Can You Make a Car Payment with a Credit Card?

Auto loan lenders generally accept noncredit forms of payment like cash, debit cards, and checks from your checking or personal savings account. Direct credit card payments aren’t usually accepted, however, which makes sense: You’re essentially accruing debt to pay off a different debt.

If your lender does offer the option to make a car payment by credit card, or if you’re able to use one of the workarounds below, it might sound like a great way to earn credit card rewards – particularly if you can then pay the card’s balance in full each month. But depending on the type of transaction, you might not earn rewards. Cash advances and balance transfers, for example, aren’t considered “standard” credit card purchases and therefore aren’t eligible for cash back or points rewards.

And although paying by credit card might help you make ends meet on months when money is tight, be sure to consider any added expenses you could incur. Credit card payments on loans, either made directly or through a workaround, often involve additional fees and/or higher interest rates.

If it’s hard to make car loan payments, it might be tempting to use a credit card. Before doing so, it’s smart to weigh the costs against other options, such as:

• Have you tried calling your lender and asking for an extension of your payment due date? The sooner you contact your lender to explain your situation, the more choices they may be able to offer you. It also shows you’re making a good-faith effort to repay your debt.¹
• Can you borrow money from a friend or family member? Using these personal networks can help provide financial relief, but it’s important to treat these arrangements seriously to avoid strained relationships. The Consumer Financial Protection Bureau (CFPB) offers a worksheet to help manage family lending and borrowing.
• Can you try refinancing your car loan? You might be able to refinance at a lower interest rate or for a longer loan term, either of which can decrease your monthly payment.
• Can you trade in or sell your car to switch to a more affordable option?

If you’re set on trying to use a credit card to make a payment, even though your lender says no, the following three workarounds might be possible.

A cash advance is when you use your credit card to get cash. Not all credit cards allow cash advances, but if yours does, there may be several ways to do it, depending on your card issuer.

• Withdraw cash using your credit card at an ATM. You can then deposit the money in your checking account to pay your lender.
• Request a cash transfer from your credit account to your checking account by using your bank’s online portal or mobile app. The transferred funds can then be used to pay your lender.
• Obtain a “convenience check,” which is a way to get a cash advance check directly from your credit card account. You can then make the check out to your lender to make your car payment.

If you are thinking about taking out a cash advance as a way to use your credit card to make your car payment, watch out for:

• Additional fees. Credit card issuers usually charge a cash advance fee. And if you use an ATM to withdraw cash from your credit card, you might be charged additional ATM fees. Convenience checks may also charge a transaction fee.
• Cash advance credit limit. The cash advance limit on your credit card will likely be lower than your credit limit for standard purchases. Check your most recent credit card statement for your card’s cash advance limit.
• No grace period. When you withdraw cash from your credit card, interest is charged immediately. This means you won’t enjoy the grace period you get for standard credit card purchases.
• Higher interest rates. Cash advances usually charge a separate interest rate that’s higher than the interest rate on standard purchases. If you don’t pay off your balance quickly, you risk taking on additional debt.

Third-party payment processing services allow individuals to use a credit card to pay vendors that typically don’t accept credit card payments. Not all lenders accept payments from processing services, and some credit cards can’t be used, either. If your lender – and your credit card issuer – allow it, here’s how it works:

You tell the processing service what lender account must be paid; the processing service will charge your credit card account and then pay your lender. There will probably be a processing fee, usually a percentage of your payment amount. It’s important to read the processing service’s terms and conditions, as well as those for your credit card, to find out whether payments are treated as regular purchases or cash advances.

A balance transfer is the process of moving debt from one account to another. In this case, you would transfer the balance of your car loan onto a credit card – ideally, one with a low or 0% intro APR offer, which would decrease your monthly car payments as long as you pay off the balance before the intro period ends and don’t miss any payments, thus causing you to forfeit the no-interest intro period.

However, not all credit card issuers let you transfer a loan balance to a credit card account, and some might have specific eligibility requirements that must be met in order to do so.