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does paying off a car loan early hurt credit?
Posted on 3/21/24 at 2:02 pm
Posted on 3/21/24 at 2:02 pm
Hey yall, I got a car loan recently for around 26k, spoke w/ a family member who will loan me enough to pay it off & I will pay them back. Would this do a lot of damage to my credit if I pay it off quickly?
6
Posted on 3/21/24 at 2:24 pm to EFHogman
No. Paying off any loan early will not damage your credit.
Posted on 3/21/24 at 2:30 pm to sidewalkside
quote:
Paying off any loan early will not damage your credit.
It could lower his score a bit, but I wouldn't worry about it unless you're about to buy a house or something.
Posted on 3/21/24 at 2:43 pm to EFHogman
How long have you had the car loan so far?
Paying as agreed on installment loans for over 2 years really helps your credit (assuming you don't have this elsewhere on your credit report with a mortgage or other car loans).
Paying off an installment loan overall helps your credit.
Although... having a 2+ year track record paid as agreed helps credit.
And having active credit accounts helps credit.
There are so many moving levers, it is difficult to generalize.
But yes. Paying off an installment loan helps your credit because it shows you are managing debt (even if you are cheating and having a friend loan you the payoff amount).
Paying as agreed on installment loans for over 2 years really helps your credit (assuming you don't have this elsewhere on your credit report with a mortgage or other car loans).
Paying off an installment loan overall helps your credit.
Although... having a 2+ year track record paid as agreed helps credit.
And having active credit accounts helps credit.
There are so many moving levers, it is difficult to generalize.
But yes. Paying off an installment loan helps your credit because it shows you are managing debt (even if you are cheating and having a friend loan you the payoff amount).
Posted on 3/21/24 at 2:47 pm to meansonny
Have only had this car loan for a month. Have great credit currently & only owe on my house. Think I will go ahead & pay off the loan company. Thanks everyone for the advice!
Posted on 3/21/24 at 3:00 pm to EFHogman
quote:
Hey yall, I got a car loan recently for around 26k, spoke w/ a family member who will loan me enough to pay it off & I will pay them back. Would this do a lot of damage to my credit if I pay it off quickly?
I wouldn't take a loan from my family. Changes the relationship. The borrower is slave to the lender.
Posted on 3/21/24 at 3:03 pm to EFHogman
quote:
spoke w/ a family member who will loan me enough to pay it off & I will pay them back.
Posted on 3/22/24 at 12:32 pm to EFHogman
I got forced to do this when I had a VEH stolen after about 6 months. Credit Score did go down some, but manageable for me at the time, as I happened to not be in the market for credit needs at the time. I ended up able to find a solid used car replacement I could pay cash for.
I'm thinking if you are looking to seek credit any time soon then you may want to hold of at the same time. Otherwise from my experience you should be good.
I'm also assuming your interest rate is super high, so worth the borrowed route. Or pay off some and invest the rest in a for sure thing from here, and pay your friend back sooner. Win-Win...but hook me up with the sure thing. Thanks.
I'm thinking if you are looking to seek credit any time soon then you may want to hold of at the same time. Otherwise from my experience you should be good.
I'm also assuming your interest rate is super high, so worth the borrowed route. Or pay off some and invest the rest in a for sure thing from here, and pay your friend back sooner. Win-Win...but hook me up with the sure thing. Thanks.
Posted on 3/22/24 at 12:49 pm to EFHogman
quote:Yes. If you're 12...
does paying off a car loan early hurt credit?
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