Loan Question

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Pink00000
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Loan Question

Postby Pink00000 » Thu Mar 07, 2013 2:41 am

Hi, I have a question about what would be the best option for paying down a student loan. We have 3 loans, about $5K, $6K, and $7K. The 5 & 6 are at 3.25% rates, which is great, I'm happy with that. The $7K loan is at a 9.25% rate, with 8 years left on the term ($3700 of interest left to pay if we stick to the schedule and rates don't go up!) and I'd like to figure out the best way to get rid of it. We rent, so HELOC's and such are out. We have the cash to pay it off, but putting out that much money makes me nervous. Our long term goal is to save up for a down payment for a home, but moving is probably at least a year out for us, maybe two.

I've been looking at personal loans, and the best rates seem to be around 7%, which is a step in the right direction. I've also seen that there are secured personal loans, which essentially use your savings as collateral for the loan, and they have rates at 3.25%. I'm not sure that it would make financial sense to go that route b/c you really don't have access to that savings since it is collateral, but at the same time, it's appealing to me because we wouldn't be putting out such a large amount of money all at once, and would gain access to the savings as we paid down the loan. We need to do something to help us direct a bit more focus onto the loan and get it paid down quickly.

I'd love to know what options you guys would think might work for us. I assume that we would probably pay off 2K, and be looking to take out a 3 year loan for $5K for the rest.

Thanks!

Tightwad
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Re: Loan Question

Postby Tightwad » Thu Mar 07, 2013 7:09 pm

Personally I'd forget a home until that high interest rate SL is gone.

peachy
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Re: Loan Question

Postby peachy » Tue Jun 04, 2013 8:42 am

If you pay it off, how much cash will you have remaining? Maybe you could use your cash to pay off the high interest loans, and then pay off the others as you go. That way, you are closer to getting your home with a good interest rate, and closer to getting out of debt.

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AntonIvanov
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Re: Loan Question

Postby AntonIvanov » Sat Jun 08, 2013 10:51 am

Do yourself and favor and forget about taking another loan to pay off your student loans. Your job should be to get rid of your loans ASAP, and only then start thinking about buying a house, etc. This may not be what you want to hear, but getting out of debt should be your #1 priority.

As far as which loan to tackle first, I would probably go after the $7k one because of the high interest rate. I wrote an excellent guide on getting out of debt fast. You don't owe that much and with consistency and discipline you will be debt free in no time.
Dreams Cash True - Achieving the Dream of Financial Freedom
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