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George123's avatar

Bank loans - pay back decision?

Asked by George123 (8points) July 17th, 2019

I have two bank loans ( car) both interest free. One is for $11,000 over 15 months from today and the other is $29,000 over 44 months. I will have $12,000 from a sale in the next month or so. Which should I consider paying out first?

My logic is to pay the first one out so then ill have to pay only one loan for the remainder of the period. But my mom argues that pay the larger loan to reduce the period by half so that both loans end at about the same time and then I can take a housing loan later. I’m a bit confused. I can get the housing loan while one car loan still exists. Which option would be wise?

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5 Answers

KNOWITALL's avatar

Dave Ramsey would tell you to pay one off/ down, whichever has the highest interest.

zenvelo's avatar

They are BOTH interest free? Don’t pay off either of them. Invest your money in something safe (like a CD) and earn money from using the bank’s money.

Tropical_Willie's avatar

^^^ Right answer @zenvelo ! ^^^

Response moderated (Spam)
jingle's avatar

This is a question of debt pressure. If you are sure that you are able to pay both loans regularly and normally with stable income or enough deposit supported.
Pay one off first will reduce your mental pressure from two loans every month (which would left you $659 to pay over 44 months);
Pay part of the other one first would shorten your debt period over car;
No pay to both means you take this money into a dependable invest and the interest it generated would ease you from the amount you need to pay every month;
The choice depended on your evaluation to your current and future financial situations

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