The most common ways to pay your car loan
You can pay your car loan through your lender's online portal, by phone, by mail, or through automatic bank transfers. Most lenders offer all of these options, though some may charge a fee for phone or in-person payments. The fastest and most reliable method is automatic payment — you authorize your lender to pull the payment from your bank account on a set date each month, and it happens without you having to do anything.
If you pay online through your lender's website or app, the payment usually posts within one business day. Payments by mail take 5 to 10 business days to reach your lender, depending on postal delivery and their processing time. Phone payments are immediate but may carry a convenience fee of $5 to $15. Automatic transfers are free and the most reliable way to avoid late payments.
Some lenders also accept payments through third-party services like PayPal or Venmo, though these typically route through the same processing system as online payments and take the same amount of time. Check your loan documents or call your lender to confirm which methods they accept and whether any carry fees.
Key Takeaways
- Automatic bank transfers are free, reliable, and the easiest way to ensure your payment arrives on time each month.
- Online payments through your lender's portal post within one business day, while mail payments take 5 to 10 days.
- Phone and in-person payments may charge convenience fees ranging from $5 to $15 per transaction.
- Your payment due date is set in your loan agreement, and late payments trigger fees and damage to your credit score within 30 days.
When your payment is due and what "due date" actually means
Your due date is the last day your lender will accept payment without charging a late fee. This date is listed in your loan agreement and appears on your monthly statement. Most car loans are due on the same day each month — often the 1st, 15th, or the last day of the month. Some lenders let you choose your due date when you first take out the loan.
The due date is not the same as the date the payment must be received. If your due date is the 15th and you mail a check on the 14th, it may not arrive until the 20th or later — and you will be charged a late fee. To avoid this, mail payments at least 10 days before the due date, or use online or automatic payment instead. If you use automatic payment, set it for 2 to 3 days before your due date to account for processing delays.
A payment is considered late if it arrives after the due date. Most lenders charge a late fee of $25 to $50 for the first late payment. If your payment is 30 days late, the lender reports it to the credit bureaus, and your credit score drops. After 60 days late, the lender may begin collection efforts or repossession proceedings.
How much you owe each month and where to find it
Your monthly payment amount is fixed in your loan agreement and does not change unless you refinance or modify the loan. You can find the exact amount on your loan documents, on your monthly statement, or by logging into your lender's online portal. The statement also breaks down how much of your payment goes toward principal (the amount you borrowed) and how much goes toward interest (the cost of borrowing).
Early in the loan, most of your payment covers interest. As you pay down the loan, more of each payment goes toward principal. For example, on a $25,000 loan at 6% interest over 60 months, your first payment might be $483, with $125 going to principal and $358 to interest. By the final payment, nearly all $483 goes to principal.
If you miss a payment or pay late, the unpaid amount rolls into the next month's balance, and interest continues to accrue on the full amount owed. This is why falling behind quickly becomes expensive — you end up paying interest on interest.
Automatic payments: how to set them up and why they matter
To set up automatic payment, log into your lender's online portal or call their customer service number. You will need to provide your bank account number and routing number, and choose the date you want the payment to come out each month. Most lenders allow you to pick any date between the 1st and the 28th. Once set up, the payment happens automatically every month until you cancel it or pay off the loan.
Automatic payment is the single most effective way to avoid late fees and credit damage. You do not have to remember the due date, write a check, or log in each month. If you change banks, you will need to update your account information with your lender, but the payment itself continues. If your bank account does not have enough funds on the scheduled date, the payment will fail and you will be charged a late fee — so make sure you have enough money in the account before the payment date.
Some lenders offer a small interest rate discount — typically 0.25% — if you enroll in automatic payment. Over the life of a loan, this can save you hundreds of dollars. Ask your lender whether they offer this discount.
What to do if you cannot make a payment on time
If you know you will miss a payment, contact your lender before the due date. Do not wait until after you are late. Explain your situation and ask whether they offer deferment, forbearance, or a payment plan modification. Deferment allows you to skip one or more payments, though interest usually continues to accrue. Forbearance temporarily reduces or pauses your payment. A modification changes the terms of your loan — for example, extending the loan term to lower the monthly payment.
These options are not may provide, and lenders have different policies. Some will work with you if you have been on time for months and this is your first hardship. Others will not. The key is to ask before you are late, not after. Once you are 30 days late, your credit score is already damaged, and the lender is less likely to negotiate.
If you cannot afford your car payment at all, you have a few options: refinance the loan to a longer term (which lowers the monthly payment but costs more in interest), sell the car and use the proceeds to pay off the loan, or surrender the car to the lender. Surrendering the car damages your credit and may leave you owing the difference between what the car sells for at auction and what you owe — called a deficiency.
How late payments affect your credit and what happens next
A payment that is 30 days late is reported to the credit bureaus (Equifax, Experian, and TransUnion) and appears on your credit report. This single late payment can lower your credit score by 100 points or more, depending on your current score and credit history. The damage is worst if you have a short credit history or few other accounts in good standing.
After 60 days late, the lender may begin collection efforts. After 90 days late, they may file a lawsuit to recover the debt or begin repossession proceedings. Repossession means the lender sends someone to take the car back. They can do this without warning and without a court order in most states. Once the car is repossessed, it is sold at auction, and you owe the difference between the sale price and what you still owe on the loan.
A late payment stays on your credit report for seven years from the date it first became late. Even after you catch up and pay on time for months, the late payment remains visible to future lenders. This makes it harder and more expensive to borrow money for a car, home, or credit card in the future.
Paying more than the minimum and paying off early
You can pay more than your required monthly payment at any time without penalty. Extra payments go directly toward principal, which reduces the total interest you pay and shortens the loan term. For example, if your required payment is $400 and you pay $500, the extra $100 reduces your principal balance immediately.
Some lenders charge a prepayment penalty if you pay off the loan early, but this is rare for car loans. Check your loan agreement to see whether a prepayment penalty applies. If it does not, paying extra is always a good idea if you have the money.
To pay extra, log into your lender's online portal and make an additional payment, or call and ask how to send an extra payment by mail or phone. Make sure to specify that the extra amount should go toward principal, not toward future payments. If you do not specify, some lenders will apply it to next month's due payment instead.
Frequently Asked Questions
What happens if I pay my car loan early?
You pay off the loan faster and save money on interest. Most car loans do not have prepayment penalties, so there is no downside. Your credit score may dip slightly in the short term because your credit mix changes, but it recovers quickly. Check your loan agreement to confirm there is no prepayment penalty before you pay a large lump sum.
Can I change my due date?
Most lenders allow you to change your due date once per year, or sometimes more often. Contact your lender's customer service to request a change. The new due date usually takes effect within one or two billing cycles. If you are struggling to make payments on your current due date because of when you get paid, moving the due date can help you stay on time.
What if I pay by check and it bounces?
Your lender will return the check unpaid, and you will be charged a late fee even though you attempted to pay. You will also be charged an overdraft fee by your bank. Contact your lender immediately, explain what happened, and send payment again by a method that will not bounce — such as online payment or automatic transfer from an account with sufficient funds.
Do I have to use automatic payment?
No, but it is the safest option. If you prefer to pay manually, online payment is faster and more reliable than mail. Phone payments work but may charge a fee. Whatever method you choose, make sure you send the payment at least 10 days before the due date to account for processing time.
Can I make two payments in one month?
Yes. You can make extra payments at any time. Make sure to specify that extra payments should go toward principal, not toward future months' payments. This reduces your balance faster and saves interest.