Loan COmparison? Which is better?

[s.mutans]

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Curretn Stafford loan rate 3.42%
20, 000 loan

A. Chela Financial

1.67%
3% origination fee
waived Gurantor's fee
revoke 1.75% after repayment. (1.5% begin repayment and .25 auto debit deduction)
10 years

20,600
1.67%
10 years
interest paid: $1,782.24


B. Access
3.42%
no fees
.25% discount when repayment begins for auto deduction
2% discount after 4 years of repayment

20,000
3.17%
4 years
interest paid: 2,095.65

PLUS

remaining balance after 4 years 12,750.53
1.17%
6 years
interest paid: 458.98


So I am comparing the total interest paid

Chela $1782.24


ACCESS $2095.65 + 458.98=2,140.98

Let me knowif i am missing some other factors? It seems clear to me!

 

[mpp]

Looks reasonable to me assuming they really do deduct 1.75% when you enter repayment.

 

[s.mutans]

Thanks for the input, I just don't believe Chela's offer. It looks like the cheapest offer. The catch is you can't be late once and you must have the money in the bank or they will revoke the offer.

 

[mpp]

Actually, you have to include the extra $600 you are paying CHELA that you don't pay to ACCESS. Total payments to CHELA are:

20,600 principal + 1,782.24 interest = 22,382.24


Total payments to Access:

20,000 principal + 2,140.98 interest = 22,140.98

So the Access saves you about $240 for equal amounts borrowed ($20,000).

However, if you read the CHELA website carefuly it says that the interest rate deduction does not reduce the monthly payment amount bu rather reduces the term of the loan by including the intrerest rate reduction as an extra payment to the principal. I have yet to do the math to figure out what this does to total interest paid.

 

[mpp]

By keeping the payments the same and providing putting the extra payment amount towards principal yields a total interest paid as $1768.05 in 110 payments. This means total payments to CHELA are

20,600+1768.05 = 22368.05

still more than Access Group.

 

[s.mutans]

Thank you very much. I did not catch that. I would have never understood that process. While closely examining the details, they have a clause that states they can revoke the offer at anytime.

I really appreciate your help.