An auto loan is an installment account, or one with a level payment every month.
Once your auto loan is repaid, you could lose points on your credit score, especially if you don’t have other installment accounts.
So paying off your car loan — or paying it off early — could actually result in your score dropping a bit.
How long does it take for credit score to go up after paying off debt?
Allow at least one to two billing cycles, roughly one to two months, for the credit card company to report that information to Experian and the other credit reporting companies. Another month or so will demonstrate that you aren’t going to immediately take on more debt.
Is it bad to pay off a car loan early?
You want to pay off your car loan early. But auto lenders make it extremely difficult to make principal-only payments. With most loans, if you pay them off sooner than planned, you pay less in interest (assuming it has no prepayment penalties). But that may not be true for your car loan.
Photo in the article by “Social Security”