Can You Pay an Ally Car Payment With a Credit Card?

Many individuals consider using a credit card to pay their car loan, often to earn rewards or manage cash flow. This question frequently arises for those financing vehicles through lenders like Ally Financial. Understanding payment options and their financial implications is important for car loan obligations.

Ally’s Direct Payment Methods

Ally Financial generally does not accept credit cards directly for car loan payments. This policy is common among auto lenders due to merchant processing fees, which can range from 1% to 3% or more of the transaction. Lenders avoid these costs to maintain loan profitability.

Ally offers several official payment methods that do not involve credit cards. The online portal or mobile app allows payments directly from a checking or savings account. Users can set up one-time payments or enroll in Auto Pay for recurring monthly withdrawals without additional fees. This method requires the user’s bank account and routing number.

Customers can also use their bank’s bill pay feature, which sends payments directly to Ally. This requires the Ally Auto account number and mailing address. Payments made this way may take a few business days to process. Traditional payment methods like mailing a check are also available. For phone payments, Ally facilitates this through ACI Pay, a third-party provider, which charges a fee.

Third-Party Payment Options

While Ally does not directly accept credit cards for car loan payments, several third-party payment processors can facilitate this. These services act as intermediaries, allowing users to pay them with a credit card, and then they remit the funds to Ally via Automated Clearing House (ACH) transfer or check. Examples of such services include ACI Payments, Inc., CheckFreePay, MoneyGram, and Western Union Quick Collect, with some platforms like doxo also offering this capability.

These third-party services almost universally charge a convenience or processing fee for using a credit card. For instance, CheckFreePay typically charges around $3.75, while ACI Payments, Inc. may charge a money transfer fee of approximately $4.00. MoneyGram and Western Union also impose their own fees, which vary. These fees are in addition to the car payment amount, and their percentages can range from 1% to 3% of the transaction, though flat fees are also common.

The process usually involves the user providing their Ally vehicle account number, credit card details, and sometimes their ZIP code to the third-party service. It is important to note that while these services offer flexibility, the associated fees can quickly erode any potential credit card rewards. Transaction limits or processing times may also apply, so users should verify these details with the specific third-party provider before initiating a payment.

Financial Implications of Credit Card Payments

Using a credit card for a car payment, especially through a third-party service, carries various financial implications that warrant careful consideration. A significant distinction exists between a credit card purchase and a cash advance. Many payment processors treat loan payments made with a credit card as cash advances. Cash advances typically incur higher interest rates than standard purchases and often lack a grace period, meaning interest begins accruing immediately from the transaction date.

Beyond the initial processing fee charged by third-party services, cash advance fees from the credit card issuer, often 3% to 5% of the amount, may also apply. If the credit card balance from the car payment is not paid in full by the statement due date, interest charges will accrue, potentially making the car payment significantly more expensive over time. Credit card annual percentage rates (APRs) for cash advances can be quite high, sometimes exceeding 27%.

Carrying a large balance on a credit card due to a car payment can negatively impact one’s credit score. A higher credit utilization ratio, which is the amount of credit used compared to the total available credit, can lower a credit score. While earning credit card rewards like cash back or points might seem appealing, the combination of third-party fees, cash advance fees, and accruing interest can quickly outweigh any benefits gained from these rewards.