I didn't see this scenario and was curious about an auto loan payoff situation.
I have two auto loans on my report. One has been active for 24 months, the other for 36 months. I have the cash to pay off the loan that has been active for 36 months but don't want my scores to go down when I do. So I am trying the following.
I paid it down and left a $10 balance. This is on PenFed. According to PenFed I've essentially pre-paid my loan down and I don't have another payment due for 18 more months. So the 1.49% on that $10 balance is neglegible even if I left it that way for the next year or so. I have no interest in trading or selling the vehicle so I don't need it paid off or the title in hand.
What Im curious about it how this affects FICO. I've seen everyone complain about the scores going down when paying off an auto loan but need to keep my scores up or get them higher for a HELOC later. Will leaving the small balance and effectlviely leaving the loan help the balance/credit ratio for my installment accounts. Keeping the longer history open and keeping the higher ratio help the scores too?
Thanks....
Balance to credit is pretty much non-existent when we're talking installment loans. There's been much theorized on ratio of current balance to original installment balance but nothing concrete either way.
That said I would've done the same thing you did with Penfed if I'd had the opportunity to do so with DCU: payment history and open installment line both benefit from what you did. Any underwriter will know what happened and be amused by it (especially if you tell them why if they ever ask about it) and it'll help FICO much like any other open, aging tradeline.
EXACTLY!!! Good job! Wish I would've known that trick BEFORE I paid off the Jeep a year early. My poor FICO score took a 45pt nosedive due to that payoff. 
Well darn..... That plan sorta backfired.
Looks like PenFed thought I made a mistake by sending in the payoff a few $$$ short. They went ahead and closed it out anyway and just forgave that small balance. I called them back asking them to reverse it and leave the account open. Guy on the phone sounded a bit confused I didn't want to pay off my car but they were already processing the title to send back to me.
Oh well. At least I saved a few $$$. Now I'll wait and see if I get a FICO hit from the payoff. I was real interested in seeing how this experiment would work.
-edit-
Well maybe it unbackfired. Someone else at PenFed must have been able to override it. Just looked at my account and the loan is back. They just refunded the last payment back to my checking account and told me to just leave a little higher balance so they woudn't close it out. Woohoo... Curious to finally see how this works when the PenFed and Walmart FICO's post again.
