Capitalized Interest

[tennischic]

I have about 23k on cap interest. My principal balance is 66k. So my total loan balance is 23k+66k+3k....Is the amount I have in capitalized interest a lot?

[Saria]

Everything's relative I suppose but IMHO yeah, it is a lot. Think of it this way. Let's assume your interest rate is 6%, and that's a low estimate since it sounds like you have private loans. The $23K in capitalized interest will cost you roughly $1400 in additional interest over the course of a year and a LOT more over the life of the loan. About of quarter of the interest you pay with each payment could have been avoided had interest payments been made rather than capitalized. I'm not judging - hey, I'm letting a little bit of interest capitalize myself - but just food for thought for anyone who might read this who's in a position to avoid it.

[tennischic]

I have been out of school for 2 years. I don't know if that info helps any.

[Saria]

Maybe I don't understand what your question is, but there's nothing you can do about it. You understand what capitalized interest is, right?

[tennischic]

Maybe I don't understand what your question is, but there's nothing you can do about it. You understand what capitalized interest is, right?

 

yup i looked it up...and it freaked me out...but i was hoping someone would say it isnt as bad as I think it is.....