payign Osap now or open a line of credit with MBNA

[2k4accord]

Hi,

I have the ONLY credit card with MBNA for over 6 years now.
Right now my osap interest is 8.5% over the course of 15 years.
Sure I get the 15% back from the interest for income taxes.

Here are my options:
Ask for $25, 000 with MBNA to pay off my MBNA credit and OSAP.

I can open a line of credit with MBNA for 8.75% to pay off my osap loans.
Or I can ask for a normal loan with probably lower interest than 8.75% (they told me), they won't tell me exactly how much until i applied which mean a credit check.

I can pay off the loan in 4 years or 48 months.

Which would be better in the long run?
Keep OSAP as it and pay minimum until 15 years are up.
Get line of credit for 8.75%
Or apply for normal loan with a lower interest than 8.75%.

I am not an accountant so I can't see which is better in the long run.

Please input your opinions and expertises.
Thanks.

[BBQPorkBun]

Hi,

I have the ONLY credit card with MBNA for over 6 years now.
Right now my osap interest is 8.5% over the course of 15 years.
Sure I get the 15% back from the interest for income taxes.

Here are my options:
Ask for $25, 000 with MBNA to pay off my MBNA credit and OSAP.

I can open a line of credit with MBNA for 8.75% to pay off my osap loans.
Or I can ask for a normal loan with probably lower interest than 8.75% (they told me), they won't tell me exactly how much until i applied which mean a credit check.

I can pay off the loan in 4 years or 48 months.

Which would be better in the long run?
Keep OSAP as it and pay minimum until 15 years are up.
Get line of credit for 8.75%
Or apply for normal loan with a lower interest than 8.75%.

I am not an accountant so I can't see which is better in the long run.

Please input your opinions and expertises.
Thanks.

stay with osap for the following reasons

1) flexibility, you can pay lump sums anytime, change your monthly pmts or just pay interest
2) interest deductible
3) lower rate (no brainer)
4) most important reason is if you make low income or lost your job, you can apply for interest relief that allows you to not have to make payments for 6 months and the interest is paid by the gov't (max 5 years). you never know what will happen i the future (layoff etc.)

as of now i see no advantages to a LOC

[afterglow]

I agree. Flexibility is the key for me coz if a sudden expense comes up and it gets tight I can stick with the low minimum payment and when things get better I can dump more funds against the loan to pay it off faster. The other thing is if you get the normal loan your rate is fixed so if rates drop you're still stuck paying the higher one. The current 8.5% rate for OSAP is float so in the long run if you plan to only make the min mthly payments you'll pay less interest....plus you can claim it in your tax return as opposed to the MBNA loan.