Will paying off my car loan two years ahead of schedule have a negative impact on my credit score?

I am looking forward to buying a house in a few years (likely 3) and have started saving for it. I have enough saved to pay off the remainder of my auto loan, but I am concerned that doing so might have a negative impact on my credit score (which in turn would impact my ability to qualify for mortages in the future). The interest rate of my savings account is almost equal to the interest rate of my car loan. Does it just make more sense to pay over time?

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This entry was posted on Thursday, March 11th, 2010 at 5:08 pm and is filed under auto car loan. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

12 Responses to “Will paying off my car loan two years ahead of schedule have a negative impact on my credit score?”

rocco the alpha puppy on March 11th, 2010 at 5:08 pm

paying off your debt as fast as possible is always the most sound advice.

all lenders would rather have a debt free client when they loan out hunderds of thousands of dollars-to one who’s still paying off cars,credit card bills,etc.

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mike Z on March 11th, 2010 at 5:08 pm

Pay it off.

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College Student on March 11th, 2010 at 5:08 pm

early pay off will not have a negative impact

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cuteredhead on March 11th, 2010 at 5:08 pm

Pay it off

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elfsareus on March 11th, 2010 at 5:08 pm

no, if anything it will improve it

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aout on March 11th, 2010 at 5:08 pm

If you have the money to finish paying off your car now, do it!

It will not have a negative impact on your credit. If anything, it could help. Companies are always happy if you pay them earlier then planned. They will never refuse your money.

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forbiddenfruit9 on March 11th, 2010 at 5:08 pm

Paying your car loan ahead of time will certainly have a positive impact on your credit rating…Your rating is based on how you pay your bills and keep them up to date..Mainly making monthly payments on time..

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Freddie on March 11th, 2010 at 5:08 pm

There would be no negative impact on credit score from paying off the car loan early. Check with the lender to see if there are any prepayment penalties. If there are none, then pay away. You will decrease the amount of interest you pay over time. Then you have more money available to save for your house. If you do not have an auto loan payment at the time you apply for the mortgage, that will actually be better for you. Lenders compare the total amount of debt you pay monthly with the total income you have monthly as a criterion of rmortgage approval.

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Barbara C on March 11th, 2010 at 5:08 pm

It will help you in the long run if you pay off early cause alot of morgage companys look at it as a early pay of which is a good thing. So do it if anything it will help your credit score:)

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sarah a on March 11th, 2010 at 5:08 pm

no i would NOT pay it off with you intrest rate in your savings and your car loan the same. what happens if a emergeny happens, then you need money fast and have to use 19 percent apr credit card for it. if you pay on time or double pay recomended would be just fine. save for a downpayment.

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Hoa N on March 11th, 2010 at 5:08 pm

No,
It will help your credit score

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dimples22221 on March 11th, 2010 at 5:08 pm

No.

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