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Zuto is a credit broker, not a lender. Our rates start from 8.9% APR. The rate you are offered will depend on your individual circumstances. Representative Example: Borrowing £9,000 over 60 months with a representative APR of 20.9% the amount payable would be £234 a month, with a total cost of credit of £5,047 and a total amount payable of £14,047.

Zuto Limited. Registered in England under number 05722976. Registered office: Winterton House, Winterton Way, Macclesfield, Cheshire SK11 0LP. Zuto Limited is acting as a broker and not as a lender. Authorised and regulated by the Financial Conduct Authority, registration number 452589. Zuto can introduce you to a limited number of finance providers, based on your credit rating, Zuto won't charge you anything for this service, but do get a fee from the lender which varies based on the product or amount borrowed.

How to pay off car loan with a credit card

If you’re buying a car, it may have crossed your mind to use a credit card. In recent times, credit card companies have offered very good rates, meaning they are a serious competitor in the car finance marketplace.

Perhaps you’ve already taken out a loan to buy a car, and are now tempted to pay this off using plastic. In this scenario, you’d be clearing one debt, but taking on another. If you’re wondering how to pay off your car loan with a credit card, read on.

What to look out for

Terms & conditions

The first thing you’ll need is a credit card with a good rate on money transfers, then you can borrow the money and pay it into your bank account. Having done that, you can use this cash to pay off the loan.

The terms and conditions of your loan will determine how you can do this. Some lenders may allow early repayment, but will charge a fee. This is to compensate them in part for losing the interest you would have paid to them over the term of the loan.

Paying off the loan

You could also pay off the loan gradually, using the cash from the credit card money transfer. This is not ideal, as you’re likely to be paying interest on both types of borrowing - to the loan provider and the credit card provider.

Paying off the loan gradually might be attractive if you’re struggling to make the payments, but otherwise it’s best avoided. If you do take this route because you need to, then it’s advisable to be very careful indeed about how you use this extra credit.

Proceed with caution

A good rate on a money transfer is only likely to be offered if you have a good credit rating. Ideally, look for a card with a 0% rate on money transfers and use it only for the car loan. If you don’t meet the minimum payment every month, remember you will be charged fees as well as interest.

If the 0% rate comes to an end, the best thing to do - if you can - is to apply for another credit card with a 0% rate - assuming you can find and be accepted for one.

Paying off a car loan with a credit card may not be ideal, but there is a viable alternative if you haven’t yet bought the car.

Buying a car with a credit card

You can avoid the pitfalls mentioned above by buying a car with a credit card in the first place. If you can obtain a card with a 0% rate on purchases for a set time period, you could buy the car, then pay it off within the time limit. That way, you’d pay only the price of the car itself and no interest.

This is viable if you can pay the credit card balance off within the introductory period. If not, you will be paying the credit card company interest, so you’d need to compare the credit card rate of interest with that offered by a loan or other form of car finance.

There is another advantage to buying a car on a credit card - protection. Your cash is automatically protected by the Consumer Credit Act when using plastic. You may also obtain some sort of reward points or cash back if the card provider offers this.

You would have to check that the car dealer accepted credit cards, as not all traders do. Of course, the car would also have to cost less than your credit limit.

Do your homework

Buying a car with a credit card is realistic if you can borrow enough at a good rate, and pay it off quickly. Paying off your car loan with plastic is best avoided - unless it’s absolutely necessary. Either way, do your research and proceed with caution.

Other related FAQs

Looking for more related content to this? We’ve picked a selection of related topics that you may find helpful

If you want to pay off your car loan faster, your first step should be to contact your lender to request a settlement figure.

If you’re struggling to pay your car loan, your first step should be to speak to your lender. They may come to an agreement to help you make your repayments. You could also seek help from a debt advice organisation.

There are a number of ways to lower car loan payments, including choosing the right type of loan, going for a long repayment term and searching for the best interest rates.

If you want to pay off your car finance early, check the terms of your deal and contact your lender to discuss your options.