Most car lenders don't accept credit card payments directly, but you have workarounds
Your car lender almost certainly will not let you pay your monthly car payment with a credit card. They accept bank transfers, checks, automatic withdrawals from a bank account, and sometimes money orders — but not credit cards. If you want to use a credit card anyway, you have three real options: a third-party payment processor, a cash advance, or paying your credit card bill and letting the lender pull from your bank account instead.
Each route has different costs and risks. A payment processor charges a fee (usually 2 to 3 percent of the payment) but keeps the transaction straightforward. A cash advance from your credit card gives you cash to send to the lender, but the interest rate is much higher than your regular card rate, and interest starts accruing immediately with no grace period. Paying off your credit card from a bank account and then having the lender pull from that account costs nothing but requires planning ahead.
Key Takeaways
- Car lenders do not accept credit card payments directly, so you cannot charge your monthly payment to your card at the dealership or through the lender's website.
- Third-party payment processors like Plastiq or PayPal let you pay your car loan with a credit card, but they charge a fee of 2 to 3 percent of the amount you send.
- A credit card cash advance gives you cash to send to your lender, but the interest rate is typically 20 to 30 percent and starts accruing immediately.
- The cheapest option is to pay your credit card bill from your bank account, then have your lender pull your car payment from that same account.
How third-party payment processors work
A payment processor acts as a middleman between you and your lender. You pay the processor with your credit card, and the processor sends the money to your lender as a bank transfer or check. The processor charges a fee — usually 2 to 3 percent of the payment amount — which you pay upfront. If your car payment is $400, you would pay roughly $8 to $12 in fees.
Plastiq and PayPal are the most common options. Both let you enter your lender's details and set up a one-time payment or recurring payments. The money typically reaches your lender within one to three business days. You should confirm with your lender that they accept payments from third parties before you send money, because some lenders flag these payments as unusual or require you to register the processor in advance.
This route makes sense if you are trying to earn credit card rewards on a large payment, or if you need to use a credit card because your bank account is unavailable. It does not make sense if you are just trying to avoid paying your car payment — the fee adds up quickly, and your lender will still report a late payment if the money does not arrive by your due date.
Credit card cash advances and their true cost
A cash advance lets you withdraw cash from your credit card at an ATM or bank, then send that cash to your lender. The catch is that cash advances carry a much higher interest rate than regular purchases — often 20 to 30 percent, depending on your card and creditworthiness. Interest starts accruing the moment you withdraw the cash, with no grace period like you get on regular purchases.
If you take a $400 cash advance at 25 percent interest and pay it back over three months, you will pay roughly $25 in interest alone. Over six months, that climbs to $50. A cash advance also usually charges an upfront fee of 3 to 5 percent of the amount withdrawn, so a $400 advance costs $12 to $20 just to get the cash. This option is expensive and should only be used if you have no other way to make your payment and you can pay the cash back within a month or two.
Using your bank account as the middle step
The cheapest way to use a credit card for your car payment is to pay your credit card bill from your bank account, then have your lender pull your car payment from that same account. This costs nothing and takes advantage of the fact that your lender will accept a bank transfer.
Here is how it works: you charge something to your credit card (or transfer a balance to it), then pay that credit card bill using your bank account. Once your bank account has the money, you set up an automatic payment with your car lender to pull from that account on your regular due date. Your lender sees a normal bank transfer and processes it like any other payment. You get the credit card rewards or cash back on whatever you charged, without paying any fees.
The downside is timing. You need to make sure your credit card payment clears before your car payment is due, or your lender will report you late. If your car payment is due on the 15th and your credit card bill is due on the 20th, this does not work. But if you have flexibility in when you pay your credit card, or if you pay it early, this is the only option that costs nothing.
Why your lender probably won't accept credit cards
Car lenders avoid credit card payments because they have to pay processing fees to the credit card company — usually 2 to 3 percent of each transaction. For a lender processing thousands of payments a month, that adds up. They also want to reduce fraud and chargebacks, which are more common with credit card transactions than with bank transfers.
Some lenders also want to make sure they can reach your bank account directly if you fall behind on payments. If you pay with a credit card, the lender has to go through the credit card company to dispute a payment or recover money, which is slower and more complicated.
What happens if you miss a payment, regardless of method
If your car payment does not reach your lender by the due date, it does not matter whether you tried to pay with a credit card, a third-party processor, or a bank transfer. Your lender will report the payment as late to the credit bureaus, and the late payment will stay on your credit report for seven years. Late fees typically range from $10 to $25 for the first late payment, and your interest rate may increase.
If you are using a third-party processor, make sure you send the payment with enough time for it to clear. Most processors take one to three business days, so sending a payment on the due date itself is risky. Send it at least three to five business days early to be safe.
Frequently Asked Questions
Will paying my car loan with a credit card hurt my credit score?
Using a third-party processor or cash advance will not directly hurt your score, but it may increase your credit utilization (the amount of your credit limit you are using), which can lower your score slightly. The bigger risk is missing a payment while trying to set up the credit card route — a late payment damages your score far more than high utilization does.
Can I use a debit card instead of a credit card?
Most car lenders accept debit card payments directly through their website or phone line, just as they accept bank transfers. Debit cards are treated like bank accounts, not credit cards, so there are no processing fees or interest charges. If you have a debit card, that is usually the simplest option.
What if I want to earn rewards on my car payment?
A third-party processor like Plastiq lets you charge your car payment to a rewards credit card, but the 2 to 3 percent fee usually eats up most or all of the rewards you would earn. You come out ahead only if your card offers rewards of 3 percent or higher and the processor fee is lower than your rewards rate.
Is it ever a good idea to use a cash advance for a car payment?
Only if you are facing an immediate late payment and have no other way to get the money. The interest and fees are too high to make this a regular strategy. If you are regularly short on money for your car payment, talk to your lender about a loan modification or payment plan instead.