In What Order Should You Pay Back Loans Or When Do I Pay Back My Car

In What Order Should you​ Pay Back Loans?: Or,​ When Do I​ Pay Back My Car?
If you’re like most Americans,​ you​ have quite a​ few bills to​ pay .​
a​ car loan,​ credit cards,​ maybe even a​ mortgage .​
If you​ have extra cash,​ when you​ should pay it​ back?
Credit Cards First
If you​ have a​ lot of​ loans,​ the​ first rule of​ thumb is​ to​ pay back the​ higher interest loan first .​
This means that first of​ all,​ you​ should never get a​ payday loan or​ cash advance on​ your paycheck .​
These loans can lead to​ exorbitant rates of​ interest,​ and should always be repaid first.
However,​ for many people,​ the​ highest-interest debt that they owe is​ a​ credit card debt .​
This should be paid back before you​ put any extra money on​ your car payments,​ student debt,​ or​ mortgage .​
Although many people carry a​ balance on​ their credit cards,​ the​ best thing to​ do is​ to​ avoid carrying a​ balance,​ or​ to​ pay as​ much as​ you​ can each month .​
This will reduce the​ amount of​ money that you​ are spending each month on​ just giving the​ credit card companies money.
Car Loans,​ Personal Loans,​ Renovation Loans,​ Student Loans
Once you​ have paid off your credit card debt,​ what do you​ with extra money now? Again,​ start with your highest interest debt .​
This means comparing the​ financing rate on​ your car loan with the​ interest rates on​ your other loans.
If you​ have a​ lot of​ loans,​ you​ might be able to​ consolidate them,​ especially if​ you​ are a​ student .​
Visit the​ Guide to​ Student Loans for information on​ how to​ consolidate your loans .​
If you​ consolidate them you​ put them all at​ one interest rate and one monthly payment .​
Remember: lowering your monthly payment isn’t always the​ best choice .​
You want to​ have the​ lowest interest rate possible to​ save you​ money in​ the​ long term .​
If you​ choose to​ consolidate,​ the​ answer becomes simple,​ you​ put the​ money on​ the​ consolidated loan that you​ have.
Mortgages are one of​ the​ least-taxed loans that there are .​
This means that there is​ no rush to​ pay off your entire mortgage instantly .​
However,​ whenever possible,​ do put extra money on​ your mortgage payment .​
Even if​ you​ only put an​ extra $500 in​ the​ first year,​ that will save you​ more than $500 in​ interest .​
Make a​ goal to​ overpay your mortgage,​ but only slightly .​
Your other,​ higher-interest loans are more important to​ pay off first.
Although getting all of​ your loans paid off might seem like a​ good thing,​ you​ need to​ remember to​ save for the​ future too .​
Make monthly payments into a​ retirement plan (perhaps a​ 401k),​ and pay yourself first .​
Once you​ have paid your savings,​ and then paid your monthly payments on​ debts,​ you​ will know how much money you​ have left to​ spend.
In What Order Should You Pay Back Loans Or When Do I Pay Back My Car In What Order Should You Pay Back Loans Or When Do I Pay Back My Car Reviewed by Henda Yesti on February 22, 2018 Rating: 5

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