Ippolit Posted September 30, 2014 Report Share Posted September 30, 2014 I have a 5 year auto loan, now just over 2 years to pay off left.I have cash to pay it off with one transaction now, that would save me about $1000 in interest (3.75% over 5 years on $27K car).If I pay it off right away, will it improve my credit score or I'd better keep paying regularly for another 2 years?Thanks! Quote Link to comment Share on other sites More sharing options...
willingtocope Posted September 30, 2014 Report Share Posted September 30, 2014 No reason to keep paying interest. Your "sucker" score may drop a bit (decreased utilization) but your FICO New Car score and your FICO Mortgage score will probably both increase. 1 Quote Link to comment Share on other sites More sharing options...
ArtVandelay Posted September 30, 2014 Report Share Posted September 30, 2014 That is not an easy question to answer because the different credit scores have different scoring models. If this is the only outstanding balance you have then your balance is probably a small percentage of the original loan amount. Paying it off now may have a short term bump to your score(s). On the other hand if you keep making payments on time it will increase your score over time. I wouldn't worry about your score as much as saving the money. If you will not need this money in case of an emergency I say pay it off. If this will drain your savings then you might want to do it a little slower. You will also want to make sure the loan doesn't have a prepayment penalty before you do anything. 2 Quote Link to comment Share on other sites More sharing options...
Ippolit Posted October 1, 2014 Author Report Share Posted October 1, 2014 Thank you guys, sounds like it better to pay it off with one check even I may lose some points for closing up the loan..It's not going to strain the budget, more cash available, just opened Vanguard to invest. 1 Quote Link to comment Share on other sites More sharing options...
ArtVandelay Posted October 1, 2014 Report Share Posted October 1, 2014 In my opinion its rarely a good idea to pay extra money (interest) just to have a better credit score. I would only consider it if you had a low credit score and needed to qualify for a mortgage in the future. Good Luck! Quote Link to comment Share on other sites More sharing options...
CordusAdmin Posted October 1, 2014 Report Share Posted October 1, 2014 @Ippolit - that sounds like a good plan. I would venture to say your credit score is not going to be all that bad. Personally, I would rather save the money in interest and sock it away than worry about a few credit score points. Quote Link to comment Share on other sites More sharing options...
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