Paying off a car loan?

Question

I want to buy a used car for about $8,500 and I have the money to pay it off but I also want to boost my credit by making it car payments. I was thinking about applying for a loan for it then paying until I have about $500. Will it automatically make my payments shorter if I have $500 left or will it keep it the same monthly payments that I had before making me pay it off early?

Answer 1

NOOOOOOOOOOOOOO.  Forget all the BS about building credit.  That's just for those who don't pay their bills.  Pay the cash.  If you have a card, only use it for airline tickets or to document reimbursement.  I'm 77 and never knew my credit score,  But when I refinanced my home they tried to talk me into borrowing an extra 100,000.  Aside from regular things like utilities the only debt I ever had was a house payment. No I was not born rich.  Worked since I was 15 and paid for my university degree.

Answer 2

Credit scores are immaterial when you don't need to borrow money.  Buy the car and pay cash.  Otherwise you will lose out on the interest payments.  Use a credit card for every day purchases and pay off all of it except for a few dollars and your score will go up.

Answer 3

The way to build credit is to make steady payments of at least a couple hundred a month on time for 12 months, so paying it all off immediately except for $500 would be foolish. Use a credit card for that instead. 

Answer 4

It will not adjust the loan payments and make them smaller. You signed a contract that stipulates what the payments are. If you pay off a bunch in advance, it will just reduce the number of payments until the principle is paid off. It will reduce the amount of interest significantly however.

Answer 5

Its kind of silly to pay interest just to build credit. I am unclear what you are asking about the $500. Also unclear what you mean by shorter payments. If you prepay $8000, the loan would end a lot sooner.