"Should I pay off my auto loan early, or should I leave a small balance to keep the account open? "

"I currently have the money to pay off my car loan early, but I know paying it off will close out the account, which will make my credit score drop.

I worked really hard to get my score up and I would like to keep it that way for as long as possible.

"

Answer
“It really depends on how much money you will save by paying off the loan early.
If your loan has an early payoff penalty, or if it is structured so that the full interest amount is owed no matter when you pay off the loan, then by all means keep it open for as long as possible. However, if paying off the loan early will actually save you money in interest charges, then pay it off as soon as possible.
You really shouldn’t worry about the dip in your credit score, especially if you have other lines of credit open. The dip will be minimal and future lenders will still be able to see the closed account on your record. “
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Johnny Puckett
Answered on May 25, 2021
Johnny Puckett is a freelance writer and automotive expert. He has contributed content to a number of some of the largest online publications, aftermarket automotive manufacturers’ sites, and automotive informational sites. His experience in the automotive and information fields informs his writing at Jerry. His automotive interests bleed into his free time, where he enjoys modifying his favorite cars and woodworking.
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