Can I payoff my car loan at once and get good credit score?

V Asked: Can I payoff my car loan at once and get good credit score?

I bought/financed my car about 2.5 years back and since then I am paying car’s payment on a monthly basis (regularly). The car loan is for 5 years.

Now I want to pay off the car loan as soon as possible but at the same time I want to get a good credit score increment because I was regular at all my payments.

The question is:
1) Shall I pay all the remaining amount at once (which is equal to 2.5 years of payments) or shall I pay it in 3-4 equal installments?

2) What happens when you payoff the car loan? I mean when you can get the car’s registration certificate?

Please advice. Have a good day!

Answers:

John Jones Answered:
NO, they like to see history, so keep paying.

Huntsman Answered:
Installment loans build credit by making payments over time. You have to pay on car loans for at least 12 to 18 months to do much for your credit/score. Paying off the loan early will do nothing to improve your credit/score. It will save you a lot of interest though. Sometimes you should think with your pocketbook and not worry about a few points to your score.

Your payoff on that car loan is a lot less than 2.5 years of payments. You don’t have to pay the interest on those 2.5 years. Call your lender and ask for the payoff balance. Pay that and save all that interest.

When you pay off the car, the lender will release their lein and you get clear title to the vehicle.

Ronald S Answered:
If you can afford to get it over with now, do it. You will see a bigger effect on your credit score from the fact you paid off the loan and now owe less money, than from the extra payments. All you’ll get out of four more payments is the privilege of paying more interest.

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