Kendall Capital

Last week, I was interviewed by Catey Hill of Smart Money Magazine in reference to whether an individual should continue or stop paying an outstanding loan and what are the considerations a borrower should think about when defaulting on a loan.  The article, "Choosing the Debts to Pay Off Now (and Later)", discusses what you should consider when deciding which loans to pay off now and which ones you should pay off later.

Pay Off Loans that Have the Most Impact On Your Life

When paying off your debt, focus on loans that will have the most negative impact on your life if you do not pay them back this period. For example, alimony, taxes and child support can all land you in jail if you do not make the payments on time.

Pay Off Loans that Provide You With the Least Advantage

Paying off bills, school loans and credit card debt can be difficult, but focusing on loans that have the highest interest rates and that are not tax deductible can help you make the most out of your money.

Pay Off Loans Based on the Cost of Non-Repayment

When you don't pay back your loans on time, you will face the consequences - rather it's by accruing more interest, getting a lower credit score (which will impact how much you will pay for future loans) or losing any collateral that backs up any of your secured debts.

The main financial issue most borrowers do not consider when borrowing loans is that a loan is a financial leverage. Like a physical leverage, small changes in cost of capital and return of capital can make a hope of difference to an individual's return on capital. 

If you want more financial tips on how to better manage your debt, contact Kendall Capital Management in Rockville, Maryland (MD) today! Our financial planners will help you decide which loans are best for you to pay off now and which ones you can wait to pay off later.