How to Use Rewards and Cashback With Car Loans (2025 Guide)

Car loans are a major financial commitment — and for most people, it’s one of the largest purchases they’ll ever make after buying a home. But what if you could make that loan work for you instead of the other way around?

Thanks to rewards programs, credit card perks, and cashback deals, smart borrowers are now finding ways to save money and even earn rewards while paying for their car loans. In 2025, financial institutions and fintech lenders are making it easier than ever to combine rewards programs with auto financing — turning car payments into an opportunity for savings.

In this comprehensive guide, we’ll explore how to use rewards and cashback with car loans, the different programs available, the potential risks, and practical strategies to make the most of them.

Understanding Rewards and Cashback Programs

Before diving into how to use them for car loans, let’s clarify what rewards and cashback programs are and how they function.

1. What Are Rewards Programs?

Rewards programs allow you to earn points, miles, or cashback on eligible purchases. These rewards can be redeemed for:

• Travel (flights, hotels)

• Gift cards

• Cashback or statement credits

• Merchandise or services

For example, a credit card might offer:

• 2% cashback on all purchases

• 3 points per $1 spent on fuel

• Bonus rewards for online transactions

These rewards can then be applied toward financial products — including auto loan payments or related expenses.

2. What Is Cashback?

Cashback programs return a percentage of the money you spend to your account or as a statement credit.

Example: If your credit card offers 2% cashback, and you make a $1,000 payment, you get $20 back.

Over time, that adds up — especially if used strategically with your car loan.

Can You Use Rewards or Cashback for Car Loans?

The short answer: Yes — but with limits and strategy.

Not every lender allows direct payment of loans using reward points or cashback. However, several modern financial tools, cards, and programs let you use rewards in ways that reduce the cost of your car loan or car ownership expenses.

Here’s how it typically works:

1. Earn rewards or cashback using a credit card or financial app.

2. Redeem those rewards as statement credits or direct deposits.

3. Use that money to make extra car loan payments or cover related costs like insurance or maintenance.

Popular Ways to Use Rewards for Car Loans

Using Credit Card Rewards for Car Loans

Paying Car-Related Expenses

While most lenders don’t allow direct car loan payments via credit card, you can still benefit by using your rewards card to pay for:

• Car insurance premiums

• Fuel and maintenance

• Registration fees

• Down payment (if allowed)

Then, apply your cashback or reward points toward your car loan’s principal or next month’s payment.

Example:

If your monthly car-related spending is $500 and your card offers 2% cashback, you earn $10 monthly, or $120 yearly. Over a 5-year loan term, that’s $600 saved — without changing your spending habits.

Pro Tip:

Use a high-reward category card, like:

• Citi Double Cash (2% cashback)

• Chase Freedom Unlimited (1.5–5% cashback)

• Capital One Quicksilver (1.5% cashback on all purchases)

Auto Loan Cashback Offers from Lenders

Some lenders and dealerships offer cashback incentives for financing your car through them.

These offers typically come in two forms:

1. Cashback rebates on the car purchase

2. Cashback bonuses tied to the auto loan

Example:

These deals often appear during holiday promotions or year-end clearance events.

Pro Tip:
Always compare the cashback offer with alternative low-interest financing options. Sometimes, taking 0% financing saves more in interest than a one-time cashback offer.

Bank and Credit Union Reward Programs

Many banks and credit unions offer relationship rewards programs, meaning the more financial products you use with them, the more benefits you receive.

Examples of Relationship Rewards:

Pro Tip:
If you’re already a member of a credit union or bank, check if they provide interest rate reductions or loyalty rewards for maintaining your accounts.

Refinancing With Cashback Offers

Refinancing your car loan is another opportunity to earn cashback. Many lenders now use cashback refinancing promotions to attract new customers.

How Cashback Refinancing Works:

1. You apply to refinance your existing loan with a new lender.

2. Upon approval, the lender pays off your current loan.

3. You receive a cashback bonus or interest discount.

Example:

A fintech lender may offer $300 cashback if you refinance your car loan through them and make 12 on-time payments.

Pro Tip:
Check the fine print — some cashback offers may come with higher rates or longer loan terms that cancel out your savings.

Leveraging Cashback Apps and Portals

Cashback and shopping apps can indirectly help reduce your car loan expenses.

Popular Cashback Platforms

Earn cashback through these platforms and transfer the funds to your savings account, then make extra payments toward your car loan.

Even small contributions can shorten your loan term and save you hundreds in interest.

Combining Rewards for Bigger Benefits

The best way to maximize rewards and cashback is to combine multiple programs strategically.

Example Plan:

1. Use a high-cashback credit card for insurance and fuel.

2. Shop online for accessories through a cashback app.

3. Finance your vehicle through a bank or credit union that offers loyalty rewards.

4. Use cashback earnings to make extra payments on your car loan.

Sample Savings Table:

That’s over $2,000 in rewards — just by being strategic!

Risks and Considerations

While using rewards and cashback for car loans can be rewarding, there are potential downsides to watch for.

a. Higher Interest Rates

Some cashback offers come with higher loan rates, offsetting the benefit. Always calculate the total cost of borrowing.

b. Temptation to Overspend

It’s easy to overspend chasing rewards. Stick to your budget — rewards aren’t worth extra debt.

c. Limited Redemption Options

Some programs only allow cashback as statement credits, not direct loan payments.

d. Fees and Fine Print

Always read the terms — especially if using third-party services or apps.

Smart Strategies for Maximizing Rewards

Here are expert-backed strategies to make your rewards work harder for you:

1. Pay in Full Every Month

If using a credit card for car-related expenses, never carry a balance. The interest will cancel your rewards.

2. Automate Your Rewards

Set up automatic transfers from your cashback account to your loan or savings.

3. Use Multiple Programs

Don’t rely on just one source of rewards. Combine banking, credit, and app-based programs.

4. Monitor Your Credit

Using rewards cards responsibly helps build credit, which can lead to lower rates on future loans.

5. Track and Redeem Regularly

Many people forget to redeem points. Keep track and cash them out regularly to put toward your financial goals.

Key Takeaways Table

Conclusion

In 2025, the world of car financing is smarter and more flexible than ever. By understanding how to use rewards and cashback strategically, you can transform an ordinary car loan into a financial advantage.

Whether you earn points through your credit card, take advantage of bank loyalty programs, or use cashback apps, the key is to maximize every dollar. Over time, these rewards can reduce your loan balance, shorten your term, and even improve your overall financial health.

Remember: don’t chase rewards blindly. Always compare offers, calculate total costs, and make sure your strategy aligns with your budget.