What if I Pay my Car Loan Off Early?

Dear Driving for Dollars,How will paying off my car loan affect my credit score? What if I pay it off early? Does that make a difference?-Michael

Dear Michael,

It's a common misconception that paying off a car loan affects your credit score. In fact, it does not affect your credit score at all, no matter how early you pay it off. Your credit score is only affected, and then in a negative way, if you are late or miss car payments. When your loan is paid off, it just shows up as paid on your credit report.

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