One of the most common questions financial advisers are asked is “When should I close my loan?”. With almost every adult relying on some kind of loan to finance items such as cars, homes or university, many are living in financial distress trying to determine what payments are priorities and how loan repayments should be structured.
According to NDTV Profit, loans should be paid off in the following order:
1. Personal loans
Because personal loans come without collateral, they often come with higher interest rates. Although repayment charges can also be higher, the quicker you pay your personal loan off the less chance you have of getting caught up in interest.
2. Unproductive loans
Next on the list to focus paying off are loans that don’t have any tax benefits. Loans against property or fixed deposits provide a lower interest rate, especially if you opt for 50% of the value as opposed to 90%.
3. Educational loans
Educational loans come with a tax offset, helping to counterbalance any interest charges you may incur.
4. Home loans
Home loans also come with tax benefits, so worry about clearing off other loans before you try tackling this one.
Source:http://profit.ndtv.com/news/your-money/article-which-loans-should-you-pay-off-first-324528
