Loans 1 and 3 are half the size of loan 2; interest rates on them are 4.8, 4.79 and 5.4% respectively. The proportion of each payment going towards principal for each of the three loans is currently 85, 75 and 78% respectively.
Am I best to pay lump sums against loan 3 as it currently has the lowest proportion of payments going towards principal? (This is what I have been doing.)
Or against loan 2 as it’s the largest?
Or am I better to focus on getting loan 1 paid off, given it’s already the one with the shortest pay-back time (4.5 years vs 6.5 for the other two)?
I’m sure this could be modelled, but I’m just interested in a straight-forward explanation as to which is the most advantageous approach.
Thanks for any suggestions…