It depends on whether you want to improve your credit in the short run or improve it in the long run.

In the short run, the lower your balances the better. So if you pay off your account, it will help your credit.

HOWEVER, and this is a big “however.” Part of your credit score is based on length of credit history and part of it is based on mix of credit. So let’s say everything is paid off and you don’t owe anyone any money. This is great from an interest rate standpoint. It’s great from a balance-to-credit limit ratio. It’s great from a credit score right now standpoint. But the average age on your accounts will always be low, which will lower your credit score. Also, the mix of credit will not be there, i.e. revolving credit (such as credit cards), installment loans (such as a car note), etc, which will also lower your credit score.

Lenders want to see not only that you’re not over-extended, but that you can handle a mix of credit and stable payments over a long term.

So…

The best option if you want your credit improved immediately is to pay off the car as soon as possible.

The best option if you want to improve your credit long-term would be to make an extra principal payment every month on the front end to reduce your overall interest, but continue to make payments until the end of the term.