My credit union has approved me for a 60-month loan on a vehicle worth up to $10K. The APR is 6.75%. This credit union will not charge a penalty for early repayment. I'm looking at getting a used van for around $5500. I could put this loan on a 60-month, but I could also probably afford to pay this off as a 36-month, maybe even a 24-month. I am tempted to do a 60-month and then pay it off in 3 years or less. If I do this? Will this negatively impact my credit score? Will this negatively impact my future ability to get loans, or get low interest rates?
I could never understand why paying a loan off early would hurt your score? Can someone explain that to me?
I don't think paying it of too early will hurt you. HOWEVER, I think you should provide at least 24 months worth of payments. If not, there is no real history on how well you make payments over an extended period of time. You need that history on your credit reports for future loans and credit cards. BTW, congrats on the loan!!
We used a sub prime lender for our car and paid in off in 1 1/2 years instead of 5 years. It just so happened I hit alot of trifectas at the track. When we traded it in for our second car(this time a minivan for 2 kids) the company we first had refused to deal with us. I guess they could not fleece us enough.
Thanks, miles! I'm amazed I got auto financing at all. I have a 582 FICO based on my Equifax scores. If you or your parents work for the State of North Carolina, run, don't walk, to your nearest branch. They have the best danged interest rates around.
