There are lots of reasons for paying off a car loan early. Once you’ve paid off your debt, you’ll own your own car! You’ll be free of your obligation to the lender, and you’ll pocket hundreds of extra dollars every month. And successfully paying off your auto loan will boost your credit score.
Or will it? Generally speaking, paying off debts will usually improve your credit score. But credit is complicated. To find out if paying off your loan will boost your score, we’ll have to take a closer look at how it affected your credit in the first place.
Let’s start with some background. What determines your credit score? How does an auto loan affect your score? And how will that change when the loan is paid off?