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Posted in Auto Loans
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Junce

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How long do I need to pay my auto loan to get the credit score benefit?
I purchased a new vehicle last month and pulled a 15K auto loan. I did not actually need the loan as I had the money for the car, but I hear that auto loans will help your credit. My interest rate is 6% (quoted 8% from my company credit union!) and their reasoning was that my profile was too "thin" and credit cards were not enough credibility to get me a better interest rate.

How much did I help/hurt my credit by pulling the loan? How much will it help/hurt my credit if I pay it off early (1 year of the 6 year life)? How much will it help/hurt my credit if I keep the loan closer to the life of the contract?

Thanks!

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I checked that out for myself since I recently bought a new car with a 6 year payment.  Having a long-term loan and paying it on time as agreed works to help your credit score, especially since you have a thin file right now.I was going to pay mine off within a very few years but am considering not doing so due to the credit score benefit.  Or, I might pay it off within 3 years vs 6.  Still pondering that, especially since I like to avoid paying interest as much as possible.  You might consider reading some of the articles on this site and doing a Google search with your question to get more information on which to base YOUR decision.

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