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

Posted on: 26th Oct, 2006 11:40 pm
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?
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
Posted on: 27th Oct, 2006 12:34 am
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.
Posted on: 27th Oct, 2006 05:54 pm
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