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Valued Contributor
Posts: 1,228
Registered: ‎05-10-2012
0

Question about paying off/closing installment loan

[ Edited ]

Hello all,

 

I generally spend my time in "Rebuilding Credit" so that should tell you where my current status is.

 

I have an unsecured loan with a co-signer that I opened two years ago to help pay off a car I was upside down on, as well as purchase another cheap car.  I have 4k left on it, pay 185/mo.  It is my only installment loan and has impeccable payment history.  I've been working on my credit for the past 8 months or so, paying things off, working other strategies, and I'm finally in a position where I can attack this loan.  

 

My question:  I am probably able to pay this off in the next 4 months. What are the implications of this?  It is my only active installment loan outside of student loans, but I believe those count different in the credit mix?  Because it has such good payment history and continues to be paid perfectly, is this also positively influencing my score to the point I might be slowed in my progress if I pay it off early?

 

Edit:  To add, there are 26 months left on the loan, interest rate is 13.24%

  • Current: EQ FICO 706, TU FICO 701, EX FICO 706 | Starting Score: 525 (05/2012)
  • Starting total revolving credit: $1100 | Current total revolving credit: $36,700
  • Inquiries (12 Months): EQ 2 TU 1 EX 1 | Most Recent: 1/21/2014
Chase Freedom $9500
DCU Visa $10000
Capital One QS $2000
AMEX BCE $3000
Lowe's CC $8500
WalMart CC $3100
BOA Platinum $600
AMEX Gold NPSL
Moderator
Posts: 13,249
Registered: ‎04-15-2011
0

Re: Question about paying off/closing installment loan

Pay it off.  Account will still show positive for another 10 years.  Get rid of the interest payments.



Starting Score: 504




July 2013 score:
EQ FICO 819, TU08 778, EX "806 lender pull 07/26/2013
Goal Score: All Scores 760+, Newest goal 800+
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Current scores after adding $81K in CLs and 2 new cars since July 2013
EQ:809 TU 777 EX 790 Now it's just garden time!
Established Contributor
Posts: 760
Registered: ‎02-11-2012
0

Re: Question about paying off/closing installment loan

If you have the ability, pay it off early. On top of saving interest, it will look very good on your credit report being paid off several months in advance. It may not increase your score tht much, ymmv. Congrats, quite a milestone!

Starting scores 01/02/2012 EQ 707(Fico) TU 733(Fico) EXP 735 (FAKO)
Updated scores 06/01/2014 EQ 797(Fico) TU 768(Fico) EXP 769 (Fico), EQ 849 (Next Gen 5/27/14 Penfed)


Remember the Three P's: Pay early in Full, Pay on Time, Patience
Valued Contributor
Posts: 1,228
Registered: ‎05-10-2012
0

Re: Question about paying off/closing installment loan

So this won't negatively affect my credit mix? I won't be signing a new installment loan until I get a new car, which I won't be getting until I can get a half way decent interest rate.

 

Thanks by the way.  Happy to have gotten the hard part out of the way, now we wait...

  • Current: EQ FICO 706, TU FICO 701, EX FICO 706 | Starting Score: 525 (05/2012)
  • Starting total revolving credit: $1100 | Current total revolving credit: $36,700
  • Inquiries (12 Months): EQ 2 TU 1 EX 1 | Most Recent: 1/21/2014
Chase Freedom $9500
DCU Visa $10000
Capital One QS $2000
AMEX BCE $3000
Lowe's CC $8500
WalMart CC $3100
BOA Platinum $600
AMEX Gold NPSL
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