Shared Secure Loan - PenFed, SDFCU, Alliant and NFCU

[Anonymous]

I need to set up a Shared Secure Loan in the 20,000 to 40,000 USD range with a CU

Any advice between PenFed, SDFCU, Alliant or NFCU (membership pending) as to which one offers the lowest rates?

as you pay down a secure loan is the money paid released/"unfrozen" or do they hold the entire amount until a zero balance on the loan?

Any experiences or thoughts on these, please let me know. Thanks!

[Anonymous]

At Alliant it is unfrozen incrementally.  You can certainly ask the other lenders.  Your question about interest rates is also best explored by asking the lenders.

I would be grateful to hear more details about your situation.  Would the thing you propose using to secure the loan be a bunch of cash sitting in a savings account?  That's how I have always heard these SS loans working -- though in theory I can imagine other things be used (a house you own, etc.).

Assuming you are planning to use cash, I am curious to hear how in your situation this makes sense.  I am sure it does -- just trying to get a handle on that myself.  If you have 30k in cash you are willing to lock up, then as far as I can see you end up making a tiny bit on interest paid to you from the savings account and paying substantially more to the bank/CU in interest on the loan.  Whereas if you just use the 30k in cash for whatever the loan would have been used for, you lose only the amount you could have earned with it being in an Alliant CD or savings account -- i.e. not very much.

Curious to hear your thoughts.

[Anonymous]

Have to show overall funds for a specific reason on something else, so happy to have it sit there. This makes my case a bit unusual perhaps.

I have found the solution for my situation since the original post. PenFed at 2%

i think this might be the best secured loan option out there. Terms, if you need them to over 120 months.....money is unfrozen as it is paid, shows as installment loan on all 3 CRA's. yes, I will use cash in the savings

these credit unions are fantastic....wish I had explored them long, long ago!

[Anonymous]

Great work, TS!  Very helpful news.

I encourage you to get the loan for the longest possible term you can and keep it open the full term.  You will almost certainly be permitted to pay the balance down in advance without shortening the term of the loan.  (And thus reducing the yearly interest to something negilibile.)  By doing this you will have a big loan that at some point is almost entirely paid off sitting open on your reports for up to ten years.  Then it will remain as a closed loan for ten more years after that.  When it finally falls off it will be 20 years old.

The only final wrinkle to choosing between different CUs is whether the CU in question does a hard inquiry when you apply for the SS loan.  Alliant does not, but others may.  I view this as a comparatively minor thing to consider (inquiries stop having an effect after one year) but it should be part of your decision.

[Anonymous]

Thanks for the great advice. Since I am just starting to rebuild, I would like some additional advice on this strategy.

PenFed already did a HP for signup so no further damage will be done for the loan. They pulled Experian.

I have a student loan with 4K left I am paying on so there is a TL with this installment type, but it had a many year period 

I was out of country and went unpaid. It is now current on all 3 CRA.

The goal of thePenFed loan is to wipe out 21k on 3 CC's @ 29.999% interest with the Share Secure for 25k @ 2%. 

Bringing my Util down to 0. Then keeping it under 9% Util going forward. This will shoot my Fico's way up 

Normally,  I am comfortable covering 25k in 24 months at just over 1k/month. However, my plan was to put it to 5 years, so it is

Approx 420/month, which I can pay down on 2 to 4x

However, PenFed allows greater than 120 months I think. I will need to double check and make sure that length will still be at 2%.

If it is still at 2%, please let me know how best to maximize this and what positive impact it can have. I assume it is best to pay a significant chunk down.

of course this only works if the term stays the same. 

Please advise further.

[manyquestions]

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@Anonymous wrote:

I have found the solution for my situation since the original post. PenFed at 2%

i think this might be the best secured loan option out there. Terms, if you need them to over 120 months.....money is unfrozen as it is paid, shows as installment loan on all 3 CRA's. yes, 

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Did they mention a minimum loan amount for the 120 months term? 

[Anonymous]

Good question...I did not happen to ask that, so not sure. When I call back I can post an update with an answer.