What will save me the most money??

I have a school loan that is a private loan with Key Bank. The principal balance is $38,500.

My loan payment is $400 a month.

I have saved $10,000 to pay down the loan.

WHICH WILL SAVE ME MORE MONEY DURING THE LIFE OF THE LOAN?

If I pay extra each month towards the principal or if I just make a single lump sum payment of $10,000 to the principal?

The interest rate is 8.290% on $17,635 AND 8.320% on $20,863.

The interest rates are VARIABLE!

Thank you for your time!

What will save me the most money??

Pay the $10k today......

You will cut-off 6 years and $15,000 in interest

What will save me the most money??

If the loan is a student loan, then the interest you pay on the loan can be deductible. You might save more money paying off the loan slower, claiming the interest credit on your taxes (since taxes can be as high as 30%), and earning interest on the money in your savings account (put it in a high rate CD or something). The $10,000 is worth more to you today than a lower loan balance will mean to you in the future.

What will save me the most money??

very good question...

it depends what you do with you $10,000.00

if you put that money somewhere that would give you more interest rate than the interest rate on the loan then its better not to invest that amount in your loan...

if you get less interest rate by using that amount than the interest rate of the loan then its better to pay the loan now.

note that you are comparing the interest rate...and not the interest amount.

your interest loan is 8.29% to 8.32%..(it varies as you have said)

what is your interst rate if you put that amount in bank...?

the correct decision would involve risk and in calculating the interst rate for your $10,000.00

What will save me the most money??

Budget for long term debt reduction, some basic sensible advice here:

http://www.quazen.com/Home/Personal-Fina...

What will save me the most money??

Before you do anything, you need to check your loan papers and find out if there is any penalty for prepaying or paying down, that interest is not predefined in anyway and only based on the outstanding principle.

be sure you specify that you want to apply the 10,000 towards principle only.

the loan is high enough that it is not likely you will get that kind of return for a while.

If you can pay a little extra on each payment above and beyond the 10,000 that would be great.

Good Luck

What will save me the most money??

Because the interest on your loans is tax deductible you may be better off investing your $10k in something else, and just continuing to make your loan payments.

And, often you can get a discount on your student loan interest rate by arranging automatic monthly payments. Call the lender to check into this. I cut 1% off my loans that way.

The important thing (as mentioned by the other posters) is not to just blow the $10k you%26#039;ve saved. If you are going to do that, then by all means pay the loan down. But, if you are disciplined enough to invest it I would probably do that first. Then, when you later want to buy a home you could use the 10k as part of your downpayment.

What will save me the most money??

Personal finance is more action than math (I stole most of that from Dave Ramsey). Pay the debt down today! It will help motivate you to pay down you other debts to see them getting paid off.

Make a list of you debts, smallest to largest and put it on your refrigerate in big bold letters with the amounts you owe. When you pay one off cross it off. Just wait until you cross off that last item, you%26#039;ll feel great!!

Again most of this was stolen from Dave Ramsey baby steps, I don%26#039;t%26#039; think he would mind.

What will save me the most money??

My first reaction would be to pay the loan down...at least the albatross is smaller then. But...it depends. Do you have other debt? What rates is that debt at?

If you have other debts...you could, for instance, pay off two other debts with that $10K and be free of the monthly payments...then you could apply those payments toward the student loan each month. It might be worth it.

The answer depends on your total financial situation. Consider all your debts and then decide.