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Posted in Auto Loans
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aml1215

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does it hurt your score to pay your car loan off for a year instead of making monthly payments
We got a loan last year for a car. At tax time this year we paid for a full year so we wouldnt have to worry about falling behind on our car note every month and we plan to do the same next tax time. A friend of mine said that that actually hurts your score cause youre not paying it once a month like you should and technically all we really paid for was the interest of the loan. Is this true? I hate to go to monthly payments because if we cant make the payment I feel like that would hurt worse. Our payments are 100% so i would assume paying the full year isnt hurting. opinions??

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Your friend is slightly confused.  You actually saved interest by paying it off early.  Did you hurt your score?  Well, yes, because any time you close an account your score will drop.  However, you have to do what makes the most sense to you.  If your score is already in the 700s, then keep doing what you are doing, you're in good shape.  It would be silly to pay extra money in interest just to drive your score up.  If you need to improve your score, I'm not sure if that is the best way for you to do it.  I'd need to evaluate your entire credit report to give good advice, but I suggest you visit www.credit.about.com and use their links or search box to get great advice about your situation.  Best of luck.

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