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    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.

    Pros and Cons


    • You can potentially save a lot of money in interest charges by transferring an auto loan balance to a 0% APR credit card. If you are able to qualify for such a credit card, you will be saving on loan repayments for the entire time the 0% APR is limited to
    • After paying off your auto loan with a credit card, you get the immediate title of ownership and the car is not at risk of repossession from the lender
    • The transfer or cash advance will be marked as a new credit entry on your credit report, and making timely payments will improve your credit rating
    • You are converting your secured auto loan to revolving credit. This means you can easily carry over a balance from statement to statement. As long as you pay the minimum amount mentioned in your statement, you will not have to pay any penalty


    • Most credit cards charge a high transfer fee to transfer a balance which is usually 3% to 5% of the amount transferred. This can be more than what you would save on interest, especially if you plan to pay off the balance quickly
    • The biggest disadvantage to paying off an auto loan with a credit card is that it can harm your credit score. The credit reporting agencies view unsecured loans much lower than secured loans, meaning regular payments will not boost your credit score so much. To maintain a healthy credit score, it is best to use less than 30% of the total available amount on your card
    • If the 0% period runs out and you are still paying off the debt on your card, you can end up paying much more interest than you would have paid to your auto loan lender

    Is It For Me?

    If you do not have a concrete plan to pay off your auto loan, transferring the balance to a credit card will not help you. Instead of moving your money around to handle the debts, it is a good idea to try paying it off as per the loan agreement. Many auto loans allow you to clear your debt early without any penalty.

    In dire situations, you can try to refinance to ease the repayments. However, if you have enough funds on your card or if your card has an offer of 0% APR for a temporary period, transferring the loan balance or applying for a cash advance can really help. 

    Essentially the choice depends on your financial circumstances and both short term and long term cash flow outlook. 


    While it is possible to transfer your debt balance and pay your car loan debt with a credit card, it is not always the best idea. If you will not be able to pay your credit card bills as quickly as planned, it can backfire and you could end up paying more interest over time. If you choose to pay off your auto loans with a credit card, make sure that you are doing it for the right reasons.