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Thread: Paying loan off early?

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    #1

    Paying loan off early?

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    I can't decide what would be better for our credit- paying my car off early or setting up an account with the balance of the loan with automatic payments.

    I have the money to pay my car off now. I have 8 payments left. I know that sometimes paying a large loan off early can negatively impact interest rates on future loans but I don't know if 8 months early would really make that big of a difference. I will save a bit of money on interest if I pay it off now. I started out with a simple interest loan, but when my credit union merged with a larger one it changed to a compound interest loan for some reason.

    Thoughts?
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    #2
    I would pay it off but I hate carrying debt and especially hate car payments.

    Do you have a comfortable emergency fund? If you do I would just pay off the car note, if not I would beef up the emergency fund and then pay off the car loan as quickly as possible.
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    #3
    I would pay the car off...or pay off a large part and then making it 1-3 payments left and creat automatic payments...paying off the interest alone will be better also
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    #4
    I've heard of there being penalties for paying loans off early... make sure you won't be charged a fee, cause often times unless you're way early in the loan, it can end up costing you more.
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    #5
    Quote Originally Posted by Tojai View Post
    I would pay it off but I hate carrying debt and especially hate car payments.

    Do you have a comfortable emergency fund? If you do I would just pay off the car note, if not I would beef up the emergency fund and then pay off the car loan as quickly as possible.
    We don't have a lot of savings. But I want to use this money either way for the car. Not having that payment every month will help us put more into savings each month.
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    #6
    I always thought that just getting the loan and paying it off builds you credit, not necessarily the individual payments. But maybe I'm mistaken.

    I would pay it off, or pay a much bigger chunk than you are paying now and lower it to 2 or 3 more payments.
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    #7
    Quote Originally Posted by VeraBot89 View Post
    I've heard of there being penalties for paying loans off early... make sure you won't be charged a fee, cause often times unless you're way early in the loan, it can end up costing you more.
    There is no penalty for paying it off early. Or at least there wasn't originally. I will have to call and ask about that as it seems the terms of the loan have changed with this new bank.
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    #8
    Ive never heard of paying things off early being penalized. I'd call your credit agency that you financed your loan through. I figured that they'd be happier to get their money early.
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    #9
    Quote Originally Posted by maegan View Post
    I can't decide what would be better for our credit- paying my car off early or setting up an account with the balance of the loan with automatic payments.

    I have the money to pay my car off now. I have 8 payments left. I know that sometimes paying a large loan off early can negatively impact interest rates on future loans but I don't know if 8 months early would really make that big of a difference. I will save a bit of money on interest if I pay it off now. I started out with a simple interest loan, but when my credit union merged with a larger one it changed to a compound interest loan for some reason.

    Thoughts?
    I've never heard of this. Has anyone else?

    I'd pay it off. Unless you dont have an emergency fund. I think the standard Dave Ramesy emergency fund is $1000.


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    #10
    Quote Originally Posted by azarmygf View Post
    I always thought that just getting the loan and paying it off builds you credit, not necessarily the individual payments. But maybe I'm mistaken.

    I would pay it off, or pay a much bigger chunk than you are paying now and lower it to 2 or 3 more payments.
    I know a few people who have payed off cars early, and when they went to get a loan for another car they got a way higher interest rate than their credit merited because the banks see that you will pay it off early and they won't get as much interest out of you.
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