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    mjl's Avatar
    mjl Posts: 486, Reputation: 26
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    #1

    May 8, 2008, 07:10 AM
    Sudent Line Of Credit.
    To pay for school next year I was planning on getting a student line of credit. I went to the bank and got the information about it. Here are the details...

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

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

    Does that sound resonable?. $3,000 a year in interest on just a $8,000 loan?!
    ScottGem's Avatar
    ScottGem Posts: 64,966, Reputation: 6056
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    #2

    May 8, 2008, 07:15 AM
    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's Avatar
    mjl Posts: 486, Reputation: 26
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    #3

    May 8, 2008, 07:18 AM
    That's what I thought, but he called the bank, and he said that's what they told him.
    ScottGem's Avatar
    ScottGem Posts: 64,966, Reputation: 6056
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    #4

    May 8, 2008, 07:42 AM
    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.

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