Loan payment process

POSTED BY TheZionView ON November 21, 2012 10:27 pm COMMENTS (2)

I have a question with respect to decision to be made on the way to go about re paying the three loan

Loan 1: 1L From Friend at 12% non compunding due in Jan 13 can pay just interest and close next year

Loan 2: 69K Gold Loan from Bank with 12% interest its compounded monthly based on pricipal balance

Loan 2: 1.47L Gold Loan from Bank with 12% interest its compounded monthly based on principal balance

Currently repaying the loan in below method

10K(5K in each gold loan) in Loan 2 &3.

5K in chit fund from which i will get around 85K in Jan 13.I will need to pay 5K until Jan 14.

What should i do with this 85K?

Pay of the friend loan 1?

If this then i will keep paying 10K in both gold loans and since its based on deceraing principal.

Pay of the Gold loan 1.Use remaining to pay friends Loan 1 interest?

Then i need to park the extra 5K in some RD to pay of the friend in jan14

I could not calculate the benifit of each method.

2 replies on this article “Loan payment process”

  1. TheZionView says:

    Manish,
    The problem is gold loan is based on decreasing principal.i.e if i pay 10K/month that will be deducted from principal and only the rest is calculated for interest.But friends loan is fixed i cant pay him on monthly basis and reduce the interest i have pay him in full

  2. Why not pay the bank loans first ,friend loan can be paid later if he is ok with interest part only . once you clear that bank loan , you can then use the EMI saved from there to repay your friend loan .

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