/biz/ - Business & Finance

Is the interest rate on the loan flat or floating?

Ignoring loan fees etc, if inflation is higher than your loans yearly % interest rate, its cheaper to just make minimum payments

>>51623058
Fixed for a year at a time. Currently 2.5% interest and inflation in my country is 8%.

By having money on my bank account i lose 8% due to inflation, therefore thinking also if it would be worth using that money to pay off the loan

Get credit card with 0% APR
pay all debt through card
Wait for debt to be inflated away
ezpz

>>51622965
Zoomzooms are in for a little treat when they find out that people take paycuts during recessions just to be able to keep their jobs

>>51623113
I work in IT, things can't go bad there, r-right?

>>51623119
hahahahaha no you're also fucked bro, friend of mine has a PhD and almost didn't get hired on a FAANG level company, and we're not even IN the recession yet

>>51623128
*that is to say, we have been in a recession for months now, but the market and the government are pretending we're not in it yet until the very last people of zion have sold their bags

>>51622965
>inflation will remove the loan
this won't work because even if inflation would increase your income in such a way as to outpace your debt the bank will adjust loan fees to outpace your income.

the only way to win this game is to not play.

>>51623099
No Inflation allows borrowers to pay lenders back with money worth less than when it was originally borrowed.

The bank is holding the debt, each year they lose 8% off its worth due to inflation. And can only get back 3.5% of it.

As long as inflation is higher, you should make minimum repayments and invest elsewhere.

>>51623267
>invest elsewhere.
But everything is going down?

>>51623287
I bonds
https://www.washingtonpost.com/business/2022/07/20/buying-inflation-indexed-i-bonds/
Guaranteed to not lose money to inflation. You're also not going to make money.

>>51623161
but his loans are in fixed rates, your comment doesn't make sense in his example.

>>51623287
Are you in America?

>>51623267
Worth is relative, a higher interest rate will still require me to pay more in mortage

>>51623321
Europoor

>>51623287
If you are american, I saw a comment similar to this the other day, this anon may know what I'm on about. >>51623295

Some American was talking about buying T bonds? As much as he legally could and buying them on his wife and kids name. Then reselling them in a few months

>>51623119
Anecdotally, I know a manager and a tech lead who were just laid off with severance through the end of the year. The fiscal year ends in about a week, so I'd expect to see decently sized priority shifts in about a month once those plans have trickled down from executive leadership.

>>51622965
If the interest rate is fixed and below inflation, then there's no reason to pay it off early.

>>51623333
Sure worth is relative to a point, but assuming inflation stays at 8% a year.

Any amount is always going to be worth 92% of what is was the previous year.

Its not worth to pay a loan off early if inflation is higher trust.

Idk buy btc and xmr

>>51623345
T bonds are decent but they don't really hedge you against inflation. They do pay semi-annual interest though

>>51622965

>>51623128
>PhD

>>51624168
admittedly it was a pretty good deal for both of us
>leave shithole country
>come to US, land of opportunity [sic]
>spend 4-5 years with same quality of life as in shithole country
>get job anywhere on earth (it's a STEM PhD)

Pay it off unless its fixed rate and the rate is whatever you can get in short term bonds, right now thats 3-4%. Like its retarded to pay off a 3% mortgage right now when you can put into a savings account and earn more interest that the mortgage interest.

But if you have something like a 5-6% fixed rate, pay it off if you want to be safe, but long term investments will still beat that easy.

Anything over 6-7% or variable rate just pay off.

>>51624310
>Like its retarded to pay off a 3% mortgage right now when you can put into a savings account and earn more interest that the mortgage interest.
In europe the savings interest is still 0% while loans are 2%

>>51622965
This meme is missing a few updates.

>>51624504
Nobody would ever actually use a savings account (unless they are retarded), savings account is used a short-hand for "risk-off bonds and treasuries".

>>51624628
So what you recommend then for savings?

>>51624727
bonds and treasuries. They unironically yield more than savings accounts right now.