Posted on: 26th Oct, 2006 11:40 pm
I have taken a education loan at 8.3 % interest rate, but I don’t have to start payment until end of 2008. Although my income is very low but I have enough cash to pay off the loan, what do you suggest, should I go ahead and pay off the loan?
Hi Andrew,
Welcome to MortgageFit Forums.
Well if you ask me I will always say pay it off as soon as possible. Whether it is a education loan, mortgage or credit card debt.
The only time you should not pay off the loan early is when you have the choice of investing that money at a higher interest rate then what you are paying on the loan. But in your case I don’t think that will be sensible because you will not find a safe and guaranteed investment that will give more than 8.3%.
I would suggest you to take the middle ground. Pay off some portion of the loan but save enough for your living expenses and a little bit for emergencies.
Thanks,
Jerry
Welcome to MortgageFit Forums.
Well if you ask me I will always say pay it off as soon as possible. Whether it is a education loan, mortgage or credit card debt.
The only time you should not pay off the loan early is when you have the choice of investing that money at a higher interest rate then what you are paying on the loan. But in your case I don’t think that will be sensible because you will not find a safe and guaranteed investment that will give more than 8.3%.
I would suggest you to take the middle ground. Pay off some portion of the loan but save enough for your living expenses and a little bit for emergencies.
Thanks,
Jerry
I have heard that there are tax deductions available on the interest on these loans. So it is better to keep some portion of the loan as Jerry has mentioned.