Dear Clever Credit,
How can I pay my car loan with my credit card? I have a balance of around $10,000. Can you even make a car payment with your credit card?
Signed,
Riding in Cars with Cards
Dear Cars,
Yes, you can actually pay your car payment and even your entire car loan with your credit card! But the simplicity — or lack thereof — is another story.
The first hurdle is finding out if your car loan lender actually accepts credit cards for payments. Most don’t, because the merchant is subject to fees when you pay with a credit card. When it comes to paying off your entire car loan with a credit card, normally I wouldn’t recommend it. But if you really want to, here’s how you could do it.
Since you only have $10,000 left to pay, I recommend applying for a balance transfer credit card, preferably one with a long 0% introductory annual percentage rate period. Just know that if you want to pay off the entire car loan with a credit card, your card issuer might not let you.
[Read: Best Credit Cards.]
For example, American Express doesn’t allow you to balance transfer a loan. But other issuers — like Discover and Chase — do. Just double-check the issuer’s terms and conditions before making any big moves.
One option might be the Wells Fargo Reflect® Card — it comes with a 21-month 0% introductory APR period. If you don’t pay off the entire loan within that time, you’ll pay a 17.24%, 23.74%, or 28.99% variable APR.
With the Reflect card, keep in mind you’ll also pay a balance transfer fee of 5% — which will add $500 to the total you’re paying back. (See Rates & Fees) If you go with the Reflect card, you’d have to make monthly payments of about $500 to pay off the full balance in 21 months. If that’s feasible and lower than what you’re currently paying, it could be a good option.
At the end of the day, you’re trading one debt for another. So make sure to do the math to ensure the move makes sense for you and your finances. It can be a lateral move, or even a downgrade, if you incur too many fees.
Good luck!
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Clever Credit: I have $10K Left On My Car Loan. Can I Pay Off My Car With a Credit Card? originally appeared on usnews.com
