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Can I pay off my auto loan with a credit card?

You might be able to save with a balance transfer — but only if you pay it off before the 0% intro period ends.

Updated

It’s possible to transfer your car loan balance to a credit card — and in some cases it can save you hundreds in interest. But it isn’t always a good idea. It could end up costing you more if you don’t have the budget to pay off the credit card within the next year or two.

How to transfer a car loan balance to a credit card

Using a credit card to pay off your car loan usually involves a process called a balance transfer. This is where you transfer your remaining car loan balance to a balance transfer credit card. You then pay off your credit card balance with new rates and terms. Here’s how it works:

Step 1: Crunch the numbers to make sure it’s worth it.

Many balance transfer credit cards come with a 0% intro period, typically for 15 to 21 months. But after that, rates typically range from 14% to 24% APR — much higher than the average car loan interest rate. And most credit card issuers also charge a fee of 2% to 5% of each balance transfer.

If you want to transfer all of your car loan, divide your current loan balance plus the balance transfer fee by the number of months in the intro period. If that number is within your monthly budget, a balance transfer can help you save on interest. Otherwise, you might want to consider car loan refinancing instead.

Step 2: Apply for a balance transfer credit card.

Compare balance transfer cards to find the one with the longest 0% APR promotional period that you think you can qualify for. If you can snag a card with no annual fees, even better. You’ll need to have the credit card account open before you can pay off your car loan balance.

Compare balance transfer credit card offers
Data indicated here is updated regularly
%
Name Product Amount saved Balance transfer APR Balance transfer fee Recommended minimum credit score Filter values
Citi® Diamond Preferred® Card
0% intro for the first 18 months (then 14.74% to 24.74% variable)
$5 or 3% of the transaction, whichever is greater
740
Long 18 months intro APR periods on purchases and balance transfers. Plus Citi Entertainment℠ for deals on dining and going out.
Citi® Double Cash Card
0% intro for the first 18 months (then 13.99% to 23.99% variable)
$5 or 3% of the transaction, whichever is greater
740
This one of the most valuable flat cashback cards. It comes with 2% cash back (1% when you buy plus 1% when you pay) and 18 months to pay off transfers.
Luxury Card Mastercard® Titanium Card™
0% intro for the first 15 billing cycles (then 14.99% variable)
$5 or 3% of the transaction, whichever is greater
700
Enjoy unique excursions, privileged access to exclusive events and insider opportunities.
TD Cash Credit Card
0% intro for the first 15 billing cycles (then 12.99%, 17.99% or 22.99% variable)
$5 or 3% of the transaction, whichever is greater
680
3% on dining and 2% on groceries make this a valuable card for food purchases. Use it while traveling, too, with no foreign transaction fees. Available in: CT, DC, DE, FL, MA, MD, ME, NC, NH, NJ, NY, PA, RI, SC, VA, VT
CardMatch™ from creditcards.com
See issuer's website
300
Use the CardMatch tool to find cards you're likely to qualify for with your credit score, without a hard pull on your credit.
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Compare up to 4 providers

Step 3: Talk to your car loan servicer.

Your servicer is the company that handles repayments. Reach out to customer service to ask if it’s possible to pay off your remaining balance. If it is, you’re nearly done. All you have to do is follow the directions to enter your credit card information and pay off your account.

But it’s likely your servicer doesn’t accept credit card payments at all, since credit cards typically come with a processing fee. In that case, you’ll need to do a balance transfer.

Step 4: Gather the information you need.

Before you can initiate a balance transfer, make sure you have the following information on hand:

  • Car loan servicer name
  • Car loan account number
  • Current balance on car loan

Step 5: Start a balance transfer with your credit card company.

There are usually a few ways you can start your balance transfer:

  • Online. Log in to your online account and follow your credit card company’s instructions to begin a balance transfer.
  • Over the phone. Reach out to customer service and ask about making a balance transfer over the phone.
  • By mail. If you received balance transfer checks from your credit card company when you opened the account, you can mail in one of these to pay off your balance.

Keep in mind that most credit card issuers have a deadline you need to make your balance transfer by — typically a few months after opening your account. Read your credit card agreement or contact your issuer to ensure you don’t miss out.

Step 6: Pay off your credit card balance.

Put as much as you can toward your credit card payments to make sure you get out of debt fast enough to beat the promotional 0% APR deadline.

When is paying off my car loan with a credit card a good idea?

You might want to consider paying off your car loan with a balance transfer credit card in the following situations:

  • You have good credit. You’ll generally need good to excellent credit to qualify for a balance transfer credit card — especially if you want a long promotional period.
  • Your car loan fits within your credit limit. If you have $10,000 left on your car loan but only qualify for a credit card limit of $5,000, you can’t pay off the entire balance in one shot.
  • You want your car title ASAP. One perk of paying off your car loan is that you’ll fully own your vehicle once you move the balance to a credit card.
  • You want points. It’s possible to earn points for your balance transfer, which could translate into additional savings.
  • You don’t want to risk collateral. By transferring your balance, your car is no longer on the line should you default.

When should I rethink paying off my car loan with a balance transfer?

Using a balance transfer credit card to pay off your car loan isn’t right for everyone. Consider another option if:

  • You have bad credit. You likely won’t qualify for a balance transfer credit card with a 0% APR intro period.
  • You want to avoid fees. Balance transfers typically come with a fee of 2% to 5% of each transfer — which might offset some of your savings.
  • You can’t pay it off before the promotional period ends. A few straggling months of payments still might help you save. But credit card interest adds up fast once the actual rate kicks in.
  • You don’t have a plan. Just paying off the minimum each month can quickly sink you into credit card debt.
  • You plan on applying for other types of credit. A balance transfer can actually hurt your credit. Credit scoring agencies tend to look at credit card debt less favorably than installment loans — and having a high balance can up your credit utilization ratio.

Can’t qualify? Refinance your car loan instead

Data indicated here is updated regularly
Name Product Filter Values Minimum credit score APR Loan term Requirements
PenFed Auto Loans
Varies
2.99% (Starting at)
Up to 10 years
Active membership with PenFed
Low APR car loans from a well-known credit union.
LendingClub Auto Refinancing
Fair or better credit
7% to 24.99%
From 2 years
Car must be less than 10 years old with fewer than 120,000 miles. Current loan must have a balance between $5,000 and $55,000 and at least 24 months left in its term.
Lower your monthly car payments and save on interest through a fast and easy online application process.
Clearlane
640
3 to 7 years
Monthly income of $2,000+, live in an eligible US state, ages 18+
SuperMoney Auto Loan Refinancing
600
Varies by lender
Varies by lender
Car must be less than 10 years old with fewer than 150,000 miles. Fair to excellent credit, an income source, US Citizen or Permanent Resident, 18+ years old
Find an offer and get rates from competing lenders without affecting your credit score.
LendingTree
Good to excellent credit
Starting at 3.09%
Varies by lender
18+ years old, good to excellent credit, US citizen
Compare multiple financing options for auto refinance, new car purchase, used car purchase and lease buy out.
MotoRefi Car Loan Refinancing
525
2.99% (as low as)
1 to 6 years
Must have an income of at least $2,000/month and have a vehicle with less than 100,000 miles.
A car loan connection service for borrowers looking to refinance.
RateGenius Auto Loan Refinance
510
2.99% (as low as)
Varies
Income of $2,000+/month, vehicle has less than 150,000 miles and is no older than 8 years, loan balance is between $10,000 and $100,000, debt-to-income ratio is less than 50%
Connect with a network of over 150 lenders to refinance your car loan.
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Compare up to 4 providers

Should I pay off my credit cards or car loan first?

When it’s a choice between putting extra money toward a specific debt, prioritizing paying off your credit cards can save you the most. That’s because credit cards usually have higher interest rates than car loans.

But if you’re only able to pay one bill, go with the car loan. You risk losing your vehicle if you can’t pay it off — which can make it difficult to get to work and earn an income.

Other ways to pay for a car with a credit card

Transferring your full balance isn’t the only way you can use your credit card to pay off your car loan. Here are a couple of smaller ways a credit card might help.

Make a repayment

Using your credit card to make a repayment isn’t ideal — you’ll have to pay higher interest. But it can help you avoid missing a payment if you think you might fall behind. There are a few ways you can do this:

  • Pay your servicer directly. While rare, some car loan servicers accept payment by credit card. You can typically do this online or over the phone.
  • Use a third-party service. Companies like Plastiq will pay your creditors using a bill pay service, which you pay with a credit card. But you’ll have to pay a fee of around 2.5% per transaction.
  • Take out a cash advance. A cash advance usually comes with a higher rate than purchases. But as a last resort, you can withdraw money from an ATM, deposit it into your bank account and use that to pay off your car loan.

Make a down payment

If your dealership requires a down payment you don’t have — and you don’t have time to save — you can sometimes pay it with your credit card. Even if they only take cash, you can take out a cash advance using your card to pay this amount.

But it’s not ideal. You’ll add more, higher-interest debt to your car loan.

Bottom line

You’ll need excellent credit and a low balance to make transferring your car loan to a credit card a good deal. Otherwise, you might be better off with other options like refinancing your car loan or making extra payments.

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