If you're in a bind, you might turn to your credit card to cover your auto loan obligation. You might also consider charging your auto loan to receive additional credit card benefits. There are a few ways to pay your car loan with a credit card, but the procedure is more complicated than making typical daily expenditures. There are a few things to think about before attempting to use your credit card to pay for your car.
Main points
- The majority of vehicle lenders don't accept credit cards for car payments directly.
- Using workarounds like a cash advance or balance transfer to pay for a car may result in extra costs.
- Using your credit card to pay for a loan depends on your available cash advance limit.
Is a Credit Card Acceptable for Car Payments?
Credit cards are rarely accepted by lenders for auto loans. When a lender does accept a credit card, there may be a fee associated with the transaction, raising the total cost of your loan payment. The added charge may outweigh the incentives if you were intending to use your credit card rewards for your auto loan. There are other successful ways to use a credit card to pay off an auto loan, but they each have their own disadvantages. You can evaluate whether it is worthwhile to charge your car payment on your credit card by considering your possibilities.Using a Cash Advance or Convenience Check to Pay
While you most likely won't be able to make a car payment using your credit card as a regular transaction, you might be able to do so using a cash advance or convenience check. If you choose to do so, you can write a convenience check to yourself, deposit money in your bank account, and then pay your auto loan as usual. Alternately, you could write a check payable to your lender and mail the payment. You would need to get a cash advance from an ATM if you wanted to pay for your car with a cash advance. You may then make your regular payment by depositing the money into your bank account. Alternatively, you might buy a money order and send it to your lender via mail. Read the rules of your credit card for cash advances. Most cash advances result in a fee dependent on the amount of your advance, whether it is performed with a convenience check or through an ATM. Additionally, the transaction can be assessed at a different interest rate from other transactions. Additionally, there won't be a grace period, so interest will start to accrue right away. It's possible that your cash advance limit is less than your standard credit limit.Payment by Plastiq
For a charge, you can pay practically any business with a credit card using the Plastiq payment platform. Even if your lender isn't set up to accept payments through Plastiq, you can add your credit card to your account after signing up and then set up a payment to your auto lender. 1. Choose whether you want to pay by check, bill pay transfer, ACH transfer, or wire transfer, as well as the date and method you want to use. Depending on your payment option, fees change. For instance, 2.85 percent is added to check payments and standard ACH transactions. 2. In comparison, an expedited ACH transfer (two versus three business days) costs 3.35 percent and $15. Depending on how your credit card company handles the transaction, you can potentially be charged fees associated with the cash advance in addition to those Plastiq charges. Plastiq does not accept American Express for car payments.Paying Bills Through a Payment Service
If your vehicle lender accepts payments through a payment processor like PayPal, you can select your credit card as the funding source to finish the transaction. Using a credit card to conduct business through PayPal won't cost you any extra money. Another choice is to pay with the Cash App, which is a little more flexible than PayPal but more expensive. Your lender does not need to be affiliated with Cash App in order for you to use the app to pay invoices using the routing and checking numbers linked to your Cash App account. Paying this method, meanwhile, would only make sense if you're in a tight spot financially for a brief period of time because you might be charged a 3 percent fee for payments made using a connected credit card. You might not be able to finance your balance using a credit card because payment firms may have policies prohibiting utilizing the service to send yourself a cash advance. A wire transfer or moneygram are acceptable payment methods for some lenders. You must pay a fee for the transfer, which may be as much as $60 for a $550 payment made in person through Western Union using a credit card. 4Use balance transfer
Transferring your auto loan to your credit card is an option if your credit limit is high enough. If you can take advantage of a 0% promotional offer, you can avoid paying interest on the debt. You will pay a balance transfer fee—either a percentage of the transfer (usually 3%) or a flat fee. Naturally, in order to fully benefit from the deal, you must settle the balance before the promotional APR expires. While moving your balance to a credit card may save you money on long-term interest fees, it might not necessarily get you out of a tight spot financially, especially if you have to increase your payment to pay off the balance before the promotional period expires.Should You Use a Credit Card to Pay for Your Car?
Making your auto payment with a credit card may help you fill in a few months' worth of income gaps, but it's typically not a wise long-term strategy. You'll have to pay a fee with most of the options because the majority of vehicle lenders don't take credit card payments directly. Even worse, you might have to pay both the service provider and the company that issued your credit card a fee.The conclusion
If you can use a no-interest balance transfer to save interest, using your credit card to pay for your car may be advantageous for you. Otherwise, there are hardly any benefits to paying for your car with a credit card. If you're having trouble making your auto payment, speak with your lender to find out your options.Questions and Answers (FAQs)
What should you do if you're unable to pay your auto loan? After your due date, you can have a grace period for a few days during which you can make your payment without incurring late fees. The grace period is specified in your loan documents. The current month's payment may also be postponed and added to the end of the loan if you need extra time to make payments. To learn about the payment choices you have, get in touch with your lender. When did you start making auto payments? Depending on the lender, the due date for your first car payment could be between 28 and 90 days after the purchase date. Prior to the due date, a welcome package or billing statement will be issued to you with instructions on how to make your first payment. How much should you put down when buying a car? Typically, a down payment should range from 10% to 20% of the buying price. By doing this, you can prevent owing more money than your car is actually worth as it loses value. Your monthly payment and overall loan costs will be reduced by making a greater down payment.