Asked by Heather  |  Submitted April 25, 2016

Which loan should you pay off first? One with the lowest balance or one with the highest interest rate?

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  Answers  |  2

April 25, 2016

Over the long term you save more in interest by applying extra payments towards the higher interest rate loan. There is a philosophy that you pay off a loan balance and use the freed up cash flow to apply towards the next debt - where again I would recommend that the highest interest rate loan is the best choice to pay off next.

$commenter.renderDisplayableName() | 10.01.20 @ 22:13


April 26, 2016

You always pay your highest interest rate debt, as it is the one costing you the most. If you have low rates (3.50% of below), you always want to hold onto those as long as possible.

$commenter.renderDisplayableName() | 10.01.20 @ 22:13