I have a personal loan with sky high interest. 36%!! I needed the $$ at the time but now I am able to pay much more than the minimum amount. Is it beneficial to pay these off earlier in the loan term due to the fact that you are paying almost all interest in the beginning? Or do they spread it over the loan term because interest is not calculated after each payment? Is there an amortization table for these types of loans? It seems a bit confusing and you can’t really ask the loan company because they don’t give straight answers. I know with credit card debt you are supposed to pay off high interest cards first because the interest is clearly based on the balance. Any advice would be greatly appreciated!
Congratulations for seeing some daylight!
Simple interest loans are indeed a little less toxic (because compounded interest is not added back to principal), but at 36% (!) it’s hard to imagine a higher priority for you than clearing this debt. If you’ve built up a little cash cushion for emergencies, go after this full throttle. There are very few investments with a 36% rate of return.
This is also a great example of why a healthy credit score is like gold.