Should I take out student loans to pay off my auto loan???

[Anonymous]

Hello,

I work full-time and just purchased a new Honda about 6 months ago. I have an auto loan out for about $13,000 at 8.9%.

I just landed back into full-time school as well, and it is 100% paid for by my grants. I just realized that leaves me with a significant amount of loan $$ available to accept and completely pay off my car with.

Good idea? Terrible idea?

I already have 6k and 2k student loans out from college two years ago. One is 5% and one is 6%.

The student loans I would accept would be a $6000 unsub loan and a $3500 sub loan - I'd just go ahead and pay off the rest of the car with cash.

I'm leaning towards doing this as I would have no interest on one for awhile, and the other would be tax deductible...

Someone stop me if this is a bad idea!

[llecs]

If I was in that situation, I would PIF my car loan.

[Anonymous]

---

@Anonymous wrote:

Hello,

I work full-time and just purchased a new Honda about 6 months ago. I have an auto loan out for about $13,000 at 8.9%.

I just landed back into full-time school as well, and it is 100% paid for by my grants. I just realized that leaves me with a significant amount of loan $$ available to accept and completely pay off my car with.

Good idea? Terrible idea?

I already have 6k and 2k student loans out from college two years ago. One is 5% and one is 6%.

The student loans I would accept would be a $6000 unsub loan and a $3500 sub loan - I'd just go ahead and pay off the rest of the car with cash.

I'm leaning towards doing this as I would have no interest on one for awhile, and the other would be tax deductible...

Someone stop me if this is a bad idea!

---

Read the promissory note. If you're dealing with Stafford loans, that is against the terms of the contract. The money from the loan can only be applied to school related expenses.

Although, you can probably get away with it. 

[marty56]

Give the money back.

[Anonymous]

As a student myself I have looked into the same thing. Student Loans are used to cover college expenses. When they factor that in they factor in a transportation cost. You can use this loan money for your means of transportation. Its a better interest rate than your car loan I would go for it but thats just my .02.

[Anonymous]

Wow marty, I'm not sure what "super contributor" means, but based on your tremendously insightful post.... I imagine not much.  Can you further explain what you mean by "Give the money back" or are you too busy getting your post count up posting other words of wisdom?

reflected,

Compare interest rates.  If you can pay off your car loan by accepting lower interest student loans then do it.  Then apply what you were paying towards your car to your unsub loans with the goal of having those paid off when school is finished so you can then transition into paying off your sub loans.

[haulingthescoreup]

Hello, buckeye25osu (life must be confusing during NCAA football):

Welcome to the forums!

Please go back and read the User Guidelines and Terms of Service threads.

Sarcasm isn't welcome here on the boards.

If you were to read enough of marty's posts, you would realize that he's usually pretty terse in his replies.

[marty56]

For the OP.  Giving the student loan money back I see is a win win situation.  Getting stuck with student loan debt can cause a problem down the road because that type of debt may not be BK'able and the money goes back to help someone else.

[Anonymous]

in general since you claim to be both a student and working full time taking extra loans out for the car payment is not the best decision.

I know people who saddled themselves with tens of thousands of dollars in student loan "extras" who have full time carrers and wait tables part time to help pay the student loan payments.

yep I know a prosecuter to a major city, over  a hundred forty k in SLs who waits tables three cities over to help sustain his quality of life since his student loan payments are more then his rent.

[haulingthescoreup]

Yikes, good point.