New to borrowing, please help!

[kim1438]

The math is not adding up on this student loan I have accepted. It is a 15 year loan of $10k at 10.24% (9.749 APR). The "finance charge" is above $16k, though? This number seems arbitrary and super high. Even if I pay this off early. There is a deferment period.

I have another offer for the same amount at 10.75% (10.75 APR) where the finance charge is only ~7k. This loan has a 10 year plan.

I understand the repayment period difference affecting the life of the loans charges, but the first loan still seems to be off by about an extra 7 thousand. Can anyone explain why? Because this finance charge is so high on the first loan, will it even improve with higher payments I make? It has a (marginally?) better rate so I knee-jerk chose this one. Should I switch to the second offer?

 

[jeremy444777]

@kim1438 I'm a bot, bleep, bloop. Someone has linked to this thread from another place on reddit:

• [/r/financialplanning] X-post from r/debtfree, any advice appreciated!

[sup]If you follow any of the above links, please respect the rules of reddit and don't vote in the other threads.[/sup] [sup](Info[/sup] [sup]/[/sup] [sup]Contact)[/sup]

 

[mercygrace51]

@kim1438 Asking advice on which loan to originate on the "debt free" subreddit may not yield a bounty of feedback.

Of the two options you have decided to choose between, the biggest difference is length of term. Paying something off in 10 years will automatically result in less interest than taking 15 years to pay it off. Can you afford the payments? Can you afford to pay extra, diligently and significantly? Or would you plan to pay the minimum and be in debt for 10-15 years?

Is there any other way to achieve your goals without taking a loan?