Does it sound right for a loan company to do this?

I applied for 4000 through my bank for education loan (Tuition options loan is what it was called) and they conditionally approved me for 5% interest and I would pay only interest and pay rest later. However, I get my loan check in mail it is 10.something interest and the total I pay back after I'm done (payments are stretched out very long I believe, one amount is stretched to 200 payments) is over 10k...I'm kinda screwed because I have to pay for school very soon and won't be able to get anything else in time....with loans like this do you typically get penalized for paying it off sooner? (My plan to pay off in a couple of years)

Does it sound right for a loan company to do this?

go back to the bank before you use any of the money and get these answers in writing befoe it is too late!!!

Does it sound right for a loan company to do this?

You should ask them if you will get penalized for making higher payments or paying it off early. Some loans have conditions like that on it. The interest rate is probably based on your credit rating. If you had excellent credit they would have given you the promotional 5%. If you had a co-signer, they may lower the interest rate for you. You could also try going to the bank's website to see if you can find the fine print on that type of loan or check out your paperwork.

Does it sound right for a loan company to do this?

These question should be asked to your bank. Someplaces do charge for early repay others cut you a discount for paying early. I think you need to talk to them and discuss what is your best direction you would like to go, and obviously do this as soon as you can.