You should repay your car loan first as it is a costlier debt
23-Oct-2015 •Research Desk
I have a housing loan and a car loan. I have an investment that is maturing soon. I can use this money to prepay one of these loans? I want to know which loan should I prepay first. The car loan amount and tenure is less but rate of interest is more. The home loan rate is lower but the amount and tenure are more? Please guide.
- Ashwin Sheorey
You should prepay your car loan first. The decision is based on two factors. One, a car loan is an expensive loan. And one should always repay the costliest debt first. Two, home loan is considered a good loan because it helps you to acquire an asset and the EMI on it also helps you save taxes.