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Paying off earlier - what is the best strategy?

Member

Paying off earlier - what is the best strategy?

Hello all,

I am a new guy in the US and my credit history is ~6 months. I've got a 20k 60 months 11% APR loan a couple of weeks ago and bought a new car. Technically I am able to pay it off not in 60 months but in 6 months. My wife's parents gave her 15k as a Christmas gift so we may use this money as a first month pay.

How such fast paying off will influence my credit history and score? Maybe it's better to pay off in 12 months or 36 months for my credit history?

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3 REPLIES
Valued Contributor

Re: Paying off earlier - what is the best strategy?

First off, paying down debt is the best thing you can do, and that alone will help your score. (having a low debt-to-income ratio)

Next, the account will stay on your credit report for up to 10 years after it is paid off, so that is good, it will show you are able to pay off your debt.

In conclusion, I would definitely pay it off asap, especially with that higher interest rate.

Paying less in the long run is better than drowning in interest.
CHASE FREEDOM | AMEX BCE | | BOFA REWARDS | CITI TYP | Quicksilver | DISCOVER IT | Sallie Mae | CHASE CSP
--------$32,000-------------$30,000-----------$30,000-----------$30,000-----$13,000---------$18,200----------$15,000---------$6,500----

FICO - TU: 780 EX: 784 EQ: 781
Message 2 of 4
Member

Ok, so in your opinion I should pay 15k now and then pay...

Ok, so in your opinion I should pay 15k now and then pay it off in 6 months, correct?

Message 3 of 4
Highlighted
Valued Contributor

Re: Ok, so in your opinion I should pay 15k now and then pay...

absolutely. pay it all off asap. it will still help your score if you pay it off early.
CHASE FREEDOM | AMEX BCE | | BOFA REWARDS | CITI TYP | Quicksilver | DISCOVER IT | Sallie Mae | CHASE CSP
--------$32,000-------------$30,000-----------$30,000-----------$30,000-----$13,000---------$18,200----------$15,000---------$6,500----

FICO - TU: 780 EX: 784 EQ: 781
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