Paying off Auto loan early.

[Anonymous]

I took an auto loan out in Feb. of 2013 with poor credit. I was approved and like a dummy accepted the loan joyously with a 24.99% apr. I cringe every month now come payment time. Its a 45 month loan too (OUCH).  I really want to pay this off in Febuary 2015 after 24 months of on time payments because I will be approved for more on a mortgage and just to get out from under this thing. Im currently upside down with this loan oweing slightly more than what it's worth. If I pay it off in Feb. I will pay it off 21 payments early. My question is will lenders frown on this when looking at my report? Will it hurt my scores? Im thinking it won't hurt my scores but it won't help them either. Thanks.

[Anonymous]

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@Anonymous wrote:

I took an auto loan out in Feb. of 2013 with poor credit. I was approved and like a dummy accepted the loan joyously with a 24.99% apr. I cringe every month now come payment time. Its a 45 month loan too (OUCH).  I really want to pay this off in Febuary 2015 after 24 months of on time payments because I will be approved for more on a mortgage and just to get out from under this thing. Im currently upside down with this loan oweing slightly more than what it's worth. If I pay it off in Feb. I will pay it off 21 payments early. My question is will lenders frown on this when looking at my report? Will it hurt my scores? Im thinking it won't hurt my scores but it won't help them either. Thanks.

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Generally if you close out an installment loan your scores do drop some because the CRAs like to see a mixture of revolving and installment credit.  If you pay it off are you going to trad it in abpbd finance another one?  It's really to give too much advice without knowing more about your scores and overall credit file.

[Anonymous]

Im sorry, heres a bit about my credit. I have school loans Ive been paying on for years in good standings with 10 k owed yet, I have a 18 month personnal loan through my credit union in good standings with 4 payments left, another personal loan for 24 mnths with 10 payments left in good standings, 5 credit cards in good standing but new so I need to establish them better in the next 6 months but I always pay them in full and never use more than 30% percent of my total credit. My scores are Equifax 655, TU 678, and EX 653. Im not planning on another auto loan right away but a mortgage first hence the reason I want to pay the auto off to be approved for more on my mortgage. Hope this helps. Thanks.

[Dustink]

Get that auto loan paid off, and as many of the other's as possible. If you need to wait a couple month's for the scores to rebound. So be it, 25% is too ridiculous to continue for any reason.

[Anonymous]

Thanks, thats what im thinking too. the school loans I will keep paying because the payment is oly 111.00 a monmth and its for like 10 more years but It will only help my score. The other 2 will be paid off in 4 and 10 months and they are low apr loans so ill let them go as they will surely help my scores , but this 24.99 % is turning my stomach! Ive been reading some peoples credit scores drop 20 to 30 points when paaayoing off an auto loan! I sure hope not... Thanks again.

[Anonymous]

They could very well drop that much but in time they will rebound.  Better than wasting that much money on an APR that high

[Anonymous]

I think you should refi for a lower interest rate. Try CapOne auto refi online. After paying 15% for almost a year to my cu on my loan I refied and was approved for under 3.5%. Then keep paying the smaller payments and add small amouts to the principal to, you'll show positive payment history which will help you with your mortgage app

[Anonymous]

Hello guys I'm new to the forum but have been reading up a whole lot on credit recently. I know that a vairation of revolving and installment accounts improve your credit score, but the OP already has 3 other installment accounts other then this auto loan and 5 credit cards. I would have thought that 3 installments and 5 revolving would be a great mixture already, so I would have that closing his auto loan wouldnt decrease his score at all. Please let me know if you guys disagree and why.

[Anonymous]

My thought is if he refis for lower apr he still has strong payment history but can use the 20k
he would have used to payoff towards his down payment

[Anonymous]

Well yup I agree that refi makes sense if he will be able to get a good rate. I don't know much about auto loans. I was just thinking that it shouldnt hurt his grade if he does pay it all off.