Can someone explain to me the difference between the APR and the interest rate of a student loan. My interest is 3.5 % but i got a letter today stating that my APR is 10% on a loan for 7000. i would end up paying 17000 over 144 months for 7000. what happened to the 3.5%. Please help.
And yes...I do plan to pay this immediately in May.
2006-08-26 08:08:15 · 3 answers · asked by Anonymous in Education & Reference ➔ Financial Aid
Apr or annual percentage rate is a very common term in credit. Normally you see it as an enticing way for people to sign up for a credit card 0apr or 3% apr for the first year, and here is the rub that most people do not read. The back of the loan or credit application, its normally in the fine print. APR rates only last for a certain length of time, 6 months to 1 year.
Low apr rates can also be voided by the company giving you the loan or credit if you are one day late in making a payment. Get a hold of your credit report and see if there are any errors on it. The company involved that reported the error or late payment, has to prove any errors are accurate "not you". If you can't pay off the loan for some unforseen reason start looking around for a student consolidation loan or a personal loan for less than 10%. Go over your loan agreement very carefully and look for a loop hole that the finance company could use to their benefit. My guess is that is where you will find your answer.
When reviewing your agreement put yourself in their shoes and ask " how can I get more money out of this person" playing the devils advocate usually helps when trying to review something that is working against you.
Also visit this site http://studentaid.ed.gov/PORTALSWebApp/students/english/repaying.jsp?tab=repaying - you may find some helpful information
2006-08-26 19:42:36 · answer #1 · answered by bennii 2 · 0⤊ 0⤋
Once you leave school, then the Loan can have changes in the interest rates -- so yes, it can rise and rise dramatically. You should have looked over the terms of the loan CAREFULLY when you 1st entered school to know what to expect. I suspect it was buried in the number of pages you had to review and it DEFINITELY had to be listed in those pages, but you did not pay attention and read everything carefully -- thus, this is a shock to you at this time.
2006-08-26 16:11:36 · answer #2 · answered by sglmom 7 · 0⤊ 0⤋
maybe it was 3.5% only while in school!
Jeremy Miller
http://www.bugon.com
2006-08-26 15:13:26 · answer #3 · answered by Bugon Services 1 · 0⤊ 0⤋