If you miss a payment and need to make it before it is recorded as a missed payment, or you want to make an extra car loan payment, can you pay a car payment with a credit card?
This was a question asked of our car loan team last week. We do field a lot of questions about paying for cars and making down payments with credit cards but not many around making a monthly payment using a card. That makes it ideal for a blog post!
Paying for Car Loan Payments With Credit Cards
The short answer is yes, you can make a monthly car loan payment with a credit card, if the lender agrees.
However, not all lenders accept credit cards as a form of payment. Those that do will usually levy a charge for paying by card. The company has to pay a handling fee to the credit card company, which they will usually pass onto you.
So, you can make a payment with a credit card but it will be more expensive than usual.
If you need or want to pay a car loan payment with a credit card, you may be better off using a money transfer or even paying cash.
Extra Costs of Paying by Credit Card
As we mentioned, organizations have to pay for the privilege of taking credit card payments. Those charges vary but are usually a percentage of the transaction amount.
Whatever that cost is, and whatever the lender thinks is a reasonable charge for handling credit card payments will be passed onto you.
That’s not a cheap way to pay your car loan.
Plus, you’ll then pay interest on the amount you debit from your card. If you’re making a small payment, that may not amount to much. For larger car loan payments or if you’re not planning to pay it off immediately, you’re racking up interest each month on that payment.
Avoid Needing to Make Emergency Car Loan Payments
The majority of car loans now require automatic payments. If you haven’t set them up for your car loan, we highly recommend you do.
Life is busy. We all have things going on. Then life loves to throw in a curveball once in a while. Automatic payments ensure your obligations are handled, regardless of what else is going on in your life.
As long as there is money in your account or you have an overdraft, payments get made no matter what is happening in your daily life. It’s not often something so simple can have such a positive effect, but we think automatic payments are exactly that.
We highly recommend using them and would go as far as to say we think they should be mandatory!
We hope this article helped answer your question of whether or not you can/should pay a car payment with a credit card. If you have any more questions, please click here to contact us!