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Pay off an Auto loan....

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Anonymous
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Pay off an Auto loan....

I'm a recent immigrant to the US (I've been here about 9 months), and consequently had no credit score to speak of until recently (See Immigrant Experience in the general forum).

 

A few months after arrival, my wife and I bought a car - although we had cash to buy it outright, I tried to get some financing as I thought it would be a boost to getting a credit score. I was able to get a loan of $18k, but at 13.69% interest. I've been paying this down at $300 a month with a view to paying off the balance after 12 months payment.

 

Looking at the statement, I see I've barely made a dent in the capital repayment - perhaps $400, so I'm spending an awful lot to improve my credit. However, the auto rep told me that if you repay earlier than 12 months, then the loan will not remain on your credit score. I'm not sure I believe him.

 

So, should I pay off the loan now, or make another 6 months' payments? If I do pay it off, what will happen to my nascent myFico score, which currently stands at 666

 

 

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Anonymous
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Re: Pay off an Auto loan....

This is false.  It will remain for 10 years from date closed/paid.

 

If you plan to pay off in 12 months, then pay more than the minimum payment.  If you borrowed $18k and want to pay off in 12 months, pay $16,000 now and then the $300 per month till paid off.  But then you will only being paying interest on $2000 instead of $18,000.

 

 

Message 2 of 4
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Anonymous
Not applicable

Re: Pay off an Auto loan....

This is false.  It will remain for 10 years from date closed/paid.

 

If you plan to pay off in 12 months, then pay more than the minimum payment.  If you borrowed $18k and want to pay off in 12 months, pay $16,000 now and then the $300 per month till paid off.  But then you will only being paying interest on $2000 instead of $18,000.

 

 

Message 2 of 4
Anonymous
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Re: Pay off an Auto loan....

I agree with txjohn

 

better you pay more now so that you save more on the interest every month!

Message 3 of 4
Anonymous
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Re: Pay off an Auto loan....

Great advice - thanks!
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