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jrosado22

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Pay off a large portion of a loan or payoff credit cards in full?
I know everyone has a different point of view on this topic. I'd like to hear them all and tell me what you would do. Heres my situation:

I have 4 credit cards that equal to about $4k in debt @ 19%.
I have a loan car loan $9k @ 14%
And the most recent loan $7k @ 35%.

I have about $4k that i'd like to pay debt off with. I'd like to know if I would benefit most by dumping all the money into the cards, pay little into each or pay a portion of a loan?

To some people the OBVIOUS solution here would be to dump it into the high interest. but would that do me any good? It wouldnt change my monthly payments just the time it takes to pay it off. or would my credit benefit by paying off all my cards down to a zero balance? what would you do.

Thank you in advance for your guidance.

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with that much debt i'd payoff those credit cards. if you have missed any payments on them your credit is already taken a hit. so pay off teh cards then take your monthly payments on those and put that towrds the high interest loan. you will probably always have a car payment so just continue on with it.

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It depends on what your goal is.  If you are looking to increase your credit score, then get all your credit card and loan utilizations below 30% (or lower).  If you are looking to save money, then I would pay down the 7K loan (even though your payments stay the same you are saving money by paying less interest over time).  Or paying off the 4 cards would not be bad either, once they are paid off you could use the money you used to send them to pay down the 7K loan faster.

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jrosado22

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Thanks for your reply.

So, ideally I'd like to do both increase my score, and save some money. I think that last option you mentioned is not a bad idea at all. I think if pay off the cards, I can save some money on interest by adding the extra payments to the 7k loan. 

So another question. I called the finance company who gave me the loan. She mentioned that my interest is accrued daily. About $7.65 a day. Does this mean that If I make my payment say day 2 of the billing cycle that I would pay more princepal and less interest that month?

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