I may be wrong here, but paying off the first car loan in full makes more sense to me as long as there are no prepayment penalties. You will have a paid satisfactorily auto loan, one completely positive tradeline w/ no chance of derogs, no chance of repo on one vehicle, only one auto payment to worry about, no outstanding auto loan debt hurting your DTI, and your co-signer will be in the clear on first loan. With one closed positive auto loan and 720+ scores, you might not even need a co-signer on the next loan.