I am interested in knowing more about the low interest loan that is being made available to my son this summer. He will be completing his junior year this spring. What is the interest rate, loan amount available.... He is in NROTC. Thank you.
Honestly, you have to look at what you are taking the loan for... Car? Currently car loans are as low as 0%. Career starter loans will never be that low, BEWARE don't over extend!
Our DS took only 10K career starter. He purchased his new car using Toyota loan...0% for 15K.
5K was invested in an IRA to max out. 5K was for safety when he moved to his 1st duty station...he now has invested that too.
The starter loan is great, but if you don't use it wisely you can find yourself deeper in debt, especially if you have college loans.
It is a loan. USAA has a fine print on it...look at it. Frightening to see what they will up it to if you leave early!
I would not take the USAA loan until he has commissioned.
DS wasn't a four year ROTC and has some student loans from year one. Does the Navy have a student loan forgiveness program if they go Active Duty upon graduation? If not ... this sounds like a great way to payoff Student Loans at a lower interest rate?
1. Active Duty is the only option for Naval ROTC midshipmen, so there is no "if" about it.
2. The Navy does have a student loan repayment program but it appears that only enlisted folks are eligible.
3. It may or may not make sense to use it to repay student loans. Yes, the interest rates are lower but the term is shorter as well. It's certainly worth investigating.
I am a proud parent of a NROTC-Marine Division at University of South Carolina.
This parent's advice is to tie up as little capital in a vehicle as possible after graduation. If there is a good used car in the family that is available, buy it. If the beater that you've been driving for the last couple years is in decent shape, take it off your folks hands for a song.
The next best thing is a 2-3 year old economy vehicle (perhaps OEM certified) that lets someone else take the 25% hit on when they got the new-car smell. For this, you will probably be better off taking the starter loan rather than dealer financing.
Additionally, the newly commissioned O-1 should make sure they have enough money on hand to get that lease squared away (assuming you live off-base), some starter furniture (enough that you can have a couple friends over for dinner and a some evening fun, but keep it simple) and most importantly if you don't have an emergency fund (3 mos take home), at this rate it might be OK to borrow that for a short time as you never know when something happens. Yeah, it boosts your committed payments, but taking a year or 2 to put aside an emergency fund is asking for trouble in my book. The 1-3% while you pay off that amount of the loan is a small price to pay for that ability to handle the stupid things that happen (tranny failure, car wreck, etc.). Of course, remember if you can budget for it, it is never an emergency.
That is great advice. Now if only my kid would have listened.
I have to admit, the drive I took with him from Seattle to Ft. Rucker AL. in his 2010 red Mustang GT was a blast and took me back to my muscle car youth, I do wish he would have looked at some other options. That being said he was in at least a position where he had no student loans or credit card balances, actually no debt at all, he was in the odd position of being in the black by about 6K when he left for Ft. Rucker.
Had I been able to talk him into other options he would probably be driving something else, he did get a screaming deal on the car and it's still worth more then he paid. At least he took his time and found a great buy.
My wife had asked me to talk to him about buying something more practical, I had to laugh, my first car was a 66 GTO built for speed, I guess I wasn't much help in that regard.
Luckily he has been fairly good with his pay and has a good nest egg and is now investing, not too many ways to spend your money when you either in class or studying most everyday.
For you new grads, listen to Goaliedad, he has give some great advice.
Just to add one thing, the car did not cost the entire loan, it was below $19K, with 20K miles, like I said, a screaming deal for what he got.
I am a truck guy, but man I wouldn't mind a Mustang GT haha
My wife had asked me to talk to him about buying something more practical, I had to laugh, my first car was a 66 GTO built for speed, I guess I wasn't much help in that regard.
I was glad to see comment regarding truck - that is what my son has had his eye on for years - knowing that each situation is different, I can accept that my son will buy a new truck, it helps that there is no serious relationship present, that he has households for a 1 bd apt (from moms downsizing) and is really tight with money.
He was counseled (by grandfather who has done his investments thus far - even his ROTH is bringing in over 3% now)to use the career starter to jumpstart his investments, and thus the payback sets up natural out of mind for continuing the amt into savings when gone.
As i said each situation is different, for us, I am proud that between his scholarships and frugal living, my son will graduate debt free, having driven hand me downs for years now. I will take comfort that he has very reliable transportation with hands free phone and nagiviation. But that's just us and our situation. I just wanted to share what we knew of the plans. I have learned much on this site, espically early on about VMI, so wanted to share what I could. The time flew by as I suspected - this is his senior year, so next year will bring many new adventures. larrys mom