Is the following student loan a good deal?
My $10,000 loan features a variable interest rate based on the LIBOR index, currently at 5.02%, plus 2.50%, which will adjust quarterly if the index changes and is reflected in the APR. The Annual Percentage Rate on this loan, based on the above referenced index, is 7.45%. My loan origination fee will be 0.00% of the original loan amount.
How much interest will accumulate by June 2009?
The rate of 7.45% is a fair rate, because student loands tend to be risky. The libor in general is tied to the fed funds rate, which the fed is expected to cut interest rates again. I do caution though that this rate can easily rise, and make sure that you loan agreement allows you to make a early payment without any penalty.
I am not sure what your loan agreement is to calculate accrued interest. If the loan is like a credit card, then roughly 750 dollars of interest.
If your rates begin to rise, find a credit card that gives 0% balance transfer and use that, but use that credit card for only for the purpose of refinancing.
Good luck. I am a senior in college graduating, while student loans are a pain, the payoff is worth it when you get a job.
