Personal Loans - 13% is good?

[wasCB14]

I've seen some threads where people who have very high total CLs, 700-750 FICOs, and low utilization talk about getting five or six-year personal loans in the 10%-13% ballpark. They are really excited and they get a lot of kudos and +1s from others, suggesting the community sees the loans as attractive.

But if someone has a dozen $15k cards and wants to carry a balance, why pay 13%? Why not look for some promo 0% or 1.99% or whatever rate, and do a BT after 12-18 months?

I can understand it for someone desperate...but it seems very strange to me that anyone with halfway decent credit would want one of these.

[Ardecko]

Are you certain these were straight loans, or were they lines of credit, like PLOCs, CLOCs?

I can't say I'd be happy with a straight loans at that rate, as I have, as you said, taken advantage of several 0% offers in the last 18 months.

The LOCs, on the other hand, show up almost the same as a credit card on your credit report. My guess is, most of the people taking about those here are padding out utilisation or strategically adding more "thickness" to their reports.

[kilroy8]

I don't think many here would kick a big unsecured can 'o debt 5 years down the road at 13%. Too easy to get 0% BT cards if needed.

[wasCB14]

From the descriptons, they sounded like fully drawn loans and not any sort of LOCs.

On a separate matter, do most LOCs charge a facility fee of ~1% a year of the undrawn balance? Or there are usually no fees and the APRs are a little higher?

[Anonymous]

I think getting low fee or no fee 0% bt offers is not that hard with scores above 700.  I got hit with a larger than expected IRS bill. I paid it with my Citi DC card so no fee lost then bt to Discover for 2% fee for 11 months. I probably will pay it off before January 1 but it gives me lots of room and I can earn more than 2% on my money.  I have the cash but don't want to depart with it. 

[Revelate]

Unsecured loan at 13% isn't terrible as far as APR's go, not the best APR available but better than many.

Treated vastly differently for FICO scoring purposes, and refinancing from ~20% rewards card APR down to 13% is an easy financial win too.

Various people are in various credit strata, just because it doesn't make financial sense to you, doesn't mean it isn't appropriate for them.  We all started somewhere and I'd caution against judging others in such a fashion.

[wasCB14]

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@Revelate wrote:

Unsecured loan at 13% isn't terrible as far as APR's go, not the best APR available but better than many.

Treated vastly differently for FICO scoring purposes, and refinancing from ~20% rewards card APR down to 13% is an easy financial win too.

Various people are in various credit strata, just because it doesn't make financial sense to you, doesn't mean it isn't appropriate for them.  We all started somewhere and I'd caution against judging others in such a fashion.

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That's the thing; I'm not judging people just starting out or midway through a rebuild. Those are cases where I understand the role of the loan.

I'm talking about cases where people getting these loans are in the 100k/200k/+ club...people who I would think would have several better options.

[tcbofade]

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@Revelate wrote:

Treated vastly differently for FICO scoring purposes, and refinancing from ~20% rewards card APR down to 13% is an easy financial win too.

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This.

After a while, new accounts and moving balances around can make BT offers hard to come by.

I'm not in the 700s yet, but if someone offered me a fixed loan at 13% tomorrow, it would save me nearly $400 per month and I'd jump on that like a fly on horse poopie. 

[AverageJoesCredit]

Going off personal experience only, i have pretty good scores i guess but couldnt or cant get a good rate personal loan because no one will touch me due to
my income and current debt load. So not everyone who are in those ranges even have options so a 13% loan if available might be only option.

[tcbofade]

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@tcbofade wrote:

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@Revelate wrote:

Treated vastly differently for FICO scoring purposes, and refinancing from ~20% rewards card APR down to 13% is an easy financial win too.

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This.

After a while, new accounts and moving balances around can make BT offers hard to come by.

I'm not in the 700s yet, but if someone offered me a fixed loan at 13% tomorrow, it would save me nearly $400 per month and I'd jump on that like a fly on horse poopie. 

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....or even 17%.

Just got a preapproval (Started a new thread...) from PenFed.

$25k at 17% for 60 months = $635 per month.

$24.3 in CC debt = $1,040 per month.  (across various cards with various rates...)

Saves more than $400 per month.

I am NOT saying that I'm going to do it, but PLEASE give me a reason not to.