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Is it better to pay off my auto loan early or pay it to full term?

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Member

Is it better to pay off my auto loan early or pay it to full term?

I owe $10,000 left on my car.  I took out a 72month term in 2018 and I been making on time payments for the past 24 months. I have the ability to pay it completely off in one lump sum and be done with it. But I been thinking about just paying a big chunk of it and continue to make payments on it so I have good auto loan history. This is my first auto loan, and experian knocks me down for having short auto history. What are your guys opinions?

Message 1 of 16
15 REPLIES 15
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Super Contributor

Re: Is it better to pay off my auto loan early or pay it to full term?

What's the APR on the loan?

 

Will paying in advance push out the next payment due date?

Message 2 of 16
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Member

Re: Is it better to pay off my auto loan early or pay it to full term?

8% interest rate. Depending on the amount I put towards the loan it will push out the next due date to whenever.

Message 3 of 16
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Community Leader
Super Contributor

Re: Is it better to pay off my auto loan early or pay it to full term?

@Lvmont 

That's a pretty high rate. At that rate, I'd pay it off or refinance at a much lower rate.

 

24 months is a enough time for FIs to judge your payment history. Of course, the longer the better. But don't throw money away doing it.

 

Do you have any other installment loans?

If not, you'll take a temporary ding once this one reports as paid off.

 

 

 

 

 



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Message 4 of 16
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Valued Contributor

Re: Is it better to pay off my auto loan early or pay it to full term?

Any other debt with higher interest rates?

I would make a payment every week if it pushes out the due date a month each time.

Some loans do and some don’t.

This would allow cash flow, less interest paid, and emergency fund.

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Message 5 of 16
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Frequent Contributor

Re: Is it better to pay off my auto loan early or pay it to full term?


@Gmood1 wrote:

@Lvmont 

That's a pretty high rate. At that rate, I'd pay it off or refinance at a much lower rate.

 

24 months is a enough time for FIs to judge your payment history. Of course, the longer the better. But don't throw money away doing it.

 

Do you have any other installment loans?

If not, you'll take a temporary ding once this one reports as paid off.

 

 

 

 

 


Wait. Your credit takes a hit if you pay off a loan early?

Message 6 of 16
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Community Leader
Super Contributor

Re: Is it better to pay off my auto loan early or pay it to full term?


@adelphi_sky wrote:

@Gmood1 wrote:

@Lvmont 

That's a pretty high rate. At that rate, I'd pay it off or refinance at a much lower rate.

 

24 months is a enough time for FIs to judge your payment history. Of course, the longer the better. But don't throw money away doing it.

 

Do you have any other installment loans?

If not, you'll take a temporary ding once this one reports as paid off.

 

 

 

 

 


Wait. Your credit takes a hit if you pay off a loan early?


There's a scoring penalty for not having a mix of credit if you don't have an installment loan. 







Message 7 of 16
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Frequent Contributor

Re: Is it better to pay off my auto loan early or pay it to full term?


@Brian_Earl_Spilner wrote:

@adelphi_sky wrote:

@Gmood1 wrote:

@Lvmont 

That's a pretty high rate. At that rate, I'd pay it off or refinance at a much lower rate.

 

24 months is a enough time for FIs to judge your payment history. Of course, the longer the better. But don't throw money away doing it.

 

Do you have any other installment loans?

If not, you'll take a temporary ding once this one reports as paid off.

 

 

 

 

 


Wait. Your credit takes a hit if you pay off a loan early?


There's a scoring penalty for not having a mix of credit if you don't have an installment loan. 


So, say you inherit a ton of money and pay off all your loans and credit cards, your credit takes a hit for having no active debt? 

Message 8 of 16
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Community Leader
Super Contributor

Re: Is it better to pay off my auto loan early or pay it to full term?


@adelphi_sky wrote:

@Brian_Earl_Spilner wrote:

@adelphi_sky wrote:

@Gmood1 wrote:

@Lvmont 

That's a pretty high rate. At that rate, I'd pay it off or refinance at a much lower rate.

 

24 months is a enough time for FIs to judge your payment history. Of course, the longer the better. But don't throw money away doing it.

 

Do you have any other installment loans?

If not, you'll take a temporary ding once this one reports as paid off.

 

 

 

 

 


Wait. Your credit takes a hit if you pay off a loan early?


There's a scoring penalty for not having a mix of credit if you don't have an installment loan. 


So, say you inherit a ton of money and pay off all your loans and credit cards, your credit takes a hit for having no active debt? 


You'd take 2 scoring hits. Not having a credit mix and no credit use.







Message 9 of 16
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Frequent Contributor

Re: Is it better to pay off my auto loan early or pay it to full term?


@Brian_Earl_Spilner wrote:

@adelphi_sky wrote:

@Brian_Earl_Spilner wrote:

@adelphi_sky wrote:

@Gmood1 wrote:

@Lvmont 

That's a pretty high rate. At that rate, I'd pay it off or refinance at a much lower rate.

 

24 months is a enough time for FIs to judge your payment history. Of course, the longer the better. But don't throw money away doing it.

 

Do you have any other installment loans?

If not, you'll take a temporary ding once this one reports as paid off.

 

 

 

 

 


Wait. Your credit takes a hit if you pay off a loan early?


There's a scoring penalty for not having a mix of credit if you don't have an installment loan. 


So, say you inherit a ton of money and pay off all your loans and credit cards, your credit takes a hit for having no active debt? 


You'd take 2 scoring hits. Not having a credit mix and no credit use.


Interesting. Darned if you do, darned f you don't. You have debt for years getting dinged for utilization. Pay it off, you're dinged for no utilization. lol

Message 10 of 16
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