Financially, it makes more sense to attack the loan with the highest interest rate first. In your case, this is also the loan with the highest balance. If you are a disciplined person, that's the loan you should first pay down with every available dollar you can spare--this will save you the greatest amount of money (in interest).
Psychologically, it can be more helpful to attack the loan with the smallest balance first. In your case, this is the loan with the lowest interest rate. If you lack discipline and/or need motivation to eliminate all your debts, seeing one loan balance finally drop to zero can give you a significant emotional boost to keep going and attack another loan balance in kind. For some people--particularly those with many outstanding debts--this mental edge is what keeps them going until all their debts are finally paid in full.
So, which loan should you attack first? Well, how disciplined are you?
TurboMinivan t1_jadks7b wrote
Reply to Which loan to pay off first? by [deleted]
Financially, it makes more sense to attack the loan with the highest interest rate first. In your case, this is also the loan with the highest balance. If you are a disciplined person, that's the loan you should first pay down with every available dollar you can spare--this will save you the greatest amount of money (in interest).
Psychologically, it can be more helpful to attack the loan with the smallest balance first. In your case, this is the loan with the lowest interest rate. If you lack discipline and/or need motivation to eliminate all your debts, seeing one loan balance finally drop to zero can give you a significant emotional boost to keep going and attack another loan balance in kind. For some people--particularly those with many outstanding debts--this mental edge is what keeps them going until all their debts are finally paid in full.
So, which loan should you attack first? Well, how disciplined are you?