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What would be preferable to retire a loan towards the end of its term or much before?
Wiki User
∙ 18y ago
The earlier you can retire a loan, the more money you will save in interest. Assusming it's simple interest, in the first years very little of the payment is going to reduce the principle. Toward the end of the loan term, most of the payment is going to principle and very little to interest, so the benefit of paying it off early at that point is limited. On a long term loan like a home mortgage, you may find that over the course of the first year, the principle goes down by about the amount of one month's payment. That means that if you can pay the equivalent of one month's payment extra toward the principal, you will have reduced payoff time of the loan by a year.
Wiki User
∙ 18y ago
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What would be preferable to retire a loan towards the end of its term or much before it?
In most instances paying off a financial contract saves the borrower money in terms of interest and fees. However, some loans have early payoff penalties. It would not impact negatively on a credit report. Comparing the amount that could be saved on interest charges with other contributing factors should help in making a decision.
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How would you use preferable in a sentence?
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What other words can be used instead of would be better?
It is preferable ...
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