Auto installment loan - open and paid versus paid and close - what does Fico like?

[daisyduke]

I'm wondering what the effect might be when i make that very last payment to FMC. I have two payments left, Oct and Nov. I was going to double up on Oct payment and just pay it off....but i have doubts about doing so...

My only installment loan on my CR is this lease/loan.

If you were me, would you get another loan prior to it reporting paid and closed? I would think it would take a while for the loan to actually close out but is it considered to be Paid and Closed when I make that last payment?

Even when I make my last payment, I don't think the auto loan would nec. be reported as " closed :how could FMC possibly report a closed loan when I didn't return the car to the dealer? just because it's paid doesn't mean it is closed, right?  i still have to return the car to the dealer and I would still need to have the inspector come and check it out prior to return date of 12/18...

any help/advice would be appreciated.

[Anonymous]

I too am in a similar situation.  My lease has two payments remaining, and I need to return the car to the dealer in January.  One of the problems I'm facing that complicates matters is that I was laid off and have exhausted nearly all of my savings.  While I should be working again before January (God willing), I am going to need to get a new car upon returning the old one.

I'm concerned that in the time it takes to update the CRAs to show my lease is paid and closed I may have difficulty qualifying for a "$0 down" or "sign and drive" product.  I know that my last payment will actually be made in December, but as daisyduke mentioned the car is not yet in the Bank's custody and there are additional charges which I understand the bank will invoice me for within sixty days of returning it (i.e. the miles I put on which exceeded the total miles allowed in the contract, any damage or wear outside the scope of "ordinary" and "minor").

I have two other installment loan accounts and about a dozen revolving accounts that are open (and pushed right up there to the limits after living on unemployment for six months).  I'm hoping someone has some advice on whether or not I should start looking in the newspaper for an old pickup truck for a few hundred dollars...or if I can tease myself by checking out the new cars and slick financing packages they can be wrapped up in...

[llecs]

First, it has to be said: never spend money you don't need to spend just to gain a couple of points.

Once installment accounts reach $0, they are automatically removed from scoring (except for the payment history and the age history). Installment utilization is such a teeny tiny part of scoring, so much so, that it isn't even worth considering. The only other factor to consider is your mix of credit. If you have other loans (home, car, SLs, etc.) then mix isn't even a concern, because it is already satisfied. If this is your last loan, then you may see a point change, but likely in the single digits.

I paid off my last and only loan in the spring for our car. I pulled the CR the day before it reported and the day after it reported. TU dropped 5 points and EQ went up 7 points, I believe. In other words, having an open installment account hurt my EQ report but helped TU.

[Anonymous]

Thanks.  I'm glad to know it may only result in a negligible change (either direction).  Now...this may be a topic for a different topic/forum, but considering my details below, would you have any insight into the likelyhood I can pull off leasing a new car (assuming I am employed again by such time):

EQ 641 

TU 645

Neither EQ or TU reflect any late payments or derogatory accounts.  My oldest account (revolving) is 7 years 1 month.  First auto load was in July 2004. Refinanced that same loan in November 2004 for a lower rate; paid off and closed in January 2007 in the course of acquiring my new car which I lease.  The lease contract absorbed any negative equity on the old car loan and the lease contract end date is January 12, 2010 (my last payment is December 12). 

Thank you so much for the explanation you gave!!!