Should I pay off a personal loan early?

[hellohum]

I'm sorry, I couldn't find a personal loan section of the forum so I hope this works.

I have a personal loan from upstart with a crazy high APR, it was a $5k loan and has a $3700 balance. I'm able to pay it off in full but should I? I assume the answer is 100% yes to save myself a great deal of money however I want to make sure it isn't going to negatively effect my credit score in some way I'm just not aware of. 

[SoCalGardener]

I don't have a lot of experience with loans, and definitely not high interest rate loans, but I think the answer is: YES. Pay it off ASAP. Whatever negative effect there may be (and I'm not saying there will be--I don't know) by losing a loan from your active accounts can't be as bad as the "crazy high" APR you're paying right now. I'd stop the bleeding now.

[hellohum]

---

@SoCalGardener wrote:

I don't have a lot of experience with loans, and definitely not high interest rate loans, but I think the answer is: YES. Pay it off ASAP. Whatever negative effect there may be (and I'm not saying there will be--I don't know) by losing a loan from your active accounts can't be as bad as the "crazy high" APR you're paying right now. I'd stop the bleeding now.

---

Thank you!! 

[SoCalGardener]

---

@hellohum wrote:

---

@SoCalGardener wrote:

I don't have a lot of experience with loans, and definitely not high interest rate loans, but I think the answer is: YES. Pay it off ASAP. Whatever negative effect there may be (and I'm not saying there will be--I don't know) by losing a loan from your active accounts can't be as bad as the "crazy high" APR you're paying right now. I'd stop the bleeding now.

---

Thank you!! 

---

You're welcome!

[pinkandgrey]

---

@SoCalGardener wrote:

I don't have a lot of experience with loans, and definitely not high interest rate loans, but I think the answer is: YES. Pay it off ASAP. Whatever negative effect there may be (and I'm not saying there will be--I don't know) by losing a loan from your active accounts can't be as bad as the "crazy high" APR you're paying right now. I'd stop the bleeding now.

---

This 100%. If you ask me, saving money is always more important than your score. Your score will be fine anyway, especially if your loan was in good standing. 

[SDMarik]

---

@hellohum wrote:

I'm sorry, I couldn't find a personal loan section of the forum so I hope this works.

I have a personal loan from upstart with a crazy high APR, it was a $5k loan and has a $3700 balance. I'm able to pay it off in full but should I? I assume the answer is 100% yes to save myself a great deal of money however I want to make sure it isn't going to negatively effect my credit score in some way I'm just not aware of. 

---

There is a chance that it may if you do not have any other installment loans (car loan, lease, mortgage, etc). CRA's like to see a mix of credit types. If you do have other installment loans and your installment utilization goes up after this one closes, you also may see a small drop in your score. Installment utilization is calculated as the current balane/starting balance.  Someone might know more than me on this, but your utilization on that loan is 74%, if your other installment loans (if any) wind up with a higher overall utilization after this, you may  see a slight drop.

That being said, finances over FICO every day. There really isn't a situation where paying off a high interest loan, if you are able to,  is a bad idea.

[tnhomestead]

Finances before fico always. If you do get hit with a penalty, do a credit builder loan for a little bit. 

[hellohum]

---

@SDMarik wrote:

---

@hellohum wrote:

I'm sorry, I couldn't find a personal loan section of the forum so I hope this works.

I have a personal loan from upstart with a crazy high APR, it was a $5k loan and has a $3700 balance. I'm able to pay it off in full but should I? I assume the answer is 100% yes to save myself a great deal of money however I want to make sure it isn't going to negatively effect my credit score in some way I'm just not aware of. 

---

There is a chance that it may if you do not have any other installment loans (car loan, lease, mortgage, etc). CRA's like to see a mix of credit types. If you do have other installment loans and your installment utilization goes up after this one closes, you also may see a small drop in your score. Installment utilization is calculated as the current balane/starting balance.  Someone might know more than me on this, but your utilization on that loan is 74%, if your other installment loans (if any) wind up with a higher overall utilization after this, you may  see a slight drop.

That being said, finances over FICO every day. There really isn't a situation where paying off a high interest loan, if you are able to,  is a bad idea.

---

Thank you that was really helpful. I may get a hit as I only have a car loan and the utilization will be higher on that because I just bought the car in December '21. I have had cli's denied recently due to installment ratio so that makes up and next up I can prioritize getting in some extra car payments which I'd like to do anyway. 

But I went ahead and paid off the loan!! 🎉🎉🎉

[hellohum]

---

@tnhomestead wrote:

Finances before fico always. If you do get hit with a penalty, do a credit builder loan for a little bit. 

---

Thank you! That's a good idea  

[CreditInspired]

---

@pinkandgrey wrote:

---

@SoCalGardener wrote:

I don't have a lot of experience with loans, and definitely not high interest rate loans, but I think the answer is: YES. Pay it off ASAP. Whatever negative effect there may be (and I'm not saying there will be--I don't know) by losing a loan from your active accounts can't be as bad as the "crazy high" APR you're paying right now. I'd stop the bleeding now.

---

This 100%. If you ask me, saving money is always more important than your score. Your score will be fine anyway, especially if your loan was in good standing. 

---

Ditto!