TheNona wrote:
same here ... seems we are in the same boat : recently landed immigrant . I just want to make sure : 3.6% per year means that if you borrow 10k to return them on 5 years then every year you would pay 2000$ +3.6%*2000 or 2000$+3.6%*10k ? forgive me if I seem a bit stupid , but education loans are not available in my country of origin so this whole story is totally vague to me .
The interest is compounded. Therefore assuming you pay $2000 at the end of every year and the interest increases to 4.5% in year 3, it is:
(((((10000*1.036-2000)*1.036-2000)*1.045-2000)*1.045-2000)*1.045-2000)*1.045-1386.94=0 --> payment will be complete in 6 years. You'll actually be making monthly payments, making the calculation more complicated, but you'll pay less interest. Unfortunately, we're not talking about a $10k loan.