The Poojer Posted May 9, 2016 Share Posted May 9, 2016 have a small to medium 9% leftover student loan that i have neglected for far too long and finally got on the good side of the situation. problem is it is for waaaay too long. called my credit union can either get a 8.99% 5 year personal loan for 5 years with only a minor bump in monthly payments or a line of credit with a variable rate and need to pay 2% of used balance, but that line of credit stays open. Is there any advantage/disadvantage to one over the other? I really just want to get the student loan out of the way(yeah i know, with another loan). Thoughts? Link to comment Share on other sites More sharing options...
Just Jack Posted May 9, 2016 Share Posted May 9, 2016 Good question that I don't know the answer to. I'm guessing the 2% LOC would mean a higher interest payment in the beginning that would drop as you pay it off? Link to comment Share on other sites More sharing options...
LeviF Posted May 9, 2016 Share Posted May 9, 2016 have a small to medium 9% leftover student loan that i have neglected for far too long and finally got on the good side of the situation. problem is it is for waaaay too long. called my credit union can either get a 8.99% 5 year personal loan for 5 years with only a minor bump in monthly payments or a line of credit with a variable rate and need to pay 2% of used balance, but that line of credit stays open. Is there any advantage/disadvantage to one over the other? I really just want to get the student loan out of the way(yeah i know, with another loan). Thoughts? Shop around some more. Any idea what your credit is like? How big is the debt? Link to comment Share on other sites More sharing options...
ICanSleepWhenI'mDead Posted May 9, 2016 Share Posted May 9, 2016 (edited) A third option, if you own either a car or a house/condo that is worth more than what you owe on them, would be to refinance the car or house at what is likely to be a much lower interest rate than 8.99%, and use the cash to pay off all or part of the student loan. Even if this only lets you pay off part of the student loan balance, it would save you some $$ (but puts your house or car at risk if you ever find yourself unable to make the payments on the replacement loan). Edited May 9, 2016 by ICanSleepWhenI'mDead Link to comment Share on other sites More sharing options...
Mike in Horseheads Posted May 9, 2016 Share Posted May 9, 2016 I took a LOC on my house at one point because HSBC was offering Prime MINUS 1%. Paid off my mortgage and then paid the line down much quicker at the lower rate. After that left it open and bought a new car that way. After that was paid I didn't use it and Five Star took over the HSBC branches here and closed me out for no activity. Guess they didn't want $65k on their liability side. Funny thing is now I lose points on my credit score for not having a loan open, bastards. Link to comment Share on other sites More sharing options...
The Poojer Posted May 9, 2016 Author Share Posted May 9, 2016 credit is good, worked hard the past couple of years to get it in pretty good standing...the debt is only around 15K. I do not own a house and my 99 Nissan Maxima isn't worth anywhere close to 15K :-) Shop around some more. Any idea what your credit is like? How big is the debt? Link to comment Share on other sites More sharing options...
LeviF Posted May 10, 2016 Share Posted May 10, 2016 credit is good, worked hard the past couple of years to get it in pretty good standing...the debt is only around 15K. I do not own a house and my 99 Nissan Maxima isn't worth anywhere close to 15K :-) I assume it's a private student loan. Look into student loan refinancing. Bunch of companies out there offering 5-7 year refinance loans with variable and fixed rates anywhere between 2.5% and 6%. Sofi and Earnest are two companies who do that as their primary business, and I know Citizens Bank has a program with extra benefits for people who bank there. A lot of them can get your rate with a soft look at your creditworthiness. Link to comment Share on other sites More sharing options...
Acantha Posted May 10, 2016 Share Posted May 10, 2016 You're paying back your student loan? Don't people just not do that now? Link to comment Share on other sites More sharing options...
thebug Posted May 10, 2016 Share Posted May 10, 2016 Go with the loan and get it over with (or just bump up your current payment on the student loan.) A LOC is too easy to keep using, extending the debt. Link to comment Share on other sites More sharing options...
jr1 Posted May 10, 2016 Share Posted May 10, 2016 fake your death Link to comment Share on other sites More sharing options...
Flutie Flakes Posted May 10, 2016 Share Posted May 10, 2016 What is the LOC rate tied to? Prime, libor, treasuries? Read the FINE PRINT. You could be surprised at the rate bump if you are not fully aware of what the rate is based upon AND how often it adjusts. Another issue with LOC is that it is tempting to continue to draw on it without making any headway on paying the balance down. It's one thing if it is a home equity LOC, because in most instances, you can write off the interest for tax purposes. In this case, with it being unsecured, the rate will probably be high with frequent adjustments and that can be dangerous if the temptation to draw on it is there. The loan option will force you to pay it down and at that rate, I would try to put some additional money on the principal monthly to accelerate your payments as long as there are no pre-payment penalties. This will lower the amount of interest you pay in the end and shorten the term of the loan. For instance, if your payment is $175, try to round it up to an even $200. PM me if you have any questions. Link to comment Share on other sites More sharing options...
The Poojer Posted May 10, 2016 Author Share Posted May 10, 2016 i tried that route, that's why I am still paying on a student loan at age 53 You're paying back your student loan? Don't people just not do that now? Link to comment Share on other sites More sharing options...
/dev/null Posted May 10, 2016 Share Posted May 10, 2016 HELOC would be the better route, but you don't own a home. What is rate on the line of credit? What is minimum and Max you can afford per month? When do you realistically expect to have the loan paid off I doubt the Fed will raise rates so the variable rate should be relatively stable where it is now. Link to comment Share on other sites More sharing options...
The Poojer Posted May 10, 2016 Author Share Posted May 10, 2016 that whole Interest Rate was a red flag for me...when I asked about loan vs loc, she immediately told me 8.99% rate for personal loan but said the loc was a variable rate and had to pay a minimum of 2% of o/s balance...never gave me a variable rate, maybe because it is a variable rate and they don't want people thinking that giving a rate locks them into that rate. I would like to pay the LOC off in 5 years, similar to how long it would take to pay off the personal loan...main problem with the current student loan is it has a repayment schedule of 110 months and yet it is only .01% higher interest rate than the 5 year personal loan...my 'cipherin' brain can't figure that one out. I just want to symbolically get rid of the student loan debt once and for all....finally. I am just getting myself into using credit and am trying to be careful. Not sure I want an open ended LOC sitting out there, but if I am smart about it, where is the real danger? HELOC would be the better route, but you don't own a home.What is rate on the line of credit? What is minimum and Max you can afford per month?When do you realistically expect to have the loan paid offI doubt the Fed will raise rates so the variable rate should be relatively stable where it is now. Link to comment Share on other sites More sharing options...
Richmond_Bills Posted May 10, 2016 Share Posted May 10, 2016 Check out www.lightstream.com - I work for SunTrust and that is one of our subsidiaries. You can get a debt consolidation loan, unsecured for a pretty decent rate - and you can have the money by like tomorrow. Again - this is all assuming good credit... Link to comment Share on other sites More sharing options...
Johnny Hammersticks Posted May 10, 2016 Share Posted May 10, 2016 fake your death /thread Link to comment Share on other sites More sharing options...
JohnC Posted May 10, 2016 Share Posted May 10, 2016 Take the advice of the bug at post #9 and Flutie Flakes at post #11. Don't go the exotic route. Keep it simple and basic. The last paragraph of Flutie's post at #11 is the best route to take. Link to comment Share on other sites More sharing options...
KD in CA Posted May 10, 2016 Share Posted May 10, 2016 What's a 'personal loan'? If you default do you have to pay it off like Robert Downey Jr. in Less than Zero? Link to comment Share on other sites More sharing options...
ICanSleepWhenI'mDead Posted May 12, 2016 Share Posted May 12, 2016 (edited) Hey Pooj, I sometimes read a wide-ranging financial forum site (fatwallet.com), and saw a reference to a different website that you might find useful: https://www.earnest.com I know nothing about the earnest.com website, and it was only mentioned in passing at fatwallet.com. I briefly scanned the earnest.com home page, and it looked like it might offer some flexibility in choosing payment terms. I did not drill down any further than that. Anyway, use it entirely at your own risk - - just thought it might be helpful for purpose of comparing to what your credit union already offered you. Good luck. Edit: Just realized that Levi already mentioned Earnest upthread. Oops. Edited May 12, 2016 by ICanSleepWhenI'mDead Link to comment Share on other sites More sharing options...
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