topic Re: Should I take a personal loan? in Personal Finance

Should I take a personal loan?

Anonymous — Mon, 24 Jan 2022 17:01:05 GMT

Hello all! Not sure if this is posted in the right spot or not. I have an offer for 18k personal loan @ 26% for 3 years. Score not that great 697 Experian 656 transunion and 687 Equifax

This loan would be used to pay off other loans/ cards at higher rates.

One loan 7k left is 35% still have 4yrs on it

One is 29% 3.5k left 2.5 years left and the 3rd is 25% 2.5k with 18 months left.

One card 19.99% 3k balance

One card at 29% 1.5k

It would be one payment instead of 5

Would also save me about 50.00 a month that I plan on putting toward the new loan to save a little interest on it.

Thoughts please.

Re: Should I take a personal loan?

RSX — Mon, 24 Jan 2022 18:16:28 GMT

yes you should

then - after about 6 months of payments, and hopefully your score will have bumped over 700, you should look to refinance that 26% loan with something in the 9-16% range (lower if possible of course, but that is my guess on what you will be able to get)

as you know 26% is awful - BUT - the best way to limit the amount of interest you pay, is to pay it off sooner - so add that $50 you mentioned to every month - but make extra payments whenever you can - even $25 makes a difference when the rate is that high

throw every dollar you can at this loan

good luck to you

Re: Should I take a personal loan?

pizzadude — Mon, 24 Jan 2022 18:17:52 GMT

Have you shopped around at all for a better rate ? 26% is not a great rate and you might be able to save more per month if you can find a better deal

Re: Should I take a personal loan?

SouthJamaica — Mon, 24 Jan 2022 18:19:08 GMT

@Anonymous wrote:
Hello all! Not sure if this is posted in the right spot or not. I have an offer for 18k personal loan @ 26% for 3 years. Score not that great 697 Experian 656 transunion and 687 Equifax
This loan would be used to pay off other loans/ cards at higher rates.
One loan 7k left is 35% still have 4yrs on it
One is 29% 3.5k left 2.5 years left and the 3rd is 25% 2.5k with 18 months left.
One card 19.99% 3k balance
One card at 29% 1.5k
It would be one payment instead of 5
Would also save me about 50.00 a month that I plan on putting toward the new loan to save a little interest on it.
Thoughts please.

If I were you I would join a good credit union and see if I could get a better rate.

Re: Should I take a personal loan?

Anonymous — Mon, 24 Jan 2022 18:29:12 GMT

Yes I have shopped around and the others are 29% plus.

Re: Should I take a personal loan?

RSX — Mon, 24 Jan 2022 18:32:56 GMT

one other note

only keep 1 CC in your wallet and i wouldn't put more than $200/mnth on it until the loan is paid off

you can cycle between the 2 CC's every 3-4 months so that they each get use

but don't run up any card amount again, until that loan is over and done with - otherwise you will dig back into a hole

Re: Should I take a personal loan?

Anonymous — Mon, 24 Jan 2022 18:33:41 GMT

Yes I have tried a couple of credit unions denied. After I accept or decline the offer I have I am back to the garden.

Re: Should I take a personal loan?

CYBERSAM — Mon, 24 Jan 2022 18:34:27 GMT

Yes Credit Unions are the best way to go!

4 Years ago I was in similar predicament as you, but could not get any banks to give me a Personal Loan. I went with Penfed with 15%. Consolidated bunch of CC debt to one loan and then got under 10% loan with Service CU! As my Fico Score went up, I was able to consolidate everything to one loan at 3%.

I believe within couple of months you can get much better rate then 20s

Re: Should I take a personal loan?

Anonymous — Mon, 24 Jan 2022 18:36:42 GMT

Thanks. Should I close out cards except a couple of them? I do plan on closing out any that have an annual fee when the fee rolls around.

Re: Should I take a personal loan?

chiefone4u — Mon, 24 Jan 2022 18:38:03 GMT

@Anonymous have you checked into PenFed CU? If you qualify for membership I suggest checking your rate with them.

My scores are similar to yours and they offered me $20,000 for 60 month's at 11.49%. A shorter term usually has a lower rate.

Re: Should I take a personal loan?

RSX — Mon, 24 Jan 2022 18:38:46 GMT

list them out with their Age - CL and the annual fee amount - we can make some suggestions

you will want to keep 3 if possible (for scoring reasons)

Re: Should I take a personal loan?

CYBERSAM — Mon, 24 Jan 2022 18:58:09 GMT

@Anonymous wrote:
Thanks. Should I close out cards except a couple of them? I do plan on closing out any that have an annual fee when the fee rolls around.

Yes. Especially any CC that is not going to grow for the long run such as CreditOne and similar Cards.

However list them first and let see what you have and what can be cut off without effecting your score.

Also this should be a 6 months plan to reduce your high interest rates. It is not going to happen in one week!

Re: Should I take a personal loan?

Anonymous — Mon, 24 Jan 2022 19:12:57 GMT

There a lot of scrub cards but they are as follows.

Capital one CL 2700.00 balance 1500 no annual fee 6/2019 would be paid off with the loan

Capital one CL 700.00 Balance 35.00 39.00 annual fee 3/2018

Comenity Mastercard 5900.00 CL 5/21

3000.00 balance would be paid off with the personal loan. No annual fee.

Avant MC 3/2018 1500.00 CL zero balance 35.00 annual fee

Show MC 4/2018 1000.00 CL zero balance 75.00 annual fee called in OCT 2021 to close because of the annual fee and they waived it to keep Me as a customer.

Target Red card 300.00 CL zero balance no annual fee 7/2018

Khols card 700.00 CL no annual fee

7/2018

Best buy Visa 2000.00 CL zero balance no annual fee 12/2020

Credit one MC 500.00 CL 39.00 annual fee. Zero balance 3/19

Credit one Amex 1000.00 CL 5/20

Zero balance

Shell Fuel card 700 CL zero balance

Just got this one for the .35 a gallon savings for the first 5 tanks then the savings after.

Have closed out post BK cards Indigo card had 300.00 limit 75.00 annual fee, Cerulean MC, and Reflex card both 1750.00 both had 75.00 annual fee. Figured they did what they were intended to do.

I keep enough money in my bank to pay my bills after I move money to savings account and to my PenFed savings. Withdraw the rest and use cash for most everyday purchases.

Re: Should I take a personal loan?

Anonymous — Mon, 24 Jan 2022 19:27:40 GMT

Yes PenFed they were my first try since I have a savings account with them since early 2020 but was denied

Re: Should I take a personal loan?

CYBERSAM — Mon, 24 Jan 2022 19:33:45 GMT

@Anonymous wrote:
There a lot of scrub cards but they are as follows.
Capital one CL 2700.00 balance 1500 no annual fee 6/2019 would be paid off with the loan
Capital one CL 700.00 Balance 35.00 39.00 annual fee 3/2018
Comenity Mastercard 5900.00 CL 5/21
3000.00 balance would be paid off with the personal loan. No annual fee.
Avant MC 3/2018 1500.00 CL zero balance 35.00 annual fee
Show MC 4/2018 1000.00 CL zero balance 75.00 annual fee called in OCT 2021 to close because of the annual fee and they waived it to keep Me as a customer.
Target Red card 300.00 CL zero balance no annual fee 7/2018
Khols card 700.00 CL no annual fee
7/2018
Best buy Visa 2000.00 CL zero balance no annual fee 12/2020
Credit one MC 500.00 CL 39.00 annual fee. Zero balance 3/19
Credit one Amex 1000.00 CL 5/20
Zero balance
Shell Fuel card 700 CL zero balance
Just got this one for the .35 a gallon savings for the first 5 tanks then the savings after.

Have closed out post BK cards Indigo card had 300.00 limit 75.00 annual fee, Cerulean MC, and Reflex card both 1750.00 both had 75.00 annual fee. Figured they did what they were intended to do.

I keep enough money in my bank to pay my bills after I move money to savings account and to my PenFed savings. Withdraw the rest and use cash for most everyday purchases.

You already know what's up! Keep 3 CCs (most 4) and cancel everything else! They are going to report for next 10 years!

At this stage you are not going to be able to get one big loan to cover everything! But having too many open CLs may prevent you from getting small loans.

I know many like Target CC but what are you going to buy under $300 that it would not effect your score negatively? a coffee? unless you are planning to micromanage these small CLs before they report and reduce your score, just cancel them and reboot your credit card profile when your score is better in few months!

Re: Should I take a personal loan?

SouthJamaica — Mon, 24 Jan 2022 19:40:28 GMT

@Anonymous wrote:
Thanks. Should I close out cards except a couple of them? I do plan on closing out any that have an annual fee when the fee rolls around.

Don't close anything with a balance. Only when they're zeroed out.

Closing cards with balances will depress your scores further.

PenFed isn't the only fish in the sea. And they're not the easiest lender in the world. Look for local credit unions, credit unions for which you can qualify through your employment, or geographical location, or other affinity.

Re: Should I take a personal loan?

Anonymous — Tue, 25 Jan 2022 01:10:17 GMT

So I have sorted the ones I am going to close do I close them all at once or wait a few weeks/months between each one to close them?

Re: Should I take a personal loan?

SouthJamaica — Tue, 25 Jan 2022 04:06:21 GMT

@Anonymous wrote:
So I have sorted the ones I am going to close do I close them all at once or wait a few weeks/months between each one to close them?

1. You shouldn't be closing them before applying for the loan.

2. You shouldn't close any accounts with a balance.

Re: Should I take a personal loan?

Anonymous — Tue, 25 Jan 2022 04:43:04 GMT

The loan is already good to go I just need to go in and sign the paperwork.

The only ones with a balance I would be paying off with the loan and they do not have an annual fee and are my highest CL ones. Only ones I would close have a zero balance and low CL.

Do them all at once or over time? What way would be easier for my score to recover from?

Re: Should I take a personal loan?

Anonymalous — Tue, 25 Jan 2022 05:10:40 GMT

Closing cards doensn't affect your score, except indirectly. In 10 years when they vanish off your credit reports, your average age will drop, which can lower your scores. But all your other cards will have aged 10 years, so it's not a real worry. Also, closing cards lowers your overall credit limit, which can affect utilization. After you've paid off all your balances with the personal loan, that's a non-issue.

Don't open any new cards. 26% is terrible. If you improve your scores, you might be able to get a new loan at a lower rate, and that should be your priority. Practice AZEO (if you have any charges, pay off all cards except 1 bank card before the statements cut, and then leave a token amount on the last card -- and pay it off after the statement cuts, but before it's due, so you never pay interest).