Taking loans is a necessity for a lot of people. You may need a mortgage to buy a house, an auto loan to purchase a car, or some money to run your business. The necessity of borrowing money also requires that you repay them by the time they are due, so that you do not get your credit report affected, or worse, face penalties from your lenders.
If you have ever taken more than a loan at a time, you know the challenge involved in trying to pay them back all at once, and as at when due.
The simple, most effective way to repay your loans in good time, is to prioritize them. Know which ones should receive immediate attention, and act accordingly.
So, how do you know which debt to pay first?
Typically, debts are grouped into priority and non-priority debts. The essence of this, is to help you classify which of those debts pose a greater risk of penalties when not repaid on time.
Debts are considered high priority when there is a severe penalty attached to defaulting on your repayment. Debts in this category may not be the largest facilities that a borrower has, but they are the ones with the gravest consequences in an event that you default. Loan types in this category include:
These are facilities that should be repaid, but not at the expense of the priority debts. Debts in this category include:
Classifying your debts in the way explained above will go a long way in helping you manage your debts better, and prioritizing them in a way that the repayment will be easier for you.
Have you repaid your loans using the above method, or is it something you would like to try? Tweet us your thoughts @CRCCreditBureau or share with us on Facebook (CRC Credit Bureau Limited)!