Is it a good idea to pay off the loan early?

Guest 0.10 Dollars($)

I have taken a education loan at 8.3 % interest rate, but I don’t have to start payment until end of 2008. Although my income is very low but I have enough cash to pay off the loan, what do you suggest, should I go ahead and pay off the loan?

jerry · Posted: Fri Oct 27, 2006 12:34 am Post subject: RE:

Hi Andrew,

Welcome to MortgageFit Forums.

Well if you ask me I will always say pay it off as soon as possible. Whether it is a education loan, mortgage or credit card debt.

The only time you should not pay off the loan early is when you have the choice of investing that money at a higher interest rate then what you are paying on the loan. But in your case I don’t think that will be sensible because you will not find a safe and guaranteed investment that will give more than 8.3%.

I would suggest you to take the middle ground. Pay off some portion of the loan but save enough for your living expenses and a little bit for emergencies.

Thanks,
Jerry

Guest 0.10 Dollars($)

I have heard that there are tax deductions available on the interest on these loans. So it is better to keep some portion of the loan as Jerry has mentioned.

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