Yes, it is very advisable to pay off your car loan with the lender you have borrowed from. This is because if you have an unsettled car loan or any other loan, it will cause your credit score to reduce very drastically. All banks will report your repayment process to the Credit Bureaus and if you fail to repay your car loan (or any other loan for that matter), it will be reported to the Credit Bureaus and this will reflect on your credit score negatively and showed in your credit history as a black mark. So, in the future, if you are looking to borrow again due to a financial emergency, the chances of getting the loan rejected will be very high as the lenders will begin to look at you as a risky customer.
Why is a good credit score important?
• Low interest loans – Having a good credit score gets you the lowest interest rates in the market as the lender will find you creditworthy.
• High limit credit cards – Maintaining a good credit score can get you high limit credit cards and these can come in handy with various cashbacks, rewards, discounts and so much more.
• Avoid loan rejections – If you have a good credit score, the chances of a loan rejection in the future are very minimal. This can be very beneficial as a loan rejection can further negatively affect your credit score.
• Avoid credit card rejections – If you have a good credit score, the chances of a credit card rejections in the future become very minimal. This is also very important for you as a credit card rejection can also reduce your credit score.
• Quick approvals – Loans and credit cards are very quickly approved by the banks if you have a good credit score and they see you as very reliable and hence do not have a problem with sanctioning the loan or the credit card.
To check your credit score, click here.