Can I Do a Balance Transfer for an Auto Loan?
The Federal Reserve is tying recent high rates of auto loan delinquencies to high monthly payments in 2025. The average payment on a car loan is around $500, so it’s not surprising that Americans are struggling to make ends meet. One of the ways to get your finances back on track during tough times is through a balance transfer auto loan. This is more commonly known as a loan transfer or refinance. Auto loan borrowers struggling with interest rates who do not want to lose their cars may turn to this option.
If you are struggling with your payments and a loan extension is not going to cut it, you might be wondering, “Can you balance transfer an auto loan?” Essentially, a balance transfer auto loan will allow you to replace your existing loan with a new one or transfer the balance to a credit card. While it is possible to transfer your auto loan balance, it is important to first consider the pros and cons of this option, as well as consider if you are a suitable candidate.
Do Balance Transfers Hurt Your Credit Score?
Yes, a balance transfer can hurt your credit score, but the impact can be temporary. The slight dip in your credit score comes from a hard inquiry on your credit report if you apply for a new loan or credit card. In order for a lender or credit card provider to review your creditworthiness, your history must be confirmed through a credit check.
Credit inquiries stay on your report for up to two years, but their impact may lessen a lot sooner than that if you have a positive payment record.
You can create a positive payment history by paying your bills and debt obligations on time!
While you typically cannot get any movement by just paying your electric or phone bill on time, if your credit card provider reports the payment behavior to one of the major credit bureaus like Experian or Equifax, you can see a small jump in your score over time. Payment history accounts for around 15% of how your credit score is calculated by the major credit reporting bureaus.
Does Transferring a Car Loan Affect Credit Score?
Yes, as mentioned above, transferring the balance of your auto loan to a new loan or to a credit card can hurt your score. The potential ways your credit can be affected include the following:
- If you applied for a new loan or credit card, the balance transfer will impact your score after a lender inquires about your credit history. Credit checks typically impact your score by a few points.
- In the event that you cannot repay the new loan or credit card, the defaulted payments or accumulating debt can negatively impact your score. For example, if you balance transfer your auto loan to a credit card but do not pay it back, your overall credit utilization can increase, which impacts your score negatively.
Is it a Good Idea to do a Balance Transfer on a Credit Card?
If you are searching for a balance transfer for an auto loan or another type of debt, it’s important to consider whether this is the right fit to get your auto loan and your finances back in order. Everyone has a unique financial situation, so what works best for one person may not be the right choice for another individual. That being said, consider the following before you pursue a balance transfer for an auto loan:
Pros of Transferring Auto Loan Debt to a Credit Card
Normally, transferring an auto loan to a credit card is not a smart idea, as the average interest rate for a credit card is around 28%, while the average interest rate for a car loan is anywhere from 7.12%-14.13%. However, the scenario where a balance transfer of an auto loan to a credit card makes sense is if the card has a 0% introductory APR offer. With this type of offer, an individual does not pay interest on the transferred balance for a predetermined period of time (typically several months to a year). That is a huge benefit to take advantage of if you are eligible for this type of card!
Cons of a Balance Transfer to a Credit Card
During the introductory period, it is important to prioritize paying off the balance as much as possible. Do not fall back into bad habits and avoid your debt! Create an actionable plan to pay off the balance of your loan before the introductory period is over. Otherwise, you can end up dealing with higher interest rates that can be tough to manage on your own.
If you’re interested in creating a budget to better manage your debt or spending habits, check out our free financial resources toolkit! Max Cash? offers free PDFs to download when you need them most.
Step-by-Step Guide to Balance Transferring an Auto Loan
1. Evaluate Your Current Loan
- Check your loan balance.
- Know your interest rate and monthly payment.
- Look for prepayment penalties or fees for paying off the loan early.
? Why it matters: Understanding your current loan terms helps determine if a transfer will save you money. In some cases, it may not be in your best interest to refinance your car loan with a new lender or an existing one.
2. Check Your Credit Score
? Why it matters: Lenders base your new loan terms heavily on your credit score. The better your score, the more likely it is that you have high creditworthiness, which means better loan terms in many cases.4 5
3. Shop Around for Lenders
Look for lenders that offer auto loan refinancing or auto loan balance transfer options. That’s where Max Cash can help! If you are looking for a new car or trying to refinance your auto loan, with Max Cash®, you can view and compare different auto loan rates in order to find the option that feels right for you! We have a few different partners who offer car refinancing. Some of the perks that come with working with one or more of our partners include:
- Find Refinancing Options with No Hassle
- Checking Your Rate is Free and Won’t Impact Your Credit Score
- Apply in Minutes
- Access a Nationwide Lender Marketplace and Competitive Rates4
4. Get Prequalified if Applicable
- Prequalification doesn’t affect your credit score.
- Gives you an idea of rates and terms without a hard inquiry.4 5
? Why it matters: Prequalification allows you to review some of the terms of the loan, which helps you narrow down lenders before continuing with a refinancing inquiry.
5. Apply for the Balance Transfer
- Submit a formal application to the lender you’ve chosen.
- Provide:
- Vehicle details (VIN, mileage, year, make/model)
- Current loan info
- Proof of income
- Insurance information
? Heads up: This step does trigger a hard inquiry on your credit report.
? Potential Benefits of a Balance Transfer
- If you get a Lower interest rate = lower monthly payments or faster payoff in some cases
- Better customer service
- More favorable loan terms if you qualify4
?? Things to Watch Out For
- Transfer or refinancing fees
- Prepayment penalties from your original lender
- Extending your loan term too much (can cost more in the long run)
Alternatives to Transferring Your Car Loan to a Credit Card
Although a balance transfer is an option to deal with unmanageable car financing, there are alternatives to consider, including the items below.
Changing Your Budget and Spending Habits
If you are not able to qualify for a balance transfer for your car loan, your next step should be to change your budget and get more aggressive with your debt repayment strategy. Whether you prefer the debt snowball or the avalanche method, it is important to make getting out of debt a bigger priority.
Try to pay more than the minimum amount on your car loan each month. While that is typically easier said than done, if you work through your budget, you may be able to find a little bit of wiggle room to add an extra $30 or $50 dollars per month. In more drastic scenarios, you may want to consider getting a side hustle or a second source of income. That way, you can work on lowering your expenses while paying off your debt, and hopefully, you will have more money left over each month.
Auto Loan Refinance
If you can’t rely on a credit card to save the day, another option is an auto loan refinance. By refinancing your auto loan, you are essentially getting a new auto loan to take over your existing one. The goal of refinancing your auto loan is to get a lower monthly payment, longer loan term, or simply better interest rates in order to make your loan payment more manageable.4 5
If refinancing your loan is the most ideal option, Max Cash is here to help! Easily find cars based on your desired monthly payment and down payment amount. This way, you can quickly discover vehicles that align with your financial situation.
Our partners provide up-to-date information on current interest rates and any available special financing offers from various lenders. By comparing these options, you can secure the most favorable terms and potentially save thousands of dollars over the life of your loan.4
With our comprehensive tools and resources, you can confidently find and finance your next vehicle without breaking the bank. Begin your search for car refinancing today and discover how easy it can be to find a car that fits your budget and lifestyle.4 5
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