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Is it best to pay off debts as soon as possible?

  • 27-07-2011 1:27pm
    #1
    The Scientician
    Registered Users, Registered Users 2 Posts: 1,724 ✭✭✭


    I'm currently paying off a four figure loan. I have it half paid off and am now in the situation where I could pay off the balance. Is this generally considered a good idea or is it best to keep capital while servicing the debt? How does paying off a loan extra early impact on one's credit rating?


Comments

  • #2
    homer911
    Registered Users, Registered Users 2 Posts: 5,150 ✭✭✭homer911


    If you are servicing a loan as per schedule, then paying it off early should have no impact on your credit rating.

    Sometimes the absence of a recent credit history can go against you, which might be the case for you in the future, but personally I dont think this outweighs the benefit of paying off the loan early.

    Make sure you dont get stung for an early redemption premium, especially if its a fixed rate loan.

    Paying off debts, if you have the cash available, is always a good option. You should however ensure that you keep enough liquid funds for unseen emergencies


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