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I joined about a month or so ago. Decided to go with their SSL in order to give me an installment account as I have none currently reporting to EQ & TU CRs. Read up extensively about SSLs and so after some deliberation, I called and requested a 60 month SSL for $3001.
Within the hour, the loan status changed to 'conditional approval'. As I was wondering what that could mean, a NFCU CSR called and stated the following verbatim - "the senior loan officer has at his discretion decided to offer you a loan term of 48 months and not the 60 months you requested. Do you agree to these terms?" At the time I didnt think it mattered so I agreed and esigned the docs. 30 minutes later, the $3001 was in my checking account. Later when I called, I was told the SSL would reflect under the Loans and Credits tab in a few days, at which point I intend on paying off 91.1% of the loan.
Now for those familiar with these loans, does the shorter term of 48 months(it appears that 60 months is the recommend loan term within the community) affect the benefits to my FICO 8 score? Logically, I say no but Im new here so there might be information I'm unaware of.
Thanks for your responses.
@Anonymous wrote:I joined about a month or so ago. Decided to go with their SSL in order to give me an installment account as I have none currently reporting to EQ & TU CRs. Read up extensively about SSLs and so after some deliberation, I called and requested a 60 month SSL for $3001.
Within the hour, the loan status changed to 'conditional approval'. As I was wondering what that could mean, a NFCU CSR called and stated the following verbatim - "the senior loan officer has at his discretion decided to offer you a loan term of 48 months and not the 60 months you requested. Do you agree to these terms?" At the time I didnt think it mattered so I agreed and esigned the docs. 30 minutes later, the $3001 was in my checking account. Later when I called, I was told the SSL would reflect under the Loans and Credits tab in a few days, at which point I intend on paying off 91.1% of the loan.
Now for those familiar with these loans, does the shorter term of 48 months(it appears that 60 months is the recommend loan term within the community) affect the benefits to my FICO 8 score? Logically, I say no but Im new here so there might be information I'm unaware of.
Thanks for your responses.
It's the same, just will last 4 years instead of 5.
Just a shorter turn-around before you need to consider replacing it.
Length of term is irrelevant for the short term scoring bonus, but in the long term a greater length loan could be beneficial to have fewer dips in your age of youngest account or average age of accounts, fewer inquiries, etc.
Thanks for this solid information. I have since paid it down to right under 9% and the next payment date is currently 11/2022. I expect it to be even further out once the payments are finalized.
@Anonymous wrote:Thanks for this solid information. I have since paid it down to right under 9% and the next payment date is currently 11/2022. I expect it to be even further out once the payments are finalized.
Don't count on it. In my case I was approved for 60 months, but in the end was given only 54 months. (I didn't even notice, until you brought this up.) Perhaps in your case, although you were approved for 48 months, you've only been given 42.
@Anonymous wrote:Thanks for this solid information. I have since paid it down to right under 9% and the next payment date is currently 11/2022. I expect it to be even further out once the payments are finalized.
Bear in mind that the loan charges interest. If it is just pennies away from 9%, it will soon be a few pennies over 9%. When that happens FICO will round that percentage up (9.003% ----> 10%) and you will no longer be at 9% or less. That's why 8% is in practice a simpler number to aim for.
Navy (like may other CUs and banks) can assess an inactivity fee or otherwise take steps to close an account that shows no activity for 12 months in a row. Thus the SSL technique always comes with the recomendation to make a small payment at least once every 10 months to prevent unexpected adverse action (fees, closure, etc.). In practice most people program a $2 payment from a checking account into the loan on a quarterly basis. The exact dollar amount should be sufficient to keep the loan balance always below 8.9% and always above the original monthly payment or $31, whichever is higher. People who pay the loan down to really tiny balances risk having the loan closed early.
my loan term currently shows up as 49 months
So after recalculating, I realized that I actually paid the loan down to 8.29%.
Here are the actual numbers:
- Original loan amount - $3001 for 48 months(showing up as 49 months)
- Paid $2752.26 leaving a balance of $249.29.
- Minimum payment of $65.53 due on 11/21/2022