 TITLE: Does Paying Off a Car Loan Early Hurt Your Credit? CONTENT: When Is It Better to Keep the Loan?\n-----------------------------------\nHere are some situations when you're better off keeping your car loan:\n*   **When you have a low interest loan or 0% financing**: On average, interest on car loans is lower than on many other types of debt. For example, current credit card interest rates average about 17.75%, while car loan interest rates average about 4.75%. If you're carrying credit card balances, paying them down makes more financial sense than paying off a car loan early. Were you lucky enough to get a 0% financing deal when you bought your car? Then there's really no benefit to paying the loan off early. If you've got extra cash burning a hole in your pocket and no other debt, invest it (or save it for a down payment on your next car).\n*   **When you don't have an emergency fund**: Experts recommend keeping three to six months' worth of expenses in an emergency fund in case you lose your job or are hit with unexpected expenses. If you don't yet have an emergency fund, any extra cash should go towards establishing one, rather than paying off your car loan early.\n*   **When you're close to the end of the loan**: If you only have a few more loan payments to go, paying off your car loan early won't save you a significant amount of interest. In this case, it's better to keep the loan, make those remaining payments on time, and benefit from the positive effect this will have on your credit score. (The only exception: If you want to sell your car to a private party, having title to the vehicle will make it easier to do so.) END