Pay off debts right away or save to pay them off????

SarahNeedle1872

Basically, this is how I see it..... if you are paying 10% on your debt, and you are earning 3% on your savings, you are effectively paying 7% int to have savings....

stant1man

MyLastFiver wrote: »

Yes you're missing something. You pay interest on those loans, undoubtedly more interest than you would earn by putting a comparable capital sum into a savings account.

If you have spare money, then paying off the loans early is most likely to make you the most money. Unless, as others have said, you pay the full whack of interest on the loans whether you pay back early or not. Although I can't see this is likely. You need to ask your creditors about your early repayment options.

None of my loans have early redeption penalties and can be paid off early, interest is charged monthly. So should I pay off the loans that are charging the most interest first then?

My plan was to pay off the smaller loans then once each one is cleared use the extra money available (from the payments i no longer need to make) to add to the extra amount into another loan then so on and so on... hope that makes sense.

whatatwit

Yes, if you able to make repayments then you should pay off the highest rate one first.
Make the minimum payments on all the others.

If there is very little difference in the rates, then do what makes you feel better....some people would rather clear the little ones and feel that they have achieved something.

whatatwit

Somewhere, there is a link to the snowball calculator, this will show how much you will save by paying off the higher rated loan first.

hulltrucker

If there are no early repayment penalties pay off debts first

stant1man

whatatwit wrote: »

Yes, if you able to make repayments then you should pay off the highest rate one first.
Make the minimum payments on all the others.

If there is very little difference in the rates, then do what makes you feel better....some people would rather clear the little ones and feel that they have achieved something.

My dilema is that if I pay the smaller loans I will have extra cash available to pay the bigger loans quicker?