To pay for school next year I was planning on getting a student line of credit. I went to the bank and got the infromation about it. Here are the details...

I wanted it for $8,000
The intrest rate is 5%
I do not pay a payment on the loan every month, instead I pay the intrest every month until I graduate then I start paying off the loan.

My husband said I'll be paying $250 a month in just intrest. So, that's $3,000 a year in JUST intrest.

Does that sound resonable?.... $3,000 a year in intrest on just a $8,000 loan?????!!!!!

ScottGem

not sure where your husband got his figures. but even with daily compounding that seems off. Ask the bank for an amortization schedule. I think you will find the monthly interest to be about $35, not $250.

mjl

That's what I thought, but he called the bank, and he said that's what they told him.

ScottGem

So you call the bank and ask for clarification. If you have Excel you can create your own amortization. One month's interest on $8K is $33 and change. Even if you compound daily, its still not more than that.