As a credit card user, there are so many purchases and activities that you can use your credit card to pay for and that also includes car payments. However, while you can make car payments with your credit card, not every car lender accepts it.
So, you need to inquire from your lender, if he accepts it or not. Well, if your lender does not accept car payments with a credit card, there is a way to go about it. You can use your credit card to pay through third-party platforms.
Car Payment With a Credit Card
Making car payments with your credit card will be beneficial to you if you get to use a no-interest balance transfer to save on interest. You can also avoid defaulting on your car loan when your funds are tight. Using a credit card to make payment for a car will help remove the lien against the vehicle thereby preventing possible repossession.
How to Make Car Payments With A Credit Card
There are different ways you can make car payments with your credit cards. Let us take a look at some of the ways below.
Cash Advance
A cash advance is one of the ways you can use your credit card to make a car payment. You need to find an ATM or bank teller that will work well with your credit card issuer to get a cash advance. Then you withdraw your funds from your credit card’s available cash advance limit. Next, you deposit these funds into your checking account and apply them to your car payment.
Money Transfer
Some lenders accept payments through money transfer services like Western Union or MoneyGram. So, you will be able to fund the transaction with your credit card. However, you need to know that your card issuer may treat it like a cash advance.
Balance Transfer
You can make your car payment using a transfer credit card but it depends on your credit card company. A balance transfer happens when you move your existing credit card loan from one credit product to another. This also involves moving your debt from a loan or a higher interest rate credit card to another credit card. You should also use a credit card with a 0% introductory APR balance transfer so you can avoid interest charges on the balance for a certain frame of time.
Plastiq
Plastiq is another platform that allows you to make your car payment with your credit card for a fee. But you will have to sign up for plastic. Then after you sign up, you can add your credit card to your account, then you set up a payment to your auto lender. Your car lender will also receive payments through Plastiq, even if they do not have an account.
Payment Services
If your car merchant accepts payments through other payment platforms, then you can use PayPal to set your credit card as the funding source to complete your payment. Making car payments with your credit card through PayPal will cost you nothing much.
Cash App is another payment platform you can use to make a car payment. This app enables you to pay your car bills through the routing and checking number that is associated with your cash app account. But you may be charged a 3% fee for payments using a linked credit card. Some lenders also accept car payments through MoneyGram or a wire transfer.
Can I Make a Car Payment with A Credit Card
you can make a car payment with a credit card if your car loan lender accepts it. However, loan servicers accept only cash-back payment methods because credit card purchases impose fees on the merchants.
It is possible to also use a third-party payment processing service to pay your lender with a credit card, but it will incur a transaction fee. You can also get money from your credit card to make payments in the form of a cash advance, but this option comes with a high-interest rate and steep fees.
Benefits Of Making a Car Payment With A Credit Card
What are the benefits? There are some benefits you gain by doing so, they will be discussed below.
You Get to Pay Off the Loan Balance Over a Longer Period
When you use a credit card to make your car payment, you get to decrease the money you have to spend at one time. Although banks require that you make your car payments in full every month, your credit card issuer will permit you to pay only a portion of the total balance. So, if you are charged $600 a month for a car payment, you can pay only 10% in a month thereby having more time to pay off the balance.
You Earn Credit Card Points and Rewards
You get a good number of points when you use a credit card to make a car payment. Then when you get enough points, you can convert the rewards to cash back, airline and other perks. Therefore, you need to inquire from your credit card issuer, if your card is eligible for bonuses before you start using your card.
You Get to Save On Interest with A 0% APR Credit Card
When you use it with 0% APR to make your car payment, you will end up financing your car purchase for almost nothing. You will just have to pay a transfer fee, and it is a fraction of the whole cost you may face during the length of your car payment. Transferring a car payment balance to a new credit with a 0% APR would help you with your payments.
Frequently Asked Questions
How Much Down Payment Should I Make on Your Car?
Your down payment should be about 10% to 20% of the purchase price. This enables you to avoid owing more than your car is worth as it depreciates. Making a larger down payment also will lower your monthly payment and your total borrowing cost.
When Do I Make My First Car Payment?
Your payment for your first car due date will vary depending on the lender, however, it may fall between 28 and 90 days after the purchase date. A welcome packet or your billing statement will be mailed to you ahead of the due date to inform you when and how to make your first payment.
What Should I Do If I Can Not Make My Car Payment?
Your car lender will give you a grace period for a few days after your due date during which you can make your payment and avoid a late fee. Therefore, you need to check your loan documents for your grace period.
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