Question on Student Loans

[Sip]

It's always beneficial to pay as soon as you can. So here's an example:

$50,000 loan, $1,000 a month, 2.7% APR

With regular monthly payments, you'll pay:

$3,102.53 interest
54 payments (~54 months) to pay off the loan.

With making a $500 payment every 2 weeks, you'll pay:

$2706.45 interest
106 payments (~48 months) to pay off the loan.

The difference doesn't seem that big but if you can, by just making payments every 2 weeks instead of every month, you'll pay off the loan 6 months sooner!!!! Of course this is all assuming there is no prepayment pentalty. Also note that there are 54 weeks in a year so making a payment every 2 weeks is like making 26 payments a year (as opposed to 2x12 = 24).

Edit: now I just hope I did all that right

[Anonymouse]

If I have $100,000 in loans how long would it be before I pay it off? I know it depends on how much I pay monthly, but what is a rough estimate?

[ckBejug]

It's always beneficial to pay as soon as you can. So here's an example:

$50,000 loan, $1,000 a month, 2.7% APR

With regular monthly payments, you'll pay:

$3,102.53 interest
54 payments (~54 months) to pay off the loan.

With making a $500 payment every 2 weeks, you'll pay:

$2706.45 interest
106 payments (~48 months) to pay off the loan.

The difference doesn't seem that big but if you can, by just making payments every 2 weeks instead of every month, you'll pay off the loan 6 months sooner!!!! Of course this is all assuming there is no prepayment pentalty. Also note that there are 54 weeks in a year so making a payment every 2 weeks is like making 26 payments a year (as opposed to 2x12 = 24).

Edit: now I just hope I did all that right

There's no prepaymen penalty. This sounds like a good plan. =)

[Sip]

Anon, try this. Enter 100,000, then the interest, then the monthly you think you can pay and see how long it'll take... but most likely you'll hit the 100k posts mark before it's paid off

[Sip]

There's no prepaymen penalty. This sounds like a good plan. =)

What you gonna do with the $400 you'll save?

[ckBejug]

What you gonna do with the $400 you'll save?

Buy a $400 pair of shoes?

[Anonymouse]

Because I don't have a 100000 loan yet, I don't know how much interest it will be. What do you think will be the interest roughly?

[Stark Evade]

Worry not. I am sure people will have no interest in you.

[Sip]

That's a very tough question ... the best case would be if you can get some sort of subsidized stafford loan through the school where you don't pay the interest while in school. this site says:

Stafford Loans have variable interest rates (based on 91-day T-bill rate + 1.7% during school with an additional .6% increase upon graduation) capped at 8.25% or less, depending on yearly adjustments. All lenders offer the same rate for the Stafford Loan, although some give discounts for on-time and electronic payment.

But as far as other loans, they can really vary ... a couple of years ago the interests hit some very low numbers but they've been going up. I suspect something like 6% would be common these days but that's mostly a guess on my part.

Don't worry though ... since this is a long term loan, the interest will eventually come down and you'll be able to lock them in. It's just that initially the loans may cost a lot due to current rising initial interest rates. Now of course I would be the last person to try to predict the future.

[spiral]

Can you transfer loans onto credit cards?