Should I keep or pay off the Auto Loans?

Red1Blue · ‎08-27-2008

I would like your input from the Fico Scoring purposes on my Car Loans.

I took 18K loan from Honda about 2 months ago for Honda Accord

I took 14 K loan from Credit Union 2 months ago for Toyota Highlander

So far, I have paid off 13 K on the Honda and 6k on the Highlander.

I have money to pay off the loans. Should I pay off the loans and get the titles and keep them or should I keep paying the monthly payments.

What is the most effective way for fico scores. One way my mind tells me forget the scores get the titles and get out of the debt. Other side of my mind tells me leave small amounts and pay over next 6 months.

What is your suggestion?

emoticon · ‎08-27-2008

For general FICO purposes, I don't think it will make much difference. For auto-enhanced FICOs, I'm not sure. On the personal finace front, anything over 3% APR = pay off. If your DTI is affecting approval on new loan = pay off.

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Schoolbuskid · ‎08-28-2008

The more history you have on the accounts the better, but if i were you i would pay them off!

Rebuilding and Reducing Debt, is my game plan.

Anonymous · ‎09-02-2008

I don't know if it makes any difference for credit scores. But there is something to be said for simplicity and full ownership.

islandchild82 · ‎09-03-2008

I agree. I doubt there would be much FICO advantage in paying them off, but the savings in interest and owning the cars outright would probably worth paying the loans off.

jdp1 · ‎09-03-2008

I would reccomend paying them for at least a years time. It adds mix and shows a good payment history and increases average age. In a year you're not going to be paying much in the way of interest.

Starting score: EQ08 - 590 (08/14)
Current Scores(11/14):
EQ08 - 662 : DCU - 656
TU08 - 656 : CK - 655
EX08 - 636 : CS - 674

$500 Cap1 : $500 Cap1 QS

Goal: 720 by 4/15

Takunda1 · ‎09-03-2008

jdp1 wrote:
I would reccomend paying them for at least a years time. It adds mix and shows a good payment history and increases average age. In a year you're not going to be paying much in the way of interest.

You cannot pay up to a yr in advance. You can only pay 90days upfront...anything else will be applied to principal.