How does paying off a car loan early affect my credit score?

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I recently bought a new car and financed for 48 months (mainly to get a rebate). Now, 6 months later, I have enough money to pay off the loan. However, the car salesman told me that I should wait at least a year to pay it off fully to help my credit score. Does anyone know how this works? My score is 720 if that helps. (Note: I’m not interested in whether I should pay off the loan or not, just when and how it will affect my score.)

3 Comments
  1. Reply
    Todd S
    November 10, 2011 at 3:17 pm

    Why would you pay extra finance charges if you have the money and willingness to pay off the loan?

    Even if your credit score does fall, which it probably wouldn’t because you’re reducing outstanding debt and satisfying a commitment on time, is it worth the cost in real dollars?

    The finance company makes more money if you wait to pay off your loan, as they get more and more interest each month.

    720 is a pretty good credit score and you probably won’t be adversely affected by paying it off.

    It hard to tell you the impact because it depends on the rest of your credit history, but it’s certainly not a negative. But I would think the only way it could hurt you is if you had no other credit lines open, and thus, no other credit history to be based on, which probably isn’t the case.

  2. Reply
    George Micro Finance Firm
    November 10, 2011 at 3:49 pm

    WE ARE A FINANCIAL COMPANY THAT RENDER LOAN SERVICES…..

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  3. Reply
    Andrew
    November 10, 2011 at 4:36 pm

    You can use this credit monitoring service to pre-estimate future scores for different scenarios of such payments – creditreport.imess.net

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