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Old 10-26-2004, 05:38 AM   #1 (permalink)
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Personal Loan Questions

I have a couple of general questions. A few months back I applied at my bank for a personal loan and I was rejected. The bank said I could have possible received the loan if I had a cosign, but I didn't want to do that at the time. But now I'm thinking that this might be my best bet.

So I'm wondering, will it effect my credit score if I apply for a loan again? Last check, around May, my credit score was 680. From what I understand, that's not horrible, but it's not great either. I've got around $15,000 in credit card debt and nearly $1,200 left on my car loan. What I'd like to do is get a $20,000 or so loan, pay off all of my debt and have some left over so I'm able to get by without having to rely on my cards like I have lately.

In closing:
A) Did the original denial of loan effect my score?
B) Will it effect my score if I apply again and are denied?
C) If I need a cosigner, do banks generally require that the cosigner also belong to the same bank?
4) How trustworthy are online loan companies?

I haven't done much research yet, but I wanted to throw out some of these questions to you Tilted Finance folks
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Old 10-26-2004, 07:15 AM   #2 (permalink)
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My guess would be that your income is not enough to cover the risk given the amount of debt you have.

A personal loan would be what is known as "unsecured," which means you are not putting any hard assets (house, car, etc.) up against the loan that the lender can pursue should you default on the loan. Thus, they have a high risk on the loan to you. A co-signed is someone who trusts you very, very, very much, because if you default, then the bank can come after them instead. They are putting a lot of faith in you, because oftentimes they won't know you've defaulted until months after the fact.

The cosigner should not need belong to the same bank, and applying again shouldn't affect your credit score (better check with a mortgage guy on this one).

I would guess that the bank you originally start with will sell your paper to another finance agency who specializes in these types of loans, so the company you start with might not be the one you end up with. If you go with an online lender, make sure it's an established one that's been around more than a few months.
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Old 10-26-2004, 07:47 AM   #3 (permalink)
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[QUOTE=Averett]

A) Did the original denial of loan effect my score?
B) Will it effect my score if I apply again and are denied?
C) If I need a cosigner, do banks generally require that the cosigner also belong to the same bank?
4) How trustworthy are online loan companies?
QUOTE]

A) No, being denied does not affect your score - however, actually pulling your credit report - if you are approved or denied, will slightly damage your score, especially when you have it done often.

B) Yep, but the denial part doesn't matter. Whenever a lender pulls the report, it dings your score. If you are planning on applying a couple of different places, apply on the same day, as multiple inquiries on the same day damage your score less

C) Typically they don't, although if it is a credit union they at least become a member.

4) The only one I really have experience with is Ditech, and the experience wasn't a pleasant one. One of my clients had a second mortgage through them and they weren't made aware that there was a $5000.00 pre-payment penalty, and that the 9.5% interest rate they agreed to was only a teaser rate, and their real rate was going to be over 14% after 3 months. However, that is just a single case, so you may want to check around for more info.

On a side note: You said that you only owe $1,200.00 on your car? If the bluebook value is high enough and the car is in good enough condition, you may want to consider consolidating your debt using your vehicle as collateral. It will likely be a far, far lower interest rate and will look better on your credit report. Just figured I'd throw that out there as an option.
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Old 10-26-2004, 09:01 AM   #4 (permalink)
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Quote:
Originally Posted by NoSoup

On a side note: You said that you only owe $1,200.00 on your car? If the bluebook value is high enough and the car is in good enough condition, you may want to consider consolidating your debt using your vehicle as collateral. It will likely be a far, far lower interest rate and will look better on your credit report. Just figured I'd throw that out there as an option.
Warning on this one - some of the more unscrupulous lenders will repossess your car should you miss just one payment, which they do have the right to do in some cases. They repossess the car, take out what you owe them, and then give you back the rest. I'd seriously hesitate on this one, and maybe get one of my parents to cosign if possible on your original loan.

Considering she's probably paying more than 20% on the credit card debt, anything would be an improvement, and the faster the better. 20% on $15,000 is costing you well over $3k per year, with the interest compounding on you. It's nasty.
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Old 10-26-2004, 09:02 AM   #5 (permalink)
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And Averett, that avatar worries me. Stick people in love? I'm dying with curiosity to know where you got it.
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Old 10-26-2004, 09:15 AM   #6 (permalink)
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Actually, my credit card rates are really good. The higest is 13.99%.

Sort of sounds like I'm stuck between a rock and a hard place here. Well, just need to do some research and figure out what I can do to dig myself out.


gar1976, the avatar is from a website, www.explodingdog.com. This guy gets suggestions from people for drawings, and draws em
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Old 10-26-2004, 04:05 PM   #7 (permalink)
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I sounds to me like you want to replace your $16,500 in debt with the $20,000 you want to borrow? That's not the best idea. Unless your bank can give you a totally awesome rate, Id stay away from that idea.
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Old 10-26-2004, 06:09 PM   #8 (permalink)
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I'll second the "this might not be the best idea."

So - you've got around 15k in debt at 14%, which is crappy, but could be worse. You have a minimal amount of car debt, which I'm guessing is at or around 10%, and should be paid off in six months or so. As long as the credit card debt is that rate, I'd stick with it, since the bank might charge you close to that for an unsecured loan anyways, and you might be stuck with a bunch of up-front fees.

However, should your credit card rate increase, I would definately look into it.
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Old 10-26-2004, 06:40 PM   #9 (permalink)
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Getting a decently lower rate is a great idea, if you can get the lower rate, but do not use the loan to get you out of debt and then 'treat yourself' to some nice things with the extra money. Take just what you need and keep your payments down. Consolidation of debts is a great idea, but do it with the lowest rates you can get. You can also do it without the loan, concentrate on the debt that is the most painful finance charge wise. (That may be a combination of high interest rates and high outstanding debt tha combine to make it so.)

Check with any of the agencies that are out there which offer free credit counselling, or low cost counselling.

Getting the bank loan is actually a good idea for another reason, because it actually helps you establish your credit rating or bolster it, unsecured or not. It's a few steps above credit debts.
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Old 10-27-2004, 12:43 PM   #10 (permalink)
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Yeah, I wouldn't go and pay off these loans and then use the extra money on a shopping spree. At least I say I wouldn't!

It just gets frustrating that's all. I have about $900 left on my car loan, so that'll be paid in about 4 months. Then I'll that extra $250 to put towards my other bills. But these next few months are just looking so bleek. Especially with Christmas coming just around the corner.

I worry about not having any savings. What would happen if my car broke down, or if I were out of work for awhile? I know that once I get out of this hole I'm in my finances will be better, but it's a mighty deep hole.

I'm planning a move to Canada in 6ish months, and that won't be cheap either.

Ack. Just need to stay the course. Pay off the cards as best I can.
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Old 10-28-2004, 07:49 AM   #11 (permalink)
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Quote:
Originally Posted by Averett
Especially with Christmas coming just around the corner.
If your friends and family know about your financial situation, they should be nice enough not to expect too much. And you need to be able to set a per-person budget limit and make sure you don't exceed it.
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Old 10-28-2004, 11:33 AM   #12 (permalink)
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Have you contacted your credit card issuer's about reducing the interest rates? With high balances, they will sometimes reduce the rates in an effort to "Get at least something", rather than have you possibley file bankruptcy, even tho you never intended to file. I know several people who have gotten 2-3% less on their rates, just by asking for it. Never hurt's to try.
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Old 10-28-2004, 12:15 PM   #13 (permalink)
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I did that with the card that had the higest interest. It was 15.99%, dropped it to 13.99%. The other cards are all lower than 13.99%.
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Old 10-29-2004, 01:53 AM   #14 (permalink)
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Not sure if this applies in the USA, but, in the UK we have plenty of credit card companies who are offering introductory terms on new accounts. I have a card at the moment that has 0% interest for nine months on balance transfers. If you could get just a couple, even with low credit limits you could move a couple of grand off of your total balance for a couple of months. You're never going to get away from paying the cards off but those extra dollars you save in interest will all help.

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Old 10-29-2004, 05:11 AM   #15 (permalink)
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I've done that a couple of times Andrew, and it did help. But stupidly I continued to use the other cards still. My own fault.

Recently I applied for another card, with 0% transfer and 0% for next 9 months. But I couldn't get it since my debt is so high now. So yeah... A bit of a situation.

I know it's temporary. In 3 months my car will be paid and I'll have that extra money to put towards my debt. But these next 3 months... they're going to be rough.
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