Category: Debt

Should I Pay Off All my Debt?

There are many people that work really hard to make sure that they repay their debts as quickly as possible. They decide that they want to get rid of them all and they will then clear them. However, is this a good idea?

Early Redemption Fees

It is worth making sure that there are not fees on the debts that you are repaying to start with. For example, you will find that some loans will have some thing called an early redemption fee. Basically, this is something you will be charged if you repay the loan early. Some loans do not have this charge at all, some have a very small one to cover administration fees and others have a really large charge to try to stop you moving to another lender or repaying early as they will miss out on the interest that they would otherwise have had. It may not be immediately obvious whether this will impact you. It can be wise to get in touch with your lender directly and ask them and then you will know for sure.

Interest

It is good to see how much the interest on the loans is. If it is very ow, then there is a chance that you might be better off putting your money elsewhere. For example, a mortgage rate can tend to be one of the lowest loan rates but you may find that there are savings accounts that will give you more money. So, if you put money into the savings account rather than against the loan, you will actually get more money. This can be rare though and you will need to keep checking the rates to make sure that you will not be better off repaying the no credit check loan rather than putting the money in a savings account. This is because rates do change from time to time and this means that we will need to keep a check on what they are. Even if the Bank of England base rates do not change, lenders and savings account providers may still change their rates. You may not even notice so it can be wise to ask the provider every so often so that you can be sure of what is going on with them.

Alternatives

It is also good to think about alternative problems with repaying your debt. It takes a lot of effort to repay your debt quickly and early. It means that you will have to sacrifice a lot of things or work much longer hours so that you have enough money to be able to repay the debt. It is worth thinking about the impact that this might have on you. Working a lot more will mean that you have less time for leisure. For some people, they will be able to cope with this, but it is a good idea to consider whether it is something that you will personally be able to cope with and if you can, how much you will be able to cope with. He same as cutting back on spending as many of us really like to treat ourselves to a few things and having to give that up can be hard. It might be sensible to have a compromise, where you do a little extra work and cut back a little bit but still have leisure time where you can relax and buy yourself a few treats. You have to think that if you have large debts then this new lifestyle might go on for a very long time and so you have to make sure that it is something that you will be able to manage.

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