Anonymous
Anonymous asked in Business & FinanceCredit · 8 months ago

Should I pay off my car loan?

I bought my car a year ago and have been making payments every month to make it so It would be paid of in 1 year- next month. The remaining balance is only about $500. My minimum payment is $130. I am worried that if I pay it off my credit score will drop- should i just pay the minimum payment for the next 3 odd months?

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  • B
    Lv 7
    8 months ago

    yes, your score will be slightly higher from having paid off a loan.

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  • 8 months ago

    Your score will go up a little, not drop, and you will save yourself some interest.

    A car loan is for a fixed term. It is NOT a revolving account like a credit card account is. And it's not paying down a credit card that hurts your score, that helps your score and saves you interest. It's CLOSING the credit card account after paying it down that hurts you, because you are losing that available credit. You want a lot of available credit and very little actual use of it. That gives you a low utilization rate and it improves your score. When you close an account and lose that available credit, it can make your utilization rate go UP - and THAT hurts you.

    Car loans do not involve this at all. If you have the money, pay it off. That loan will stay on your report as paid for at least three years before it drops off due to age.

    In the meantime, start reading about what goes into making a good credit score.

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  • 8 months ago

    Your credit would drop no more than it would when you pay it off in 3 months anyway. Which is not a lot.

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  • 8 months ago

    If you can, do so. One of three things will happen to your credit score.

    1. It will not change

    2. It will go up

    3. It will go down

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  • Anonymous
    8 months ago

    Making a final payment will not drop your credit score it will improve it. It does not drop your credit score to pay something off. But I found out by experience that if you happen to be making payments on a credit card and you pay off the credit card the credit card company might decide to drop you! Especially if you had a free introductory rate for a year and use their money for a year and then pay them off then they get all upset and they drop your card!

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  • 8 months ago

    It helps your credit rating to pay off a little early. If you got the money, pay it early.

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  • Anonymous
    8 months ago

    You should not worry about your credit score. Pay off all debt ASAP.

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  • Anonymous
    8 months ago

    Just pay the loan off, it isn't going to drop your score that much.

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  • Anonymous
    8 months ago

    What difference does it make whether you pay it off now or in three months? ZERO.

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  • 8 months ago

    Pay off the loan. Don't worry about credit scores

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