Debt Consolidation Loan Questions

EaglesFan2006 · ‎07-23-2019

Hello,

I'm looking at getting a debt consolidation loan via Upstart. Before I decide if it's the best option, I have a few questions.

First some background. I've made reducing credit card debt a priority, however some hits with my spouse's job has put a lot more pressure on us, and I really don't like the feeling any more of worring. So I'm trying to explore options. Anyway, I did the pre-quote from Upstart where they ask income, address info, etc...it gave me a rate of 16.7% for a 40k loan, which to me seems to good to be true since a google search prior to upstart saw rates of 25-30%. But assuming I move forward with the application and get a rate close to that, it would eliminate my CC debt and the Upstart monthly payment would be far less than what I pay on CCs now. So to me, it seems like an option.

Now my questions:

From an approval standpoint when they go through that, do they consider the debts I'm paying off when evaluating the DTI? Otherwise it kind of seems like a Catch 22

Is this viewed as just a 'personal loan' for CRA purposes?

I have to get a car some time in the near future (no current car payment)...would a DC loan be stigmatic toward that?

Finally, and I know this is probably vague but just to ballpark it: Right now I have 20 card reporting high balances, a mortgage, and a student loan. Assuming I get this loan, I would then have 20 cards reporting no balance, a mortgage, student loan, and then this loan...i'm assuming I can leave the CCs open but I don't know if getting a DC loan requires me to close them. Anyway, in your opinion which scenario would rather have?

Thanks in advance...I'd appreciate any insight into experience with loans like this

Remedios · ‎07-23-2019

@EaglesFan2006 wrote:
Hello,

I'm looking at getting a debt consolidation loan via Upstart. Before I decide if it's the best option, I have a few questions.

First some background. I've made reducing credit card debt a priority, however some hits with my spouse's job has put a lot more pressure on us, and I really don't like the feeling any more of worring. So I'm trying to explore options. Anyway, I did the pre-quote from Upstart where they ask income, address info, etc...it gave me a rate of 16.7% for a 40k loan, which to me seems to good to be true since a google search prior to upstart saw rates of 25-30%. But assuming I move forward with the application and get a rate close to that, it would eliminate my CC debt and the Upstart monthly payment would be far less than what I pay on CCs now. So to me, it seems like an option.

Now my questions:

From an approval standpoint when they go through that, do they consider the debts I'm paying off when evaluating the DTI? Otherwise it kind of seems like a Catch 22

Is this viewed as just a 'personal loan' for CRA purposes?

I have to get a car some time in the near future (no current car payment)...would a DC loan be stigmatic toward that?

Finally, and I know this is probably vague but just to ballpark it: Right now I have 20 card reporting high balances, a mortgage, and a student loan. Assuming I get this loan, I would then have 20 cards reporting no balance, a mortgage, student loan, and then this loan...i'm assuming I can leave the CCs open but I don't know if getting a DC loan requires me to close them. Anyway, in your opinion which scenario would rather have?

Thanks in advance...I'd appreciate any insight into experience with loans like this

DTI will be based on your payment obligations such as loans, mortgages and reported minimum payments on your cards.

New card loan would not be "stigmatic" but it will increase your DTI.

With $40k debt, you might want to postpone car shopping till you get some of your finances in order.

I dont see 16.7% on $40k as a good deal. Might be better than some of your APRs, but it will be hard to pay off regardless. It's a very high APR
Upstart loan has a pretty good chance of being classified as CFA.

There will be no requirement to close your cards, but again, seeing how debt was accumulated, it's probably for the best you forget you have them for a while.

Are you a member of any local CU? It's an option worth exploring, or pay down cards some more before attempting to get a personal loan to increase your chance of getting a better rate.

I do think consolidation loan is the way to go, just not the one you're contemplating

EaglesFan2006 · ‎07-23-2019

@Remedios wrote:
@EaglesFan2006 wrote:
Hello,

I'm looking at getting a debt consolidation loan via Upstart. Before I decide if it's the best option, I have a few questions.

First some background. I've made reducing credit card debt a priority, however some hits with my spouse's job has put a lot more pressure on us, and I really don't like the feeling any more of worring. So I'm trying to explore options. Anyway, I did the pre-quote from Upstart where they ask income, address info, etc...it gave me a rate of 16.7% for a 40k loan, which to me seems to good to be true since a google search prior to upstart saw rates of 25-30%. But assuming I move forward with the application and get a rate close to that, it would eliminate my CC debt and the Upstart monthly payment would be far less than what I pay on CCs now. So to me, it seems like an option.

Now my questions:

From an approval standpoint when they go through that, do they consider the debts I'm paying off when evaluating the DTI? Otherwise it kind of seems like a Catch 22

Is this viewed as just a 'personal loan' for CRA purposes?

I have to get a car some time in the near future (no current car payment)...would a DC loan be stigmatic toward that?

Finally, and I know this is probably vague but just to ballpark it: Right now I have 20 card reporting high balances, a mortgage, and a student loan. Assuming I get this loan, I would then have 20 cards reporting no balance, a mortgage, student loan, and then this loan...i'm assuming I can leave the CCs open but I don't know if getting a DC loan requires me to close them. Anyway, in your opinion which scenario would rather have?

Thanks in advance...I'd appreciate any insight into experience with loans like this
DTI will be based on your payment obligations such as loans, mortgages and reported minimum payments on your cards.
New card loan would not be "stigmatic" but it will increase your DTI.
With $40k debt, you might want to postpone car shopping till you get some of your finances in order.
I dont see 16.7% on $40k as a good deal. Might be better than some of your APRs, but it will be hard to pay off regardless. It's a very high APR
Upstart loan has a pretty good chance of being classified as CFA.
There will be no requirement to close your cards, but again, seeing how debt was accumulated, it's probably for the best you forget you have them for a while.

Are you a member of any local CU? It's an option worth exploring, or pay down cards some more before attempting to get a personal loan to increase your chance of getting a better rate.
I do think consolidation loan is the way to go, just not the one you're contemplating

Thanks,

I hear you...i've been paying down CCs down the past few months, so I feel comfortable not using them for a while. I would have no issue closing cards, my only drawback there is that I think it would hurt my credit account age. But i'm at the point where I feel better and would save more with a consolidation loan. I don't have a local CU or one through work, are there any other avenues for consolidation you'd suggest?

It just feels like its impossible...my utilizaiton is so high and obviously adding another loan would raise the DTI, even though the loan would be used to alleviate the utlization and the debt as a whole. Just feels like an impossible situation.

Anonymous · ‎07-23-2019

If you provide more details on the student loans I may be able to give you advice. Are they federal? In good standing? Balances? Payment plan type? Is your goal to pay them off eventually or get them forgiven?
Thank you