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Pay off high interest rate loans faster...
Students can save money by simply paying off their high interest rate loans
before other lower interest rate loans. To illustrate this point we have put
together this calculator that you can use to see how much you can save. The
example assumes that you have a 10 year student loan balance and a credit card
balance (or any other debt that has a higher interest rate). By choosing a
different repayment plan for the student loan, you can send additional money to
pay off your credit card debt faster and then pay off your student loan. While
this will result in a higher total cost on your student loan (compared to the
standard student loan repayment plan), this higher cost will be more than
offset by a reduced total cost on your credit card loans. The Graduated
Repayment plan (available on student loans) allows you to do this because it
only requires interest payments the first two years of repayment and then a
higher payment for the remaining 8 years.
To see how much you can save simply enter the appropriate balances and your
maximum affordable payment amount for these two loans. You'll save money simply
by paying off the higher interest rate loan first. To realize savings, you must
enter a maximum affordable payment that will cover the student loan payment and
the monthly interest or minimum payment on the credit card. Enter a higher
maximum affordable payment and you save even more because you will pay less
interest.
Note: This calculator uses javascript. It will not work if your browser does not
support javascript or if you have disabled javascript.
Notes:
All calculations assume fixed interest rates, no minimum student loan payment,
a 120 month term and that the borrower makes the maximum affordable payment
every month until all loan debts are satisfied. Any additional amount above the
stated student loan payment amount is applied to the credit card balance first
(until that debt has been satisfied) and then to the student loan balance.
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