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Does this plan make sense? (Loan repayment)
Kyougu
Registered User regular
Registered User regular
Okay, so my first payment for my student loans is coming up and I been mulling over my options.
Right now my payments will be 355 and some change. I luckily got a raise at work, so right now I can make those payments live comfortably and save up. The problem comes that I want to get a new car eventually and move out, so when those things eventually happen I would be spending a bit more, and saving less.
So I was thinking of getting into the graduated plan, where my payments would start at 188 for the first two years, then rise slowly till I was paying a little over 600 months for the last two years. Now paying that much the last two years scares the crap out of me.
I was planning on getting on that plan, making more than the "min" payment (thinking around 300 or so, maybe more if my job keeps offering unlimited overtime) and hoping that would cut into the future payments. Turns out that it doesn't matter if you make extra payments, you're still set on whatever schedule they put you in. So I'm thinking of maybe putting the money I would have been paying extra on some sorts of savings/investment that I couldn't touch, and then use that money in a couple of years when my payments started increasing.
Good idea? Bad?
Right now my payments will be 355 and some change. I luckily got a raise at work, so right now I can make those payments live comfortably and save up. The problem comes that I want to get a new car eventually and move out, so when those things eventually happen I would be spending a bit more, and saving less.
So I was thinking of getting into the graduated plan, where my payments would start at 188 for the first two years, then rise slowly till I was paying a little over 600 months for the last two years. Now paying that much the last two years scares the crap out of me.
I was planning on getting on that plan, making more than the "min" payment (thinking around 300 or so, maybe more if my job keeps offering unlimited overtime) and hoping that would cut into the future payments. Turns out that it doesn't matter if you make extra payments, you're still set on whatever schedule they put you in. So I'm thinking of maybe putting the money I would have been paying extra on some sorts of savings/investment that I couldn't touch, and then use that money in a couple of years when my payments started increasing.
Good idea? Bad?
Kyougu on
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Also, make sure that the $355 isn't just your gov't loan amount. You'd be surprised what they hide from you. They told me my loan payment was only going to be $155 but that was just the government funds which was the only one they were required to tell me about.
My private one? $500.
As you said, "Right now my payments will be 355 ... I can make those payments live comfortably and save up."
Do exactly that.
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Having a small payment is nice now, but you will just be extending it, and if you really don't need to then why do it? Also, if you get a car within the next two years when your payment is nice and low, and think you are comfy, what happens when that payment gets up to 600, now you have that and a car payment for two years.
You didn't specifically say how long the loan term was, but you said "First 2" and "Last 2" so I'll assume 4 years. Do you see your self needing a car in 4 years? I mean needing, not wanting. While it's nice to have a new vehicle, don't stretch your self out so thin just to get a shiny new toy.
First find out any restrictions on paying extra per month, like;
1.) Do they charge you (I've seen it)
2.) What does the extra money go to?
Edit: My opinion is keep it at the nice 300 some per month, if they let you pay extra towards principal, then do it when you can to get ahead a little bit.