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How We Make Money. Whether or not you can pay car payments by credit card depends on the lender. While some car dealers will accept car payments by credit card, many only accept car loan payments via bank transfer, check, debit card, and other non-credit forms of payment. But even if it’s possible, is it a good idea to pay car payments with a credit card? Before charging your car payments, it’s a good idea to consider all of the ins and outs — particularly the costs you might face. Paying Car Payment with a Credit CardEven if a dealership does not allow individuals to pay off a car loan directly using their credit card, there are several ways around this limitation that still enable buyers to charge their car payments.Third-Party Credit Card ProcessorsWhile a car dealer may not accept credit cards directly, they may accept card payments that are facilitated by a third-party processor. In such cases, a dealer may work with one specific processing company, or they may accept funds from any processor that facilitates credit card payments.It’s important to note, however, that while such processors may make it possible to charge car payments to an individual’s credit card, such payments are typically subject to extra fees, often based on a percentage of the payment.Balance Transfer Credit CardBalance transfer credit cards allow the account holder to transfer the balance owed on another loan onto that credit card. However, there may be some restrictions on the type of debt that can be moved. For example, some balance transfer credit cards only allow an individual to transfer over existing credit card debt, meaning that if the car payment wasn’t initially made by credit card, that balance would be ineligible. Other balance transfer credit cards may allow individuals to transfer other types of debt, including car payments.One restriction that many balance transfer credit cards typically have in common is that they don’t allow an individual to transfer a loan that was originally obtained from that same lender. So if a car loan was obtained from a specific bank, the buyer would likely not be able to pay for that loan using a balance transfer credit card issued by the same bank or its affiliates.Cash AdvanceCredit cards also typically offer cash advances, which allow an individual to withdraw money against their credit card from an ATM or bank branch. A cash advance is not the same as withdrawing money from a checking or debit account, or even other types of credit card purchases.While a cash advance provides the card holder with access to immediate cash flow, which they can then use to pay for essentially anything they want, cash advances carry different lending terms than other credit card purchases. They are subject to interest (often at a higher rate than the APR on purchases), and there’s also typically no interest-free grace period, even if the advance is paid back by the statement due date. You may face other fees as well. Additionally, the cash advance limit on a credit card may be lower than the credit card limit itself.Money TransferIt may also be possible to pay for a car with a credit card if the lender accepts money transfers from Western Union or another such service. However, it’s a good idea to check with the credit card issuer before initiating a money transfer, as this type of transaction may be treated like a cash advance and ultimately cost more due to the resulting interest and other fees.Pros and Cons of Making Car Payments with Credit CardsEven though all lenders may not accept credit cards to pay for a car loan, there are ways around this restriction in many cases. But just because it’s possible to make car payments with a credit card doesn’t always mean it’s the best choice.Here are some pros and cons of charging car payments.Pros of Making Car Payments with Credit Cards
Cons Making Car Payments with Credit Cards
How Might Paying Car Payments With Credit Cards Affect Your Credit Score?As mentioned previously, making car payments with your credit score could ding your credit score by increasing your credit utilization ratio, or how much of your available credit you’re using. Car buyers in the U.S. spend an average of $563 on car payments each month, according to data from Experian. This could end up accounting for a big chunk of your available credit, depending on your limit.Other Ways to Pay Your Car Loan Payments: Refinance Your CarThere are other options, such as taking out a new loan with more favorable terms — whether with a new lender or via same lender refinancing. But just like paying by credit card, there are also pros and cons of refinancing your car, including the potential for additional costs due to prepayment penalties. Before you sign on the dotted line, you’ll want to make sure you ask any and all refinancing questions to ensure refinancing actually makes sense for your situation.The TakeawayA car is one of the most significant purchases an individual can make, and the costs involved mean it’s a good idea to put some thought into how best to pay back a car loan. Make sure to consider the pros and cons involved. Another solution to more easily making your car payment is refinancing. Lantern by SoFi can help you compare rates and see if you qualify for auto loan refinancing.Photo credit: iStock/FG TradeThe tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website on credit (https://www.consumer.ftc.gov/topics/credit-and-loans)SOLC112202 About the AuthorLantern is a product comparison site that makes it easy for individuals to shop for products and compare offers with top lenders. Lantern is owned and operated by SoFi Lending Corp., the digital personal finance company that has helped over one million people get their money right. Why can't I pay my car payment with a credit card?Most lenders don't accept credit cards for car payments. The rare lenders that do take credit cards may charge a fee for the transaction, increasing the overall cost of your loan payment. If you were hoping to earn credit card rewards on your car payment, the additional fee may offset the benefits of the rewards.
Can I pay my Capital One car payment with a credit card?Like most lenders, Capital One does not allow borrowers to pay car loans with a credit card. You may pay your monthly bill: Directly from your bank account with your account number and routing number. Over the phone.
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