%. Even if you use a balance transfer card with an introductory 0% APR, one late payment could push your APR close to 30%.
• Risk of debt: Unless you pay your credit card balance in full each month, putting car payments on a credit card can quickly spiral into a daunting amount of high-interest debt. Credit card interest generally compounds daily, so carrying a big credit card balance can wreak havoc on your budget. A large balance also increases your debt-to-income ratio (DTI), which can make it harder to get credit or loans, such as a mortgage.
• Damage to your credit score: Your credit utilization rate, or how much of your available credit you use, is a major factor in your credit score. A credit card balance that's too much of your card's credit limit negatively impacts your credit score.

Learn more: What Is a Credit Utilization Rate?

Should You Pay Your Auto Loan With a Credit Card?

Even if your lender allows it, paying your auto loan with a credit card generally isn't a good idea due to costly fees, higher interest rates and the risk of ballooning credit card debt if you can't make your payments. Putting an auto loan on a credit card can also hurt your credit score if it pushes your credit utilization too high.

It's best to pay your auto loan using your bank account or debit card instead of a credit card.

If you're struggling to make your auto loan payments, consider these options instead of using a credit card to pay.

• Investigate auto loan hardship programs. Whether you're suffering a short-term financial setback or a long-term income reduction, see if your lender can work with you to make your payments more affordable.
• Refinance your loan. You may qualify for a lower-interest loan, which can reduce your monthly payments, if your credit score has improved since you got your auto loan. You could also refinance into a longer-term loan. This typically lowers your monthly payments, although it usually means paying more interest in the long run. Use Experian's car payment calculator to compare your loan options.
• Swap your car for a cheaper model. A more affordable vehicle, such as a used car, could make your payments manageable. You can sell your car to a private party and use the money to pay off your loan and buy a cheaper car. Or you could trade in the car to a dealer, have them pay off your lender and roll the remaining trade-in value into a loan on a less expensive vehicle.

Learn more: What to Do if You Can't Afford Your Car Payment

The Bottom Line

Paying your auto loan with a credit card may sound like a good way to earn credit card rewards. However, the risks of using a credit card to pay a car loan usually outweigh the benefits. If you're struggling to make your car payments, refinancing your loan, selling the car or applying for an auto loan hardship program could help.

If you're in good financial shape and want to minimize interest payments, improving your credit score could help you qualify for a car loan with a 0% APR—or at least the lowest APR available. Start by checking your credit report and credit score to see where you stand. Work to boost your credit score by making debt payments on time and reducing credit card utilization. You can also sign up for free credit monitoring from Experian to keep tabs on your progress.