What loan should I payoff first? I have two loans, Car Loan at 5% @ 255month, and Student Loans at 9% @ 135month. Both have about 11-12k in principal left on them. I just graduated from college and I'm not sure what to do. Thanks
2006-10-06 07:34:37 · 17 answers · asked by Anonymous in Business & Finance ➔ Personal Finance
Student Loan
2006-10-06 07:37:45 · answer #1 · answered by Blunt Honesty 7 · 0⤊ 1⤋
You should pay off the car loan first. Even though the interest rate is lower, you're paying over a much longer period of time. Plus, the interest on your student loan may be deductible. Once your car loan is paid off, you can start dumping additional funds on your student loan to reduce the interest calculated on the principal and pay it off sooner.
2006-10-06 14:44:25 · answer #2 · answered by Le_Roche 6 · 0⤊ 0⤋
Pay the car loan off first. The interest on the student loan is tax deductible.
Congratulations on graduating.
2006-10-06 14:37:24 · answer #3 · answered by Anonymous · 2⤊ 0⤋
you should pay off the Car loan first. It's at a lower rate, but the term is shorter so you're paying a lot more out of pocket faster. Tso clearing that up allows you to take your time on your student loans (which are tax deductible interrest.) yeah it's a higher rate, but it's also not ging to wreak your credit if you mis a payment like many car loans do. not to mention a lot of Companies will pay your student loans for you if you work for them.
2006-10-06 14:43:37 · answer #4 · answered by jeepguy_usa 3 · 0⤊ 0⤋
You need to look at your financial picture as a whole -- not just which loan to pay first. 5% is a cheap rate and the interest from the student loans are tax deductible (along with the origination fees). I'd condsider contributing to a 401K and/or a Roth IRA before pre-paying your loans.
2006-10-06 17:08:21 · answer #5 · answered by CPAKeith 3 · 0⤊ 0⤋
pay off the car loan first your school loan is tax deductible and why is ur interest rate so high for the school loan what type of a loan is it???? you can always try consolidating your school loan or refinancing your car as well. YOur interest rates might be lower if you try doing that.
2006-10-06 14:43:30 · answer #6 · answered by Joanna G 2 · 0⤊ 0⤋
I would pay off the 9% student loan first because you would rather have the remaining loan be at the lower 5% interest rate. I assume neither loan has a prepayment penalty.
2006-10-06 14:39:21 · answer #7 · answered by Kevin E 2 · 1⤊ 1⤋
You just received a college degree and you are asking that on here? Meantime you paid too much interest on that loan, government loans would have been a little over 3% when you were going to school.
2006-10-06 14:43:16 · answer #8 · answered by Tulip 7 · 1⤊ 0⤋
Looks like your answers are splt. Always pay off the highest interest loan first. But in this case, I go with paying off the car loan first. Your student loan is tax deductible.
2006-10-06 14:44:04 · answer #9 · answered by mmmodem123 3 · 1⤊ 1⤋
Payoff the higer interest rate loans first, Even though it's less money out of pocket now you wil not waste all that money on interest in the long term. Always look for the long term cash flow.
Good luck.
2006-10-06 14:37:48 · answer #10 · answered by Brent M 1 · 0⤊ 1⤋