Was going to ask /biz/ but they don't seem to like single-question threads. I need to fund college for this year (need ~$9000 in loans to commute up to class), and will be attending for at least 2 years to acquire Bachelor's.
I'm very uneducated about loans, but I can get a few student loans from banks that offer variable interest rates, which average a 3.75%-9.50% starting rate based on credit, and a max of 20% interest rate when fluctuating. My credit is above-average, thankfully.
My main question is whether or not those are good rates? Are variable interest loans worth getting or are they generally very unstable?
>>17248720
>Are variable interest loans worth getting or are they generally very unstable?
Depends on what they variate against.
>>17248724
Looking at the one I'm leaning towards (Wells Fargo):
>This loan has a variable interest rate that is based on a publicly available index, the Prime Rate. Your rate will be calculated each month by adding a margin between .24% and 6.24% to the Prime Rate. The Index (which is the Prime Rate) is subject to a contractual minimum of %. The rate will not increase more than once a month and will never exceed % (the maximum allowable for this loan).
>>17248730
>Your rate will be calculated each month by adding a margin between .24% and 6.24% to the Prime Rate.
Great, now what are they basing the .24% vs 6.24% on? I realize you probably don't have the answer, but that would be my next question.
This chart gives you a good idea of what you can expect:
http://www.moneycafe.com/personal-finance/prime-rate/
...within 6% until we figure out waht they base it on.
>>17248740
I don't think this helps much, but there's this too on their site:
>Interest accrues daily on the unpaid principal balance of your student loan. We use a simple daily interest calculation to determine accrued interest for each day:
(Current Principal Balance x Interest Rate) /(365 or 366 Days in the Year) = Simple Daily Interest
Thanks though for giving me something to go off of
>>17248768
That just means that if you can't pay your loans, you are fucked.
Basically, they are saying that if you borrow $100 at 10%, you aren't going to pay interest on $100, you will pay interest on 100+10, 110+11, and so on. Standard practice though, so nothing to be concerned about.
