cancel
Showing results for 
Search instead for 
Did you mean: 

How do shared secured loans work?

Auto Loans for ANY Credit Situation. Immediate Response.
Advertiser disclosure
Frequent Contributor

Re: How do shared secured loans work?


@513credit 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?

Message 11 of 32
Regular Contributor

Re: How do shared secured loans work?


@AllZero wrote:

@513credit 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?


$3k down and then $3k in payments, they profit 100%..?

Open LOC:
Paid-off Installment Loans:
2018:
2019:
Message 12 of 32
Frequent Contributor

Re: How do shared secured loans work?


@513credit 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

 

 

Message 13 of 32
Community Leader
Valued Contributor

Re: How do shared secured loans work?

Re read how the "SSL" works, it has been explained in detail??

Message 14 of 32
Regular Contributor

Re: How do shared secured loans work?


@AllZero wrote:

@513credit 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

 

 


I have read this thread numerous times today. I see what Sareen posted and that validates what i'm saying. He deposited $3010 and now he's making $53 payments each month for 5 years, resulting in another $3010 as the total. What I still don't understand is why you would opt for a 5 year loan and then immediately pay it down to 8.9% (yes yes yes the FICO loves it) but you're not reporting 5 years of history, only that one lump sum and then the final payment.. so two months of credit history. 

 

I'd love to do this as everyone claims it's super beneficial but I don't see how come.. For example, my rent reports monthly for an annual fee of $60. Why would I give 50x more to NFCU just to build history? It's not like NFCU is giving me any money, so I put down the $3010, and pay $3010, get my $3010 deposit back and $3010 goes to NFCU's profits. 

Open LOC:
Paid-off Installment Loans:
2018:
2019:
Message 15 of 32
Regular Contributor

Re: How do shared secured loans work?


@Jnbmom wrote:

Re read how the "SSL" works, it has been explained in detail??


It really hasn't been unfortunately. 

Open LOC:
Paid-off Installment Loans:
2018:
2019:
Message 16 of 32
Regular Contributor

Re: How do shared secured loans work?

AllZero said not to ask NFCU these questions, so what do I do if I don't understand the 'template' being provided? Am I just **bleep** out of luck for being too uneducated to participate in credit success? I want to try and learn for I can be a better person, not only for today's me, but me in 10-20 years.

Open LOC:
Paid-off Installment Loans:
2018:
2019:
Message 17 of 32
New Contributor

Re: How do shared secured loans work?

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.

Message 18 of 32
Regular Contributor

Re: How do shared secured loans work?


@satio wrote:

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.


Thanks... That's what I wasn't understanding.. Why would I have to put up $3k and then pay $3k- it just didn't make sense. Now knowing that after they set it up, they will also give me $3k which I can pay down to 8.9% and then make monthly $1 payments until the final one 4 years, 11 months later to completely pay it off.. In 5 years, do I get my original $3k back? 

Open LOC:
Paid-off Installment Loans:
2018:
2019:
Message 19 of 32
Valued Contributor

Re: How do shared secured loans work?

The answer to your question is really in the name of the Loan "Share Secured Loan." You buy shares in the credit union, then those same shares are used as collateral for a loan in the same amount as the shares you purchased. In other words, your loan is secured by the shares you purchased just like a car loan is secured by the car, or a mortgage is secured by the real estate you purchased.

As you pay back the loan, the credit union releases an equal portion of your collateral back to you. If you default on the loan the credit union will deduct the amount owed from your shares.

In other words it works just like Self Lender except that it runs for a much longer term.




Message 20 of 32
Advertiser Disclosure: The offers that appear on this site are from third party advertisers from whom FICO receives compensation.