Student Loan Question

[GoldenEagle]

I am not real good at figiruing out this student loan interest payment stuff. I was hoping someone who has better at this kind of stuff could help me out.

I have a loan outstanding that I began paying on in March 2005. The interest rate for the loan is 3% fixed. As of June 30th, 2006 I have 67% in principal and and a whopping 33% in interest. My question is: Why have I paid that much in interest?

[Greyroofoo]

Did you find yourself bending over when you made that deal?

Was the loaner holding a tube of lubricant?

[GoldenEagle]

Did you find yourself bending over when you made that deal?

Was the loaner holding a tube of lubricant?

I would not call a 3% fixed interest rate on a student loan for 3 semesters exactly getting raped.

[HomerSimpson]

In general the Principal on a long term loan is the "Buy Back" value of the loan today.


Principal = $100,000
Interest = $50,000
---------------------------
Total value of loan = $150,000

So, if I borrow $100,00 today, I will eventually end up paying the Bank $150,000 in Payments. With every Payment I make the Principal goes down. If I decide I want to repay the loan early I will just have to pay what ever is left on the Principal and not the total value of the loan.

That is the way most loans work. Student loans may be a little different.

[Eaglesfan27]

I'd kill for a 3% interest rate on my school loans..

[MrBigglesworth]

I am not real good at figiruing out this student loan interest payment stuff. I was hoping someone who has better at this kind of stuff could help me out.

I have a loan outstanding that I began paying on in March 2005. The interest rate for the loan is 3% fixed. As of June 30th, 2006 I have 67% in principal and and a whopping 33% in interest. My question is: Why have I paid that much in interest?
Do you mean that your payment is 33% interest? Because in the 17th month of a 15 year loan at 3%, the interest of the payment is about 1/3.

[Passacaglia]

I am not real good at figiruing out this student loan interest payment stuff. I was hoping someone who has better at this kind of stuff could help me out.

I have a loan outstanding that I began paying on in March 2005. The interest rate for the loan is 3% fixed. As of June 30th, 2006 I have 67% in principal and and a whopping 33% in interest. My question is: Why have I paid that much in interest?

It's probably because your payment is very low.

Take the original balance of the loan, and multiply it by .03 -- that's how much interest you paid in the first month. Subtract this amount from your payment. That's how much you actually reduced the loan amount by.

Now take your loan's current balance, and multiply it by .03 -- that's how much interest you will pay next month. It's gone down a bit, but not much.

The interest rate is low, and it's not affecting your credit, so no worries -- it will just take a while to pay off. If it really bothers you, make higher payments.

[FrogMan]

It's probably because your payment is very low.

Take the original balance of the loan, and multiply it by .03 -- that's how much interest you paid in the first month. Subtract this amount from your payment. That's how much you actually reduced the loan amount by.

Now take your loan's current balance, and multiply it by .03 -- that's how much interest you will pay next month. It's gone down a bit, but not much.

The interest rate is low, and it's not affecting your credit, so no worries -- it will just take a while to pay off. If it really bothers you, make higher payments.

err, 3% being the annual percentage rate, that would be 0.03/12 for the monthly interest...

The rest of the calculation is good though.

And yeah, I would have killed to get 3% on my student loan but I got something like 6.75% at the time which wasn't all bad and I was lucky enough to have very little loans and will be all paid off by this December.

/me is happy :D

FM

[Passacaglia]

What he said.

[Galaxy]

I locked in my loans at 4.25% (before July 1st).