topic Re: Personal Secured, Installment Loan to Pay Down CC Debt? in General Credit Topics

Personal Secured, Installment Loan to Pay Down CC Debt?

Anonymous — Thu, 30 Jul 2009 02:46:11 GMT

Hey Guys! I am a newbie and need a little help. Here is my breakdown:

Target Visa: Bal- 3630, Limit 4500 22% APR

Old Navy Visa: Bal-3470, Limit 4000 22% APR

Honda Financial: Bal-10725, 9%APR (Car Note-not lease) This plays into the question.

Other odd and end CC's totaling 1760 with APR between 17% and 22%.

So, I went to Wells Fargo to get a loan to "consolidate",only my CC debt and hopefully lower my interest rate, however, they came back and said that they wanted to pay off my car and include it for a secured loan. Here is the kicker... the interest rate is 17.49% over a 65 month period!!!

I think that this deal sounds a little fishy, but i also think that if I could change it to a 36 month period, it may work out. The loan officer kept saying that installment loan interest calcualtions are much better than CC interest calculations? I am so confussed on what to do. Please Help!!!

Re: Personal Secured, Installment Loan to Pay Down CC Debt?

DI — Thu, 30 Jul 2009 03:17:28 GMT

Smith- Welcome to the Forum

I wouldn't take out any other loans. I definately wouldn't take out a loan for the 5.5 years at 17.49. Your best option is to not charge anything else on the cards, and get a second job to pay down the balances quickly. The interest rates on your CC's means you need to knock those balance down quick.

If your credit is good, you may can find a 0% offer for up to 12 months to help with one of the cards. I doubt if your get a CL to cover all the card balances. Even with the 3-4 % BT fee you still will save some money compared to the 22% interest.

Re: Personal Secured, Installment Loan to Pay Down CC Debt?

Anonymous — Thu, 30 Jul 2009 03:55:23 GMT

Target Visa: Bal- 3630, Limit 4500 22% APR

Old Navy Visa: Bal-3470, Limit 4000 22% APR

Your util on your target is 81% and the Old Navy is 87%. Those are quite high. But you knew that because you are asking for advice. As was stated you need to get those down ASAP not just to help with a FICO score but to save money in interest.

Other odd and end CC's totaling 1760 with APR between 17% and 22%.

Would you be willing to post the balances and credit limits on these cards? Just to get a better idea of your overall util.

Time can heal all wounds and a low FICO.
"Hello my name is Sandy and I'm a recovering crediholic".

Re: Personal Secured, Installment Loan to Pay Down CC Debt?

haulingthescoreup — Thu, 30 Jul 2009 03:59:45 GMT

Alternatively, find a loan from someone else. Try a local credit union.

That's a terrible loan offer. I hope you can do better than that elsewhere.

Just as a general observation, loans to pay off CC's are great IF you have the self-discipline to stop using the cards. You can keep them alive by using each card once every month or two to buy a tank of gas or a bag of groceries --something that you would have to do anyway, using cash if necessary. The moment that the charge shows up online, pay if off, then and there. No more CC debt!

Loans to pay off CC debt are great, in that they are generally at a lower APR, and for FICO scoring, they move the debt over from revolving to installment. But if you are not ruthlessly honest with yourself, and if you allow yourself to keep using your cards and incurring additional debt, you will be faced with the prospect of making the monthly installment payment plus the new charges on your CC's.

So handle with care. If you got in trouble because of self-indulgence or lack of self-discipline, think long and hard before doing an installment consolidation loan. If your troubles arose from a one-time event, such as medical expenses not covered by insurance, or divorce or unemployment, that's different. Nevertheless, handle with care.

Hope you don't mind the tough love. I'm not scolding; I just feel that people need to regard this option with care! Good luck.

Re: Personal Secured, Installment Loan to Pay Down CC Debt?

Anonymous — Thu, 30 Jul 2009 04:08:53 GMT

@haulingthescoreup wrote:
Alternatively, find a loan from someone else. Try a local credit union.

That's a terrible loan offer. I hope you can do better than that elsewhere.

Just as a general observation, loans to pay off CC's are great IF you have the self-discipline to stop using the cards. You can keep them alive by using each card once every month or two to buy a tank of gas or a bag of groceries --something that you would have to do anyway, using cash if necessary. The moment that the charge shows up online, pay if off, then and there. No more CC debt!

Loans to pay off CC debt are great, in that they are generally at a lower APR, and for FICO scoring, they move the debt over from revolving to installment. But if you are not ruthlessly honest with yourself, and if you allow yourself to keep using your cards and incurring additional debt, you will be faced with the prospect of making the monthly installment payment plus the new charges on your CC's.

So handle with care. If you got in trouble because of self-indulgence or lack of self-discipline, think long and hard before doing an installment consolidation loan. If your troubles arose from a one-time event, such as medical expenses not covered by insurance, or divorce or unemployment, that's different. Nevertheless, handle with care.

Hope you don't mind the tough love. I'm not scolding; I just feel that people need to regard this option with care! Good luck.

But if you are not ruthlessly honest with yourself, and if you allow yourself to keep using your cards and incurring additional debt, you will be faced with the prospect of making the monthly installment payment plus the new charges on your CC's.

Have you been spying on me?????? How did you know I've done that?

Re: Personal Secured, Installment Loan to Pay Down CC Debt?

haulingthescoreup — Thu, 30 Jul 2009 04:25:07 GMT

lol, it's human nature. We're all about denial.

I have successfully used BT's and a HELOC to pay off CC debt, incurred in my stupid days. But that was after I got here, and learned stuff, and got smart.

Back in my stuck-on-stupid days, I would have created a disaster of unimaginable proportions.

Re: Personal Secured, Installment Loan to Pay Down CC Debt?

Anonymous — Thu, 30 Jul 2009 12:24:42 GMT

I appreiciate your tough love and will look other places for loans. However, I do have Suzie Orman Platimun package and there is a Debt Eliminator Plan. I may focus on that see what option that it suggests. I know I need to buckle down be done with this stupid credit card debt.

Re: Personal Secured, Installment Loan to Pay Down CC Debt?

Anonymous — Thu, 30 Jul 2009 12:33:43 GMT

This is probably a dumb question, but what is UTI and how does it affect your FICO and interest rates?

Re: Personal Secured, Installment Loan to Pay Down CC Debt?

Anonymous — Thu, 30 Jul 2009 15:08:27 GMT

OK, so I talked with the loan officer again and he said the term could be reduced to 3 years instead of 5.5?

Would this make the loan any better?

Re: Personal Secured, Installment Loan to Pay Down CC Debt?

Anonymous — Thu, 30 Jul 2009 15:43:51 GMT

@Anonymous wrote:
This is probably a dumb question, but what is UTI and how does it affect your FICO and interest rates?

Your utilization ratio is your total balances divided by your total available credit. It accounts for 30% of your FICO score so it's very important to keep it as low as possible. 1-9% seems to be a popular goal among posters here. Lenders get nervous when they seem someone using most of their credit limit. The lower your FICO the higher the interest rates are applied on loans.

7/09 (myfico)
TU-742
EQ-779

Time can heal all wounds and a low FICO.
"Hello my name is Sandy and I'm a recovering crediholic".

Re: Personal Secured, Installment Loan to Pay Down CC Debt?

DI — Thu, 30 Jul 2009 16:27:40 GMT

@Anonymous wrote:
OK, so I talked with the loan officer again and he said the term could be reduced to 3 years instead of 5.5?

Would this make the loan any better?

Did the loan officer lower the rate? If you really need to take this route, and think you can double up on the payments every month, and there's no penalty fee for early payoff, its something to think about.

Smith- I wouldn't take on any additional loans during these trying times. During a recession its time to pay off things as much and quickly as possible. Take a look at your budget and see what you can temporaily cut until the CC's are paid in full.

Re: Personal Secured, Installment Loan to Pay Down CC Debt?

Anonymous — Thu, 30 Jul 2009 18:24:58 GMT

OK, I am all about "signs". I work in HR and just recieved a garnishment for one of our employee's from Wells Farga Finance. The same palce that I am wanting to get this loan from. I think this is a sign that I should buckle down and do this on my own!!!

I think I would have more satisfaction doing it my way, once this is all over.

Re: Personal Secured, Installment Loan to Pay Down CC Debt?

DI — Thu, 30 Jul 2009 18:48:40 GMT

@Anonymous wrote:
OK, I am all about "signs". I work in HR and just recieved a garnishment for one of our employee's from Wells Farga Finance. The same palce that I am wanting to get this loan from. I think this is a sign that I should buckle down and do this on my own!!!

I think I would have more satisfaction doing it my way, once this is all over.

Consider it a lesson learnt, and handle it yourself. At the end you will look back and not want to repeat the sacrifices you had to go through to pay the cards off. That alone should deter you to be more sensible with CC's. If you don't have a budget create one. You can use MS Excel to create a simple budget.

Re: Personal Secured, Installment Loan to Pay Down CC Debt?

cobaltnv — Thu, 30 Jul 2009 23:36:07 GMT

A loan to consolidate your cc balances is not a bad idea. However, 17.5% is probably not worth it for you. I would do as others have suggested and look around at other places (credit unions for example). You might also look into places like lending club where you may be able to get a better interest rate. If you have reasonable FICO scores I would think you could get a loan for 15% or so. I would not worry about the term of the loan. I wold determine how much $$ you can put towards the balance each month and pay that (hopefully it is way above the minimum loan payment)

Good luck

Message Edited by cobaltnv on 07-30-2009 04:36 PM

Re: Personal Secured, Installment Loan to Pay Down CC Debt?

Anonymous — Fri, 31 Jul 2009 01:50:25 GMT

What is lending club?

Re: Personal Secured, Installment Loan to Pay Down CC Debt?

cobaltnv — Fri, 31 Jul 2009 06:41:30 GMT

lendingclub is a web site that provides personal loans to individuals. These loans are funded by groups of individuals who each contribute $25 or more toward the loan. The interest rates on lending Club are reasonable (normally) and are for three year terms.

Cheers

Re: Personal Secured, Installment Loan to Pay Down CC Debt?

Anonymous — Sat, 01 Aug 2009 12:53:07 GMT

Unless you are ultra-prime credit, LendingClub rates will vary in APR lower range of 13.5% and up.

Your best bet is a Credit Union. If you don't qualify for an unsecured loan, maybe they would consider a refi cash out on your car too. See if you have a local one that you can sit down and discuss a financial strategy on getting these debts paid off and wanting to reduce the interest portion of payments.

Debt eliminator plans work great. Debt eliminator plans with lower interest work even better.

If you are going to do a consolidation loan, sock drawer your credit cards and get a budget. Only use credit cards as debit cards (for cash purchases that you will PIF end of month).

Also, you might call your CCC's and just ask for an APR reduction. Some may do so. If they will, this may reduce your loan needs.

You could look at a possible BT card to apply for. I would suggest looking at NFCU (if you can qualify for membership) or Addison Avenue Credit Union (must join Financial Fitness Association $5 to qualify).

NFCU has rates as low at 7.9 and Addison has rates as low as 5.24.