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Question on Paying off my Car Loans

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Red1Blue
Super Contributor

Question on Paying off my Car Loans

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?
Message 1 of 6
5 REPLIES 5
Red1Blue
Super Contributor

Re: Question on Paying off my Car Loans

Any suggestions on my question? Should I pay off the loans or keep the installment loans?
Message 2 of 6
Anonymous
Not applicable

Re: Question on Paying off my Car Loans

For FICO scoring, I'd think it would be better to continue paying on the loans - it keeps active installment loans in your mix and you build account history. But obviously it would be better financially to pay them off if you can. I guess it comes down to which is more important to you - do you need the improved score for new credit purposes? If not, I'd probably just pay them off to free up the extra money every month (you could start putting the $$ that would have gone to payments into a nice savings account, like ING Direct)...I don't think you're going to see the same score increase from paying off installments that you would from paying off revolving.
 
Just my .02.
Message 3 of 6
Red1Blue
Super Contributor

Re: Question on Paying off my Car Loans

Thanks. That is exactly I am thinking too.  I am going to pay off Honda loan now and get the title.
I'll pay off other car loan in a month or so and get that title too.
I would rather have less debt. I guess if FICO is not happy then it is what ever it is.

desifink wrote:
For FICO scoring, I'd think it would be better to continue paying on the loans - it keeps active installment loans in your mix and you build account history. But obviously it would be better financially to pay them off if you can. I guess it comes down to which is more important to you - do you need the improved score for new credit purposes? If not, I'd probably just pay them off to free up the extra money every month (you could start putting the $$ that would have gone to payments into a nice savings account, like ING Direct)...I don't think you're going to see the same score increase from paying off installments that you would from paying off revolving.
 
Just my .02.



Message 4 of 6
smallfry
Senior Contributor

Re: Question on Paying off my Car Loans

I don't know how your lender feels about paying the debts down under 100 dollars per loan and carrying the loan as long as the original term allows. I did that with my car loan from Navy. I have 25 bucks left on the loan I took out last June 2007 and my next payment isn't due until January 2012. It costs less than a penny a day.
Message 5 of 6
Anonymous
Not applicable

Re: Question on Paying off my Car Loans

What ever you choose pay down the loan to save interest.
Message 6 of 6
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