On the other hand, certain types of loans and credit lines carry such low interest rates that it sometimes makes sense to take your time paying them back. And often these debts give you certain tax benefits that make them an even better deal.
Student loans are an example of low-interest debt that many young investors are familiar with. If you took a loan to pay for college, it may feel like a big burden hanging over your head in your first few jobs. And you're not alone — more than 70% of students borrow to finance their educations. What may make repaying college loans a little more bearable is that, depending on your income, some or all of your interest payments may be tax deductible, which means your income taxes are reduced.
In addition, if you make your payments on time each month or arrange to have your payments automatically deducted from your checking account, you might qualify to have your interest rate reduced below the already low rates. Plus, you'll build a good credit rating, which means that future lenders will see you as someone worthy of a loan.
The federal government forgives all
or part of loans for some college graduates, including
those who serve in the military, participate in a
service program such as the Peace Corps, or teach
at underprivileged schools. If you think you might
qualify to have your loans forgiven, check with the
Federal Student Aid Web site at
www.studentaid.ed.gov
for more information.
