Paying off Loan/s early

[Anonymous]

Is there a downside to paying off loans early, either through a CU or Propser/Lending Club? Does it hurt your score or opportunities for other loans with the lender in the future?

I would like to get a loan later, but don't want to drag it out 3 or 5 years, but i want the flexibility to have a lower payment if I need it one month.

[Anonymous]

Do you mean paying it off with cash or refinancing into a new loan? Sounds like refi to CU or peer-to-peer but just want to be sure. 

[Anonymous]

Cash, pay it off early.

[Anonymous]

Paying off a loan early won't help or hurt your credit score.  Paying it off with consistent payments however will only help your credit score. 

[Anonymous]

I know that the longevity of an account helps, but what about future loans with an institution. Do they look at it and say, "oh they paid off that 5 year loan in 2 years and we lost out on all that interest, so no more loans for you"

??

[disdreamin]

Our auto loans (one join, one just in my name) and my student loans were all paid off well before their intended term had elapsed. I would not say it hurt my credit at all, although I think according to the FICO algorithms having an installment loan should help. I really can't see where it could change things significantly.

Personally, for me, no debt will always trump slightly better credit, as long as the scores are already very good. I mean, you don't need 830+ to qualify for most things, right? If you had a borderline score where a few points might be the difference between qualifying for a mortgage or a higher interest rate on a necessary loan, it might be a different story.

[Anonymous]

This is so true!!

[youdontkillmoney]

You always get a "return" paying off early (unless there is an early payment penalty), because if you are paying 10% interest, then paying it off early means you are "earning" a 10% return on your money (don't have to pay 10% interest),where else in the market will you get a guaranteed 10% return.

[Anonymous]

Not at all. Shows you are able to pay and the funds can then be used to fund a new loan (and collect those origination fees!)

[DaveInAZ]

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@Anonymous wrote:
I know that the longevity of an account helps, but what about future loans with an institution. Do they look at it and say, "oh they paid off that 5 year loan in 2 years and we lost out on all that interest, so no more loans for you"

??

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Other than payday loans and other loan sharks, very few lenders have that mindset. For example, the average payoff for a 30 yr mortgage is 10 years. But if you want to maximize things - your credit score & lender satisfaction - instead of paying it off make periodic additional lump sum payments to pay it down more quickly, like paying off a 5 yr. car loan in 2 years or less. I'm sure the lender on a 5 yr loan paid off in 2 years will be happy to see you apply for another loan in the future.