Can You Pay Off Your Auto Loan With A Credit Card?
Approving the payment of an auto loan using a credit card solely depends on the lender’s approval. Some lenders accept credit card payments without any issue, while others charge hefty fees.
In either case, you should calculate whether paying with your credit card is worth it. It is important to understand that by paying off an auto loan with a credit card, you essentially proceed with a balance transfer, closing the loan account and instead taking on new credit card debt.
How It Works
Transferring your auto loan balance to a credit card is not always a simple process. Even though it may appear to be a simple debt balance transfer, the two types of debt are very different from each other. An auto loan is a secured installment loan, whereas a credit card provides a revolving line of unsecured credit. This means that moving this debt over may not always add up positively to either you, the borrower, or the lender.
Firstly, you should contact your auto loan lender to see if they would accept a credit card payment to clear the loan balance. You may get some pushback as credit card payments cost the receiving party money to accept the payment. Thich is why many lenders only accept debit cards, bank transfers or checks.
If your lender does not cooperate, then you will have to make an official balance transfer through your credit car provider. You will need to contact and coordinate this with the credit card company. Remember that you can only transfer a balance up to the credt limit on your credit card.