CA shares story of his friend repaying 3 loans simultaneously. What did he suggest? The answer may surprise you

When managing personal finances, many individuals struggle not with a single loan but with several running at the same time. This situation was highlighted recently by Chartered Accountant and financial planning professional Abhishek Walia, who shared an experience on LinkedIn. He described how a friend approached him with a dilemma: he was juggling three different debts—a credit card balance, a car loan, and a personal loan—and had no idea where to begin repayment.

According to Walia, this scenario is familiar to many Indians who are managing two or three loans together. The key concern, he explained, is not just about making payments but about deciding the order in which loans should be repaid.

The two popular repayment strategies

Walia outlined two well-known methods often used to tackle debt: the Debt Avalanche and the Debt Snowball approach.

Debt Avalanche: In this method, a borrower pays the minimum due on all loans but directs any extra funds towards the loan with the highest interest rate. For example, if a credit card carries an annual rate of 36% while a car loan charges 12%, the credit card debt should be cleared first. This approach helps borrowers save the maximum on interest. However, Walia noted that it can be difficult to stay motivated if the highest-interest loan also has a large outstanding balance, as it may take months to see progress.

Debt Snowball: Here, borrowers again pay the minimum across all loans but focus additional repayments on the smallest outstanding loan. For instance, if a car loan has only ₹50,000 left, it is cleared before moving on to larger debts. Walia explained that this method provides psychological relief by offering quick wins, though it may cost more in interest overall since higher-rate debts remain unpaid for longer.

Finding balance between logic and motivation

While the Avalanche strategy is mathematically the most efficient, Walia pointed out that the Snowball method often works better in real life because of its psychological benefits. Closing even one loan gives borrowers a sense of relief and motivation to continue.

He further suggested that a hybrid model can be effective—starting with the Snowball method to eliminate one or two smaller loans quickly and then switching to the Avalanche method to save money on larger, high-interest debts.

Why this matters in India

With credit card interest rates in India ranging from 36% to 42% annually, the Avalanche method has a strong case from a financial perspective. Still, as Walia emphasized, debt repayment is not only about numbers but also about discipline and consistency. The best method is the one that keeps borrowers motivated long enough to actually achieve debt freedom.