Need Suggestions on Closing My Loans Early (Minimizing Interest)
Hi everyone,
I’m looking for advice on how to close my loans early while paying the minimum possible interest. Here are my details:
1️⃣ Car Loan • Original Amount: ₹8 lakh • Outstanding: ₹3.89 lakh • Remaining Tenure: 26 months
2️⃣ Home Loan • Original Amount: ₹52 lakh • Outstanding: ₹40 lakh • Remaining Tenure: 109 months • I have already made some prepayments on the home loan.
I’m confused about the best strategy going forward:
Options I’m considering: 1. Close the car loan first via prepayment, then redirect that EMI toward increasing the home loan EMI. 2. Continue paying both EMIs and focus only on part-payments for the home loan (since it’s the bigger loan). 3. Continue both EMIs and focus on clearing the car loan aggressively first.
My goal is to: • Close loans early • Minimize total interest paid • Optimize cash flow smartly
What would be the most financially efficient strategy here? If you’ve faced a similar situation, please share what worked for you.
All suggestions are welcome. Thanks in advance! 🙏
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@ActiveShark , it's not about the interest amount. It's the interest percentage.
For example,
if your car loan is at 12% and home loan is at 9%, for 4L,
you'll pay 48k per annum on car loan per year, but for the same 4L in home loan, you'll pay 36k only.
So if you have surplus money or want to close or pay off something, start with the one with highest interest rate(% per annum)
Assuming your car loan has a higher interest rate than the home loan, it is better to clear that first and then add the amount to your home loan EMI.
I am doing the same with my Car loan and education loan. Prepaying car loan with a higher amount as the EMI and even putting lump sum whenever possible. Once that is closed, i will redirect the car loan emi to my education loan emi to close that soon as well.
I am also investing in mutual funds - this is currently SIP based but can’t wait for loans to clear before investing. I believe both have to be done in parallel even if it is a lower amount.
But car loan has only 40k interest left whereas for home loan 15Lac interest is left
Hire a finance planner if you’re serious about it, they can give better perspective given your current wealth status
I’ve seen that people here in Grapevine share some genuinely thoughtful and practical advice as well, so I figured I’d ask here first to get a few perspectives. If I feel I need more structured, personalized guidance based on my financial position, I can always consult a professional afterward.
Thanks for your suggestion 🙌
There is a thing called an excel sheet and ChatGPT.. put your actual numbers there and ask it to run simulations or give you an excel with various fields there you can decide which is best way.. saving you max money.
If you can't do that hire me... Just 5k and I will tell you how much to put in which loan