@Anonymous wrote:I don't see how it would be benficial :\ oh well. Paying $3,000 for history is absurd.
How are you arriving at that number?
@Anonymous wrote:$3k down and then $3k in payments, they profit 100%..?
See message 5. It's only 2.25% APR. Total finance charge will be less once you pay down to 8.9%.
See message 7. Let me know if you need clarification.
Go here for clarification. https://ficoforums.myfico.com/t5/Personal-Finance/NFCU-SSL/m-p/5653849
See message 11 and 28
There are many threads that discuss the benefit of having an installment loan as it relates to credit mix and FICO scoring model.
There is also benefit to having a loan that is paid down to < 8.9 percent, also a boost to FICO score.
Therefore, the objective is to have a loan product that will allow a long term, that can also be paid down, and NOT shorten the term of the note by requiring the same minimum payment if a lump sum is made early in the loan cycle.
Rather, making a lump sum early in the life cycle of the loan pushes out when the next loan payment is due. In this case, by many years almost to the end of the original loan term if you immediately pay a lump sum to bring the balance of the loan to < 8.9 percent.
So with $3,001 in NFCU Savings account, you request an SSL loan for that amount (3,001 or more is the magic figure for them to agree to a 5 year term).
Day 1, you have 3,001 in your savings account. You take a loan, they LOCK the 3,001 amount as collateral for the loan. They in turn give you $3,001 in proceeds from your loan.
As you pay down this amount, those funds are no longer frozen in your share account.
If you make an immediate payment (using the 3,001 proceeds they gave you) to make a payment of 2,800 you are given the majority of that back immediately. Now (less a little interest) you have ~2,800 unfrozen in your savings account.
The interest rates that others have been given in recent months is 2.25
Even if you paid on the loan for the full 5 year terms without making a lump sum payment, NFCU is only receiving about $175 in total interest payments. Yes, it's your own money you are loaning to yourself but they are servicing the loan and making monthly reports to CRAs.
As you pay the loan down, the amount that was locked at the start of the loan is made available to you again.
You also make small payments few dollars at least each 60 days so that the payment history gets reported as an active account in good standing with all CRAs. You aren't REQUIRED to make a payment by NFCU for several years but you want the account to remain active in the eyes of the CRAs with NFCU reporting regular payments. Or keep it simple and just pay $1 each month until the required payment date is reached.
Again, the most this exercise could cost you if you never made a lump sum payment is $175. It will be much less if you immediately pay down the note by a large sum.
Hope this helps.
