The practice of purchasing on credit is an age old practice, though the instrument of credit purchase might have changed over time. The popularity behind this method of purchase is that the benefit from the purchase can be experienced much earlier. Presently, the most common financial instruments used for credit purchase are credit cards and payday loans.
You might have taken multiple loans at different points of time for different purposes and repaying these loans simultaneously. A situation often comes when you have some extra money and you intend to increase the speed of repayment. In such situations, choosing the right loan for faster repayment is a very important task.
People often have a tendency to pick up the minimum loan for faster repayment. They think that by paying off this loan in a short period, they would rid themselves totally from one debt. However, this is not at all a financially intelligent choice.
While choosing the loan for faster repayment, always go for the loan with the maximum interest rate. For example, a payday loan from My Canada Payday can have interest of up to 23% per loan (up to 21% in Ontario), and when a loan is in default you can expect to pay as much as 59% per year depending on the province. This will almost certainly be of the highest priority unless you have a loan with additional consequences to delinquency, such as a title loan where you may face repossession. Of course, it now takes longer time to clear off one debt when the loan amount of the loan with the maximum rate of interest is high. But with this choice, you save a considerable amount of money, which you would have otherwise paid in the form of interest. Moreover, when you start repaying the loans with highest interest rates earlier, you might pay off all your debts faster by utilizing the money saved on interests.