Should I get a auto loan to diversify my credit lines if I have the cash to pay upfront
You should not seek a kind of debt just for it's appearance on your credit report.  If you don't need an auto loan don't get an auto loan. Getting a credit card for the purpose of building credit is a little bit of a different animal because you can use a credit card such that you never pay any interest or fees.  With a loan, you will pay interest.  Altering your score by paying interest doesn't provide you with a net benefit. With that said, depending on the auto loan rate you may want to accept the loan just to fee up your capital.  Some promotional rates are so low you may even make money leaving the cash in a regular savings account.  But don't let your credit score wag the dog. There is no need to get an auto loan just to try and affect your credit score. It is possible to have a score over 800 without any sort of auto loan. If you can afford to pay for the vehicle up front that is the better option. Even with special financing incentives it is better to pay up front if you can. Yes it is possible to use the funds to make more if you finance with a silly low interest rate, however it's also possible to lose a job or have some other financial disaster happen and need that money for something else making it more difficult to make the payment.  It may be just me but I find the peace of mind not having the payment to be worth a lot.
At the area where I live (Finland), banks typically charge a lot more for additional mortgage credit taken after purchasing the house. So, if you are planning to purchase a house, and pay it with a mortgage, you get a very good rate, but if you pay back the mortgage and then realize you need additional credit, you get a much worse rate. So, if this is applicable to your area as well, I would simply buy stocks after you have paid enough of the mortgage that it is only 50% of the house price or so. This is especially good advice if you are young. Also, if your mortgage is a fixed rate and not an adjustable rate mortgage, you probably have a very low permanent interest rate on it as interest rates are low currently (adjustable rate mortgages will also have a low rate but it will surely go up). Some people say there's a bubble currently in the stock market, but actually the bubble is in the bond market. Stocks are expensive because the other alternatives (bonds) are expensive as well. Paying back your mortgage is equivalent to investing money in bonds. I don't invest in bonds at the current ridiculously low interest rates; I merely invest in stocks and have a small cash reserve that will become even smaller as I discover new investment opportunities. I could pay back a significant percentage (about 50%) of the loans I have by selling my stocks and using my cash reserves. I don't do that; I invest in stocks instead, and am planning to increase my exposure to the stock market at a healthy pace. Also, consider the fact that mortgage is cheap credit. If you need additional credit for consumption due to e.g. becoming suddenly unemployed, you will get it only at very expensive rates, if at all. If you're very near the retirement age (I'm not), this advice may not be applicable to you. Edit: and oh, if your mortgage is fixed rate, and interest rates have come down, the bank will require you to pay the opportunity cost of the unpaid interests. So, you may need to pay more than you owe the bank. Edit2: let's assume the bank offered you a 4% fixed rate for a 10-year loan, which you agreed to. Now let's also assume interest rates of new agreements have come down to 2%. It would be a loss to the bank to pay back the amount of the loan (because the bank cannot get 4% by offering somebody else a new loan, only 2%), unless you paid also 10 years * (4% - 2%) * amount = 20% * amount of lost interest income. At least where I live, in fixed rate loans, one needs to pay back the bank this opportunity cost of unpaid interests. I don't understand the calculations in the comments by the OP. He says My monthly savings after mandatory expense is around USD 2000. This includes rent, expenses, emergency fund savings, and the monthly required payment of my auto loan.  (emphasis added) He has $2000 USD left over after monthly expenses (which includes rent, food, utilities etc, contribution towards emergency funds, and the required monthly payment on the auto loan). He claims that by applying the $2000 USD per month towards reducing the debt, it would take him 30-36 months to be debt-free.  But is it not the case that applying the $2000 to the student loan of $18K+ (while continuing to make the auto loan payments) will pay the student loan off in less than 10 months? If no payments are made on that $18K+ student loan, the accrued interest of about $2K in 10 months (this is (18.25*13.7%*)(10/12) for a total of $20K+). In actuality, with the loan being paid down, the interest will be much less. Once the student loan is paid off, the extra $2000 can go towards what is left of the $10K auto loan each month and  pay it off in another 4 or 5 months or so. So we are talking of 15 months max instead of 30-36 months. Of course, as Carlos Briebiescas points out, the car is more valuable as an asset than can be sold in case of job loss  creating  a need for cash etc, and so paying it off first might be better, but that is a different calculation. An auto title loans are typically utilized by those that wish to obtain a funding with bad credit rating or no credit in any way. An auto-mobile title lending frequently called a vehicle title lending or merely title funding as well as pink slip funding’s. You merely should have a vehicle that is paid off or nearly paid off and also you could make use of the auto title as security to obtain the cash money you require, enabling you to continue driving your vehicle while paying your loan.   Get Auto Title Loans in Hemet CA and nearby cities Provide Car Title Loans, Auto Title Loans, Mobile Home Title Loans, RV/Motor Home Title Loans, Big Rigs Truck Title Loans, Motor Cycle Title Loans, Online Title Loans Near me, Bad Credit Loans, Personal Loans, Quick cash Loans   Contact Us: Get Auto Title Loans Hemet CA 7210 Simpson Road,  Hemet, CA 92545 951-330-3101 hemetgatl@gmail.com http://getautotitleloans.com/car-and-auto-title-loans-hemet-ca/ Great question.  First, my recommendation would be for you to get a card that does not have a yearly fee. There are many credit cards out there that provide cash back on your purchases or points to redeem for gift cards or other items. Be sure to cancel the credit card that you have now so you don't forget about that yearly fee. Canceling will have a temporary impact on your credit score if the credit card is your longest held line of credit.  Second, it is recommended not to use more than 20% of all the available credit, staying above that line can affect your credit score. I think that is what you are hearing about running up large balances on your credit card. If you are worried about staying below the 20% line, you can always request a larger line of credit. Just keep paying it off each month though and you will be fine.  You already have a history of credit if you have begun paying off your student loans. "I'd lean toward using the $3,000 from the emergency fund although depending on your monthly bills, a $2,000 emergency fund (or even a $5,000 one) may be a bit small. But here are a couple of other options for you: Zero-interest balance transfers: If you have cards and have a zero balance on them, your credit card companies are keen to see you put a balance on them. Find out if they're offering any ""12 months no interest on balance transfers"" offers (or if any of their rivals is), since of course the car loan is an outstanding balance you can transfer (you're not asking them for cash). Put the $3,000 on that zero-balance transfer option, get rid of the car, and pay the $300/mo to pay down the balance on the card. 10 months later, two months before the end of the free period, you're at zero again — without dipping into your emergency fund. You'll also now have a history with that card company of paying back, which may lead them to attempt to entice you to go into more debt (which you'll resist, of course) by increasing the limit. (If you don't want a higher limit, just tell them to reduce it again.) A $3,000 unsecured loan with no pre-payment penalty provided the math works out. The interest may be expensive (unless you find something with a teaser rate for the first X months), but if you find an option, do the math on it to see if it's actually more expensive than carrying the car payments, insurance, etc. on a depreciating asset. It may not be as expensive as the 20% rate or whatever makes it sound (but again, do the math), and if you apply your $300/mo to it, within (say) 11 months you're clear again — with a nice little paid-back loan on your credit report. Both of these ensure that you still have your emergency fund at your disposal, and both capitalize on the fact that right now, you're probably a good credit risk. If you dip into your emergency fund, and an emergency happens (like loss of a job) and you find yourself short of funds, you may have trouble securing further credit at that point to cover the gap in your emergency fund." "Seems to me you don't have a ton of great choices, but of them: Keep going as you are.  If/when the car becomes unusable without significant expenses, stop using it.  Buy another junker and use that to get by until your loan is paid off.  From now until then, put aside a few hundred (or whatever you can, if more) each month towards the anticipated purchase.  When you do buy this junker, pay in cash - no loan.  Just get something that will take you to work, and that includes ""bike"" if that's a possibility.  When you can, sell the no longer usable car to finish paying off the loan. Start aggressively paying off the current loan, with the eye of getting it down to where you're not underwater anymore.  Then sell the car and dispose of the loan, and buy a better replacement.  Scrimp and save and cut everything - eat cheaply (and never out), cut your personal expenses everywhere you can.  If you get another $250 a month towards principal, you can probably be no-longer-underwater in about a year. Get a personal loan today for the amount that you're underwater, and immediately sell the car.  This gets you out of the loan and car the quickest, and if you think the car will devalue significantly between now and when you might be not underwater anymore, this might be the best option.  But it's the most expensive, likely - you'll pay 12% to 20% on the difference.  Now, 12% of $5000 is less than 5% of 15000, so it might actually be a good financial deal - but you'll probably have to shop around to get 12-15% with a 660 (though it's probably possible).  You'll still be without a car at this point, though, so you'd have to buy another one (or live without for a while), and you'd still have a payment of some sort, but perhaps a more manageable one ($5000 @ 12% @ 5 years means something a bit over $100 a month, for example.) I recommend that if you can get by without a car for a while, option 2 is your best bet.  All of these will require some financial care for a while, and probably cutting back on expenses for a year or two; but realistically, you shouldn't expect anything else.  Get a budgeting app if it will help see how to do this. As far as getting out of the loan without paying it, I don't recommend that at all.  Your credit will be ruined for at least seven years, and 660 is not bad at all really, and then would take  yet more years to recover.  You will likely be sued for the balance plus collection costs, beyond repossession.  The consequences would be far, far worse than just paying it off, and I mean that financially as well as ethically." "In addition to the two options in your question - pay off the entire loan, depleting your emergency fund; or continue as you are today - there is a third, middle-ground option that might be worth considering. Since you currently have an emergency fund, zero credit card debt, and you stated ""we can afford these expenses"", I think I'd be correct to assume that you're currently making regular contributions to either the emergency fund itself, or to another savings account, etc. Temporarily stop making those contributions, and divert those funds to make larger payments towards the upside-down loan. The additional amount will all be applied to the loan principal, reducing the interest you'll have to pay, but you'll avoid the risk of depleting the emergency fund. Additionally, the insurance premium may possibly be avoided, as in many places in the world it's possible to de-register the car (for example, in California, USA, you can submit an affidavit of Non-Use) then terminate the insurance on it. However, the car will likely have to be parked off-street (or in a location such as a private road governed by rules that do not include legal registration requirements)." "My husband made a similar car loan decision when he was younger and didn't have an established credit history / favourable credit rating.  As a result, he ended up paying triple what the car was worth, because of the interest. When we consolidated our finances, this ugly loan was first on our list of priorities to change, convert, eliminate, but unfortunately, in our case, the terms of the loan were such that only the lender benefited.  There was no incentive to pay off the loan early, in fact, we would have to have paid all the future interest at once, without saving a penny. So check the terms of your loan - hopefully you're better off than we were.  In our case, the only upside we could figure was the lesson of ""live and learn""!"