The concept of "Power Payments" will help you repay your loans faster and reduce your total interest payments. Consider a situa

Question

4 years ago

7

The concept of "Power Payments" will help you repay your loans faster and reduce your total interest payments. Consider a situa

tion where you have 3 loans:
Loan A has a loan payment of $500/month and an interest rate of 5% APR;
Loan B has a payment of $200/month and an interest rate of 3% APR;
Loan C is a credit card with a payment of $300/month and interest rate of 18% APR.
You just made the final payment on your auto loan (Loan A). Yahoo!! What should you do with the $500/month payment that you no longer have to pay on Loan A if you want to reduce your loans as fast as possible?

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1 answer:

NeX [460] · Answer 1 · 2021-12-08T14:17:26+03:00

NeX [460]4 years ago

6 0

Answer:

You should pay loan C since it does not only represent the largest monthly payment, but it also has the highest APR. The sooner you pay your credit card balance (loan C) the better.

On the other hand loan B has a smaller monthly payment and a much lower APR.

The concept of​ "Power Payments" will help you repay your loans faster and reduce your total interest payments. Consider a situa

The concept of "Power Payments" will help you repay your loans faster and reduce your total interest payments. Consider a situa