Asked by Anonymous

I'm currently paying back my parents $100 monthly for the CPF education loan I took up last time. Should I try to clear this debt faster by repaying a higher sum (eg $200) or continue at a min of $100?

I'm not intending to ask my parent to waive away the repayment of loan for me hence I'm here to ask which is a better option. Thank you. Thank you guys in advance! Assuming that lump sum repayment is not an option sadly.

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  • Gabriel Lee
    Gabriel Lee
    Level 6. Master
    Answered on 24 Oct 2018

    If the repayment amount incurs interest, then you should consider repaying a higher sum each month so as to clear off the debt as soon as possible to reduce the amount of interest payable.

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  • Lim Zhi Cong
    Lim Zhi Cong
    Level 2. Rookie
    Answered on 24 Oct 2018

    Same boat here. Currently serving NS so won't need to repay. Initially wanted to one shot pay back to clear debt ASAP. But after some thought, I would choose to pay 100/200 per month, the rest will be used for investments. I'm confident of being able to get more than 2.5% returns in my I investments, hence I choose to repay slowly. This only applies if you are confident that you can beat the interest rates for your loan, if not best is to repay ASAP so that the interest doesn't snowball. There is no shoe that can fit everyone's feet. In the end the decision can only be made by you.

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  • Tee-Ming Chew
    Tee-Ming Chew, Co-founder at Seedly
    Level 5. Genius
    Answered on 24 Oct 2018

    Definitely recommend to clear the debt as fast as possible to avoid interest. The longer it takes to clear the debt, the more interest you need to pay.

    In fact if you can do lump sum repayment, that will be even better!

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  • Huang Yixuan
    Huang Yixuan
    Level 5. Genius
    Updated on 29 Nov 2018

    Yeah try to clear it asap man. Debts are not good. Maybe you can try to cut down on your expenditure?

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  • Yong Kah Hwee
    Yong Kah Hwee
    Level 6. Master
    Answered on 24 Oct 2018

    Like what Gabriel mentioned, if your debt has interest tagged to it, then better to clear ASAP. If there is no interest, then you can either take your time to repay so you can invest your money first, or pay it off soon to return the money to your parents ASAP.

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  • Hariz Arthur Maloy
    Hariz Arthur Maloy, Independent Financial Advisor at Promiseland Independent
    Top Contributor

    Top Contributor (Apr)

    Level 7. Grand Master
    Answered on 24 Oct 2018

    Personally I wouldnt. I don't see the big deal of being debt free. Having more cashflow and liquidity is more important to me.

    I can generate more than 2.5% returns, so I'll hold off paying the loan.

    Plus if I need money, I can sell my investments but I cannot withdraw what I already paid off to my loan.

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  • Jason Sin
    Jason Sin
    Level 5. Genius
    Answered on 24 Oct 2018

    Clear your debt as soon as possible so that you could have more money to save or to invest in the future.

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  • Joyce Tan
    Joyce Tan
    Level 2. Rookie
    Answered on 24 Oct 2018

    Yes you should try 200 a month to clear it off faster and avoid interest!

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  • Nicholes Wong
    Nicholes Wong, Diploma in Business Management at Nanyang Polytechnic
    Level 6. Master
    Answered on 24 Oct 2018

    Clear your debt as fast as possible. Then after that you can use the money to invest and increase your capital for your future.

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