@DoppelgangerD wrote:Wouldn't it make sense, that if the approximate cost per year is the same, that it'd be better to just do a 5 yr loan, and then if you want another 5 years, just turn around and do the same thing again.
This way you don't have so much money tied up that could be put into earning interest, etc...
I guess one caveat would be if they stopped offering this type of loan before you could take out a new one, but other than that, I'm not seeing a negative to that approach.
The SSL maneuver doesn't tie up much money; as soon as the loan is issued and the proceeds deposited into the savings account, the proceeds are then used to pay down the loan to 9%. So for a $5000 loan the maximum tied up would be $450. And it could be less if one chooses.
@Thomas_Thumb wrote:
@SouthJamaica wrote:
@Thomas_Thumb wrote:
@Horseshoez wrote:
When I did my SSL back in 2021, like you I opted for PenFed; here's how it went down:
- I moved enough money from my Premium Savings to my Regular savings to bring that balance to at least $3,005
- I contacted customer service 30 days later and set up the SSL for $3,000 for five years
- Instead of paying the loan down to under 9% right away, I decided to pay it down in a stair-step fashion to see how my FICO scores reacted to each of the reported LTB thresholds (no surprise, each threshold bumped my scores)
- Once the loan got to about $250 I left it alone until I bought my new vehicle in late 2022, at which point the SSL was redundant and I paid the remaining balance.
Do you still have the data from stepping down the B/L ratio on the SSL? If so, can you post scores vs B/L along with comments if other factors might have influenced score.
Thanks.
I've done the SSL trick, and my recollection is that nothing whatsoever happened until I got down to 9%, when I got a big boost. After the first couple of times, I stopped even bothering with gradual payoffs.
As we know, profiles/scorecards react differently to various scoring attributes. Horseshoez reported seeing score changes at various thresholds along the way. That data could be insightful.
SJ, the data I recall seeing you post related to step down of an auto loan. There were one or two minor score boosts along the way before the big jump crossing below 10% or 9%. The minor boosts were reported on 2 of 3 CRAs. If so, perhaps there were update timing differences that didn't show on the 3rd CRA.
For those not needing an instant score boost, additional stepdown data on SSL B/L ratios is welcome. It needs to be the only open loan on file to isolate effect.
I'd be particularly interested in results of adding an SSL to relatively thin files with age of youngest revolving account over 12 months. Data points of interest for stepdown: 90% and above => 60%-65% range => 40%-45% => 20%-25% range => 5%-9% range.
@Thomas_Thumb, your memory is truly amazing. Yes I do remember gradually paying down a car loan. I couldn't afford to just pay that down to 9% in one swipe, as I had done with the SSL's. Also, it appears that I had an already paid down SSL at the same time.
So here were the results as I paid down the car loan.
80% non event
70% non event
60% non event
50% & 40% non event
10% .... + 20 to 24 points across the board