November 18, 2010

Paying Some Loans Early May Not Always Be A Good Idea

Some Contracts Won’t Allow You to Save Interest

As a basic rule, getting rid of debts is a pretty good thing. But be careful, it’s not always true.

In fact, some type of loans won’t allow you to save on interests even if you pay up early. It’s often the case with car loans or leases. 

For these loans, interest charges are calculated as part of the original contract and cannot be altered.

Verify The Contract

The only way to actually know is to read the fine prints of the contract. So check your contract before getting rid of this type of debts.

Fortunately, it’s not the general practice for most loan contracts.

Explore Other Possibilities

You’re only logical option for theses loans is to continue to make your regular payments till the end of the contract.

It would be wiser to use your extra money on other debts or to invest it. Even a “not-so-high” interest account can be more appropriated.

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