Author Topic: Cheapest way to borrow? Replace student loans?  (Read 2312 times)

champion

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Cheapest way to borrow? Replace student loans?
« on: April 03, 2013, 06:48:11 AM »
Here's the situation:

I am married, my wife has huge student loans at high interest rates:  $150K total, about $100K at 8%, $50K at 6.8%.

For various reasons, we want to pay it off over time rather than trying to pay it off as soon as possible.

However, the interest rates are brutally high.

I have a moderately high net worth and a high salary.  Is there a way that I can take advantage of this to effectively refinance the loans? 

I could borrow from some other source, pay off these high-interest loans, and then pay the cheaper loans back over time.

So the question is, what is the best way for someone like me to use my relative financial strength to borrow money more cheaply than the student loans? 

Thank you!


smedleyb

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Re: Cheapest way to borrow? Replace student loans?
« Reply #1 on: April 03, 2013, 08:04:46 AM »
HELOCs are a great source of cheap funds if you have a nice equity stake in a residence.

Another great option is a personal loan secured by stock or a CD.  You could probably open a CD for 100K and get a loan for around 3-4%.  You still earn interest, maintain liquidity of sorts, but your liquid investment is linked to that loan and probably not accessible in full until said loan is retired, or the bank will structure it a way that the loan is paid off by the time the CD retires, etc.   


Kazimieras

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Re: Cheapest way to borrow? Replace student loans?
« Reply #2 on: April 03, 2013, 08:20:46 AM »
If your assets are larger than the loan and not currently leveraged consider a secured loan or line of credit from a bank. The rates are typically a lot less since there is an asset the bank can take should repayment not occur.