Adding an installment loan -- the Share Secure technique

[newhis]

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@Anonymous wrote:

Just a thought... Wouldn't a repayment schedule starting in Jan 2021 be ideal? That would automate EVERYTHING!

I wonder what would happen if it was turned back on. Would the first payment actually happen in 2021 or would it just resort to old behavior and bill monthly starting immediately even though the first due date is in 2021?

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The problem I see is the lack of activity for 4 years.

The instructions say to pay at least once every 6 months.

I don't want to take the risk.

EDIT: there are inactivity fees that we need to avoid.

[newhis]

@CreditGuyInDixie: thank you.

1.- Sorry I didn't see it there. Just one more report that you can cancel before the original date for first payment.

2.- Still a manual way to do it. I still need to remember to come back and program the 2018 payments. But I think I would use Alliant for some savings anyway.

3.- If I find a different way to set an automatic payment, I'll let you know.

[newhis]

Here is my hypothesis to set an automatic payment just from saving account to loan account within Alliant.

1.- pay down your loan to the point that the next payment is way into the future and only for a few cents

2.- you need to cancel the recurring payment set by the loan officer

3.- set a recurring payment from your savings to your loan, you can't change the amount or the frequency but they let you change the start date

4.- change the start date from 4 years into the future to 5 months from now 

5.- the loan will then be paid monthly just for a few cents

Make sure you don't finish paying early and don't forget to pay the balance on time.

NOTE: This is just a theory. I need to work with this to prove it. My next amount due is a little over $4, so I can't do it right now. I'm waiting to make sure that everything is working before changing anything else.

Few cents: it should be less than the balance divided by 55, so 80 cents is a good number

Start date: they set the date to 4 years in the future and you can change it to somewhere between now and 364 days in the future

5 months from now: just to make 55 payments and have a nice round $0.80 payment 

[Revelate]

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@newhis wrote:

Here is my hypothesis to set an automatic payment just from saving account to loan account within Alliant.

1.- pay down your loan to the point that the next payment is way into the future and only for a few cents

2.- you need to cancel the recurring payment set by the loan officer

3.- set a recurring payment from your savings to your loan, you can't change the amount or the frequency but they let you change the start date

4.- change the start date from 4 years into the future to next month, 2 or 3

5.- the loan will then be paid monthly just for a few cents

Make sure you don't finish paying early and don't forget to pay the balance on time.

NOTE: This is just a theory. I need to work with this to prove it. My next amount due is a little over $4, so I can't do it right now. I'm waiting to make sure that everything is working before changing anything else.

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Try it, I tested this when I was first trying to work through this process; sounds great, but I couldn't schedule a payment more than a year in advance.  I also IIRC couldn't change the payment size, it was the listed payment when trying to make a recurring transfer.

Maybe it's changed though and if so would be a better solution than my going and scheduling a few $1 payments every six months.

Love the CU for the trick but their software implementation is a little inflexible... I'll deal .

[newhis]

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@Revelate wrote:

Try it, I tested this when I was first trying to work through this process; sounds great, but I couldn't schedule a payment more than a year in advance.  I also IIRC couldn't change the payment size, it was the listed payment when trying to make a recurring transfer.

Maybe it's changed though and if so would be a better solution than my going and scheduling a few $1 payments every six months.

Love the CU for the trick but their software implementation is a little inflexible... I'll deal .

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Yes, right now I can't change the amount and is for $4, so I will end paying the loan in 10-11 months.

I will need to pay the loan a little more, like $3.20 plus interest to take down the amount due for next payment down to $0.80, then set recurring payment (not future payments).

Right now I have future payments and it is only for next year.

I did some edits to my post. I hope it is more clear now.

I want to wait until my score changes, before trying this. It should be less than 2 weeks.

[brother7]

I understand the Share Secure technique works best for someone with no installment loans.

Q: Does an auto loan count as an installment loan?

Q: Does a student loan count as an installment loan?

Q: If one has a paid off and closed installment loan, is the Share Secure technique still a valid way to boost credit score?

Thanks in advance.

[newhis]

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@brother7 wrote:

I understand the Share Secure technique works best for someone with no installment loans.

Q: Does an auto loan count as an installment loan? Yes

Q: Does a student loan count as an installment loan? Yes

Q: If one has a paid off and closed installment loan, is the Share Secure technique still a valid way to boost credit score? Yes

Thanks in advance.

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I think SouthJamaica score didn't suffer when he paid the auto loan by having a SSL. Usually if you pay your auto loan and it is your only your score will drop. Having a SSL helps in this case.

My DW should open a SSL 3 months before finishing her auto loan, so her score will not drop.

Note: I think the only way the SSL will help if you have a loan, is if you get it not for $500, but some big amount that will make your overall loans debt lower. But getting a big SSL is not something for most people.

[Revelate]

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@newhis wrote:

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@brother7 wrote:

I understand the Share Secure technique works best for someone with no installment loans.

Q: Does an auto loan count as an installment loan? Yes

Q: Does a student loan count as an installment loan? Yes

Q: If one has a paid off and closed installment loan, is the Share Secure technique still a valid way to boost credit score? Yes

Thanks in advance.

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I think SouthJamaica score didn't suffer when he paid the auto loan by having a SSL. Usually if you pay your auto loan and it is your only your score will drop. Having a SSL helps in this case.

My DW should open a SSL 3 months before finishing her auto loan, so her score will not drop.

Note: I think the only way the SSL will help if you have a loan, is if you get it not for $500, but some big amount that will make your overall loans debt lower. But getting a big SSL is not something for most people.

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I think the word you may be looking for there is HELOC .  I know mine isn't being counted as revolving, and I got an unexplicable boost to Experian FICO 8 when it reported and my aggregate utilization ticked over what may have been a breakpoint but my file is nowhere close to clean enough to tease that.  If I drop points when it reports this month at a less pretty value and then gain them again as I start paying it off, maybe that'd be sufficient data point gathering even with a busy file.

Any other strategy takes non-trivial assets or cash flow as you suggest... though actually with Alliant's handling of it (releasing the funds and only holding 2x the remaining balance on the loan) if I have non-trivial cash laying around again at some point, I may try it.

That said, this whole exercise has changed my strategy for installment loans: get them for the absolute maximum length, don't worry about the interest rate, and then just pay them at the same pace I normally would (I tend to prepay everything) and let them hang out for as long as possible if it'll let me.  I see 72 or 84 month car loans in my future haha!  Or as I'll be testing with the mortgage next month when I kick an extra payment to it... just what does my mortgage do if I start throwing money at it as I'm expecting to whenever I get new-job-enabled?

Once you know the game you can apply it to the rest of your financial life, it's just unfortunate FICO hated my mortgage so much seemingly.

[Anonymous]

I agree with Revelate 100% on extending the life of installment loans as much as you can, ignoring the interest rate, as long as you are able to pay the loan balance down to a low amount early on.  I have done this with my 40k student loan at an interest rate of 8%.  (I paid almost all of it off a year ago -- current balance of $50.)  I have confirmed with the SL handler that they have pushed the next payment due out to to 2022.  Basically I am paying $4 a year for the privilege of extending a very old account.  It will be 21 years old when it finally closes, and then will be 31 years old before it finally drops off.

The one downside I see to having very extended auto loans (which R mentions as an aside) is that the lender will typically require you to have a full insurance policy (including collision) on your vehicle.  If you know that you wanted that anyway, there's no downside of course.  But if a person's style might be to lower his policy to liability only, then there's an advantage to paying the loan off ASAP.  In my case I drive a beat up 2009 Ford Focus.  It runs fine but I think with the scratches and dents it has in it the amount I'd get back if it got totalled is very little.  I am fine with just driving it into the ground and paying liability only -- right choice in my situation.

[Anonymous]

I am at the point to apply for this $500 loan.  When asked the purpose of this loan. I do not see "Building Or Rebuilding Credit"  in the drop down box.  What should I pick for the purpose of the loan? I was thinking of choosing other and then typing in Building Or Rebuilding Credit . Am I right in doing so?