Question

You have $25,000 in student loans at 4.99%. your current payment is $265/month. you want to pay them off in 5 years instead of 10 years. how much extra would you have to pay per month to achieve that?

Answer 1

To pay off $25,000 in student loans at 4.99% interest in 5 years instead of 10, an amortization calculation must be performed to find the new monthly payment amount and then determine the additional amount needed on top of the current $265/month payment.

Step-by-step explanation:

To determine how much extra you would need to pay each month to pay off your student loans in 5 years instead of 10 years, an amortization calculation is necessary. This calculation takes into account the principal loan amount of $25,000, the annual interest rate of 4.99%, and the desired loan term of 5 years. The current payment is $265/month for a 10-year term, but the question is what this payment should be for a 5-year term.

Using financial formulas or an online loan calculator, you can compute the new monthly payment and subtract the current payment of $265 to determine the additional amount required each month. Unfortunately, without precise financial formulas or a calculator part of this response, the precise additional amount cannot be provided in this format.

Note that when increasing your monthly payment, you decrease the amount of interest paid over the life of the loan, hence saving money in the long term.