It’s impossible to imagine our life without financial services and loans. Some things are very expensive and consumers can’t afford to pay the price at once so they apply for loans and get an opportunity to make monthly installment payments.
There are people saying that every debt is an evil, but modern financial advisors divide debts into good and bad ones. There’s nothing wrong in using a lending product to buy a house or to attend college.
But many consumers get confused trying to set right priorities on paying off their loans. Which loan is worth more off your attention and which one should be paid first? How to close your loans wisely? Read here to find the answers.
Unsecured Personal Loans
It’s easy to understand why unsecured personal loans always have high interest rates. At first the lender estimates your ability to repay the loan using your credit score. But also can money option for people with bad credit. In case you fail to pay the debt off the lender gets nothing in return because the loan wasn’t secured against something.
That’s why such loans are usually the most expensive so you should pay special attention and repay them as soon as possible. You will save quite enough on paying down the interest.
Secured Lending Products
Secured loans are called so because they can be secured against property, gold, fixed deposits, insurance and some other things. That means that the lender feels more secured because you provide collateral and in case you will fail to pay the money back the lender gets something that has material value. Such loans usually have lower interest rates and if used wisely they don’t bring much hassle. The interest rate depends on the amount of money you borrow and collateral’s value.
The education is getting more expensive with each year and it makes consumers to apply for educational loans. Quite often paying off such loans takes years but in most occasions interest rates are reasonable. There are options which can help to pay off student loans faster.
For example, you can use tax benefit to pay down the interest and take an advantage on your tax savings. In this case financial advisors recommend paying off other debts and repay the educational loan after them.
It’s hard to find credit products which would be more popular than mortgages and home loans. You can get a long term loan with low interest rate in case you have high credit score and proved stable source of income. It’s possible to use tax benefits both if you want to pay off the interest rate or the loan principle.
These advantages allow making property loans the last ones you will repay. But in any case, if you have some doubts regarding repaying your loans it’s better to turn to the financial adviser. Don’t take a risk and don’t make doubtful decisions on your own.