Question: Since I am relatively new to budgeting , I have a question…currently I have a very high interest loan from a finance company. I owe approximately $13,000.00 on it at an interest rate of 24.39%…scary, huh? I pay $470.18 a month on this @#$%$#@^&*^% loan and it seems that I am never going to get it paid off. Believe me…NEVER go through a finance co. with high interest rates, just because you WANT something so badly…as I did. What a lesson to be learned–the HARD way. (Reason for finance co. with high rates was due to credit that was SHOT because of other poor financial choices). Anyways, I am on the way to financial recovery in little bitty baby steps…and would like to know…do I pay off this loan early by sending in extra money when I have it…or…should I take my extra money and put it in the bank and save it, as I have very little money saved. Any advice from the frugal financial guru-types out there?
Answer: Unless you have a significant prepayment penalty, but all means make extra payments.
This almost seems like a troll note. I was not aware that it was legal to charge so high an interest rate.
If for real, you may want to apply for credit cards that have significantly lower rates and borrow at the lower rate to pay off the higher rate money. At 24% interest, it’s hard to imagine you’ll ever catch up. I shutter at thinking about paying any more than the 6% on my mortgage. I can’t comprehend 24%. I wish you the best of luck. Sounds like you are making some progress. For sure, I’d continue to sacrifice any way possible to reduce that 24% interest money. There’s almost no way you will get an equal-to-better return elsewhere, so paying down debt has to be your first priority until it gets under control. (and don’t be afraid to borrow elsewhere at lower interest rates – to pay down that almost sinful interest rate debt.
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