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.