Marshall Said:

How is the interest rate for buying a car lower than getting student loan?

We Answered:

The car loan is going to begin payments next month. I have some idea of what interest rates are going to be doing over the time of the repayment, The student loan, if we're lucky will begin repayment in 4 years - but the student may go on to grad school or be able to get deferments for a few more years and what's the repayment period - 10 years? 20 years? 30 years? And with the economy the way it is, what happens if the whiz kid doesn't get a job and begin repayment when required?

If the car payments stop, I send the crew out to snatch it from your driveway one night and as the dealer/lender I may lose some money - but I do have the car and can resell it. However, if the student stops paying on the mortgage-sized loans he's got, what exactly do I have as collateral that will ensure I get paid and soon? There's no house, there's no car, there's a piece of paper (maybe).

Wade Said:

Where can I get a better INTEREST rate for my student loan?

We Answered:

The loan is set by Congress. It'll be next to impossible to negotiate a better rate, just stay current. Hard to beat 4 1/8 anyway!

The loans are guaranteed through the Student Loan Marketing Association (Sallie Mae) and guaranteed through taxpayer dollars so the banks lending are virtually taking no risk. Hence the low rate, and the difficulty in refinance.

One option might be to wrap the loan through a home equity line, thereby extending the term and lowering the payment, but the interest rate would still increase. Remember the student loan interest is still tax deductible as well in it's present status so file accurately.