Should you save while repaying unsecured loans?
Tuesday September 30, 2008
While it is always good to have some savings in reserve, when repaying unsecured loans you are often better off paying down your debt rather than putting spare money away. Unsecured personal loans charge a much higher amount on interest than savings accounts pay in interest, unless you have a very large deposit saved, the interest gains you make on the extra you save will likely be outweighed by the interest charged on your unsecured loans.
When choosing a loan, if you are intending to repay it as quickly as possible you will want to look into whether you can redraw funds from the loan and what this will cost. A redraw facility can allow you to put more into your unsecured loans and still be able to withdraw the extra you have repaid if you need it in an emergency. For unsecured loans that calculate interest every day, the more money you have repaid at any given time can create a massive saving of interest for you overall.
Please visit our comparison page if you would like to compare personal loans and car loans, including a range of unsecured loans.
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