The current interest rate for federal direct unsubsidized loans is 4.45% at undergraduate level and 6.0% at graduate and professional levels. A direct subsidized loan is 4.45% at undergraduate level. The interest rate for a private bank loans vary from 2.5%-36%. For this project I am going to stick with the undergraduate level interest rates and a 6.0% interest rate for private banks.
A $50 monthly payment with a 4.45% interest rate does not pay enough and would leave you in a large amount of debt. It would take 363 months to pay back the loan with a payment of $100 and an interest rate of 4.45%. It would take 184 months to pay back the loan with a payment of $150 and an interest rate of 4.45%. It would take 127 months to pay back the loan with a payment of $200 and an interest rate of 4.45%. Again with a $50 payment but at 6.0% rate does not pay the loan but leaves you deeper in debt. It would take take more than 1000 months to pay back the loan with a payment of $100 and an interest rate of 6.0%. It would take 219 months to pay back the loan with a payment of $150 and an interest rate of 6.0%. It would take 138 months to pay back the loan with a payment of $200 and an interest rate of 6.0%. When the interest rate is larger you have to pay a larger minimum payment or you will be going into more debt. The minimum payment for a loan that has a lower interest rate is smaller than that with a larger interest rate.
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November 2017
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