Make Your Payments Automatically

• One of the best ways to make sure you never miss a payment is to have the money automatically withdrawn from your checking or savings account. This will help to ensure every payment is made on time, and that on-time payment history can help to boost your credit score. If your loan is at the same institution that holds your checking or savings account you may even get a lower interest rate if you choose to have the funds automatically withdrawn from your checking or savings account.
  
  Of course it is important to track your balance carefully when using such a strategy. If there are not enough funds in the account you could be hit with a costly overdraft fee and still miss your payment deadline.
  
  

Be Consistent With Your Payments

• It is important to be consistent with the payments on your installment loan, whether or not you have the funds debited from your other accounts. Making the payments consistently on the same day of each month will give you a good history of on-time payments and help to boost your FICO score. Paying the loan on the same day each month will also help you plan more effectively and make sure you do not inadvertently miss a payment.
  
  If you plan to pay ahead on your installment loan it is a good idea to send two separate checks, one for each month's payment. This will provide you with good records if a payment is questioned, and it will also ensure that the payments are reflected properly on your credit report.
  
  

It May Not Make Sense to Pay It Off Early

• When there is extra money coming in you may be tempted to pay off that installment loan early. After all it is great to not have a car payment or other loan installment hanging over your head. Even so, that extra money may be better spent elsewhere. That is because many installment loans, including most car loans, are front-end loaded. That means that the bulk of the interest on the loan is paid in the early years. If your installment loan is front-end loaded, you will not get the same benefit from early payment that you would on a mortgage or other loan that is not front-end loaded. Since the majority of the interest has already been paid, making additional payments or paying off the loan in full is unlikely to yield much in the way of interest savings.
  
  Of course paying off an installment loan early can have psychological benefits and well as financial ones. If you feel better not having that installment loan hanging over your head and you can pay it off without dipping into your emergency fund or affecting your lifestyle, it may still be worthwhile to pay it off.