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How To Best Apply for Personal Loan (Discover or PenFed?)

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How To Best Apply for Personal Loan (Discover or PenFed?)

I'd like to thank all of you for the information being shared here each day. I've been reading posts here for a few months now and have learned so much. 
 
I have a question about applying for a personal loan. 
 
First, my stats....
AoOA: 3 years, 9 months 
AAoA: 1 year, 7 months
 
Revolving Credit Accounts: 8
• Discover IT $6,241.41 // $7,000 (89.16% UTL) - currently on 0% APR that is about to turn into 20.24% APR
• Chase Rapid Rewards $9,240.18 // $13,000 (71.08% UTL) - currently on 0% APR that is about to turn into 22.24% APR
• Wells Fargo Visa $681.13 // $1,400 (48.65% UTL) - 21.24% APR
• American Express $2,000.09 // $13,300 (15.04% UTL) - 19.24% APR
• LOFT $0 // $1,000 (0.00%)
• Old Navy $0 // $600 (0.00%)
• Kohls $0 // $300 (0.00%)
• American Furniture Wells Fargo $0 // $6,900 (0.00%)
Total Revolving Credit: $18,162.81 // $43,500 (41.75% UTL)
 
Personal Loan: 1
• Wells Fargo $9,459.90 // $13,000 - 13.49% APR
 
Hard Inquiries: 2
 • Aug 31, 2018 (Wells Fargo for personal loan)
 • Jun 14, 2018 (American Furniture Wells Fargo)
 
Missed Payments / Derog: 0 
 
FICO 8 Score: 686 (FICO 8 TransUnion data provided by Discover)
 
Income: $52K/year 
(plus $400-$900 month from a part time job + freelance gigs - I always put down $52K when applying for something, because it's harder to report the freelance income if asked for POI, but I do include that extra income on my taxes) 
 
Second, a little more background.... 
 
I'm looking at getting a personal loan to consolidate the debt. 
 
I know that getting a personal loan isn't a quick fix, so background on the debt is that it all happened super fast near the end of last year when my family was hit with a series of unexpected deaths, illnesses, and car trouble in the span of a few months. We live on a budget and I am able to make the payments on all of these accounts plus a little extra payment on one or two cards each month. I moved some debt around with BT's for those 0% offers, but have not added any debt to the credit cards in well over 6 months - they essentially all live in my sock drawer and will continue to stay there. 
 
That being said, a personal loan to consolidate the debt could drop my overall monthly minimum payment down just a bit (the extra money will go towards the loan most months, but could be used for the occasional extra expense like dentist appointments or school fees for my kid - basically giving me the occasional little extra breathing room). 
 
I believe my FICO might get a little bump after the 15th of October, because I will make all of my credit card payments on that date, and the Discover will fall below 88% UTL and Chase will fall below 68% UTL at that time. 
 
Finally, my question....
 
I'm hoping I could get a loan for $30K that's lower than the 13.49% APR on my current Wells Fargo loan. Is this possible? 
 
I'm going to lose the 0% APR on the Discover card on November 9th, so I'm feeling really motivated to consolidate before that day. 
 
I got a letter in the mail from Discover telling me I'm pre-approved for a personal loan for debt consolidation up to $35K with rates from 6.49% (I know there is no way I will get a rate that low). I have until November 9th to do the application with the pre-approval code (<-- strangely enough the same day my introductory 0% ends on the credit card). 
 
I was thinking I could try applying with the Discover offer at the beginning of November, but I'm just not sure I will get offered a low interest rate (low being anything under that 13.49% I have on the current personal loan from WF).
 
I've seen a LOT of talk about people getting great rates from PenFed, so I was considering opening up an account there and trying to apply with them. My concern is that I can't apply with both places because they will do hard pulls and ding my credit. Is there a secret that makes it possible - like applying on the exact same day? I'm not really sure how best to proceed. 
 
Any advice would be greatly appreciated. Thank you!
 
Message 1 of 6
5 REPLIES 5
Established Contributor

Re: How To Best Apply for Personal Loan (Discover or PenFed?)

I'm not sure which bureau Discover pulls. But if you got a Discover mailer, it seems like a good opportunity.

 

https://www.penfed.org/personal/personal-loans

 

I believe PenFed offers loans up to $25,000 and up to 60 months terms. APR as low as 6.49% based on credit worthiness. They will hard pull EQ FICO 9 for membership. They might even hard pull again for the loan. Recent data points show they do not recycle hard pull inquiries. Best to talk to the csr before proceeding.

 

They like clean credit reports, decent income and low DTI. Your individual and aggregate utilization is a little bit on the high side. Their computer might not give you favorable APR if approved, especially with Discover IT showing maxed out.

Message 2 of 6
Regular Contributor

Re: How To Best Apply for Personal Loan (Discover or PenFed?)

@RandomLettersLearning wrote:

 

I was thinking I could try applying with the Discover offer at the beginning of November, but I'm just not sure I will get offered a low interest rate (low being anything under that 13.49% I have on the current personal loan from WF).
 

 

 

 

I can tell you that I applied for a Discover Personal Loan back in August of 2018.  I will

say that they were super easy to talk with. They pulled from TU and Experian. 

 

 I ended up getting a personal loan for a little over 11K

and my interest was 18.99.  It sure helped my dilemma of consolidating debt. 

Still have an outstanding balance of a little over 7200.00 and making double payments on it.  

 

I don't know much about PenFed at all. Good luck whichever way you decide to tackle this. Smiley Happy

 

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Message 3 of 6
Valued Contributor

Re: How To Best Apply for Personal Loan (Discover or PenFed?)

I don't know much about Discover Loans because I was denied for having 3 paid medical collections on my EQ, but my score was 780 and had very little debt at the time. So I ended up going with Marcus at 10% APR. 

 

With your scores and debt, I don't believe you'll get a lower APR. And definitely uncertain about the amount based on your current debt load, as they'll look at DTI. The monthly payment would also be fairly high depending on the term, somehwere around $800+ for a 5 year Loan. 

Which isn't that much if you have no other payments. 

 

Since your Inq are low, i guess it wouldn't hurt to try as all they can say is no. And then you'd know where you sit.






Message 4 of 6
Valued Contributor

Re: How To Best Apply for Personal Loan (Discover or PenFed?)


@Janus wrote:

I don't know much about Discover Loans because I was denied for having 3 paid medical collections on my EQ, but my score was 780 and had very little debt at the time. So I ended up going with Marcus at 10% APR. 

 

With your scores and debt, I don't believe you'll get a lower APR. And definitely uncertain about the amount based on your current debt load, as they'll look at DTI. The monthly payment would also be fairly high depending on the term, somehwere around $800+ for a 5 year Loan. 

Which isn't that much if you have no other payments. 

 

Since your Inq are low, i guess it wouldn't hurt to try as all they can say is no. And then you'd know where you sit.


Further commenting on the the uncertainty of the amount, I think it may be better to seek $20k for the just the credit cards and leave the current personal loan alone.

 

 

Ch 7 Discharge May 2015
Discover/Target/NFCU CLOC/NFCU Cash Rewards/PenFed Power Cash Rewards/PenFed Pathfinder AMEX - $60k total revolving
EQ/EX/TU: FICO 8's Sept 2019: 696/676/670, 25% utilization, INQ's: 0/0/1
New approvals based on this data: Costco Anywhere Visa $5500, NFCU Platinum $25k
Message 5 of 6
Contributor

Re: How To Best Apply for Personal Loan (Discover or PenFed?)

I looked into discover earlier this year. the good is that you can apply now and they will tell you your rate with a soft pull. the bad is that you cannot use discover money to pay off discover debt and ~80% has to go direct to lenders.

 

the blended apr for your credit cards is 21.19% and if we can do the math, so can lenders. so my theory is any legitimate lender would offer 16-20% at best with your current credit profile.

 

as previously stated, I would leave the 13.49 personal loan alone. I would pay off the 681 because it takes the number of accounts with a balance down from 57% to 42%. also, I have read amex, disco, and wells all do soft pulls for clis, so I would explore that if you have not.

 

after that, I would just avalanche budget to payoff that 17481 in three years.

 

 limaprbalmin pmt
(~2%)
payoff
36m
cumipmt
36m
Chase Rapid Rewards1300022.249240−185−354−3505
Discover IT700020.246241−125−233−2136
American Express1330019.242000−40−74−648
TOTAL  17481−350−660−6289

 

so 660 plus 300+ your paying for the personal loan will put you at about 1000/mo towards debt payoff. at 6-12 months your score/DTI will tip to the point where you can consolidate and save some interest.

Message 6 of 6
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