Discover Personal Loans - Any feedback?

[paganredhead]

Greetings:

 

My SO who has very good credit got an offer from Discover Personal Loans. He has a big credit line with Discover ($18k limit, small balance currently). He wants to apply for the loan to pay off his other cards (Barclays, Citi and Cap 1) so he has the balances consolidated into one payment. I think he would be better off with a credit union as it seems from the research no really ever gets approved for the 7.99 rate. I am also concerned with the potential for this to have an adverse action on his existing cards. Additionally, it appears that the pull all three bureaus a la Cap One? I personally don't think it is worth the hit to his CR for the inquiries but I am wondering if anyone has any feedback.

 

Any thoughts would be greatly appreciated

[creditmmax]

Greetings:

 

My SO who has very good credit got an offer from Discover Personal Loans. He has a big credit line with Discover ($18k limit, small balance currently). He wants to apply for the loan to pay off his other cards (Barclays, Citi and Cap 1) so he has the balances consolidated into one payment. I think he would be better off with a credit union as it seems from the research no really ever gets approved for the 7.99 rate. I am also concerned with the potential for this to have an adverse action on his existing cards. Additionally, it appears that the pull all three bureaus a la Cap One? I personally don't think it is worth the hit to his CR for the inquiries but I am wondering if anyone has any feedback.

 

Any thoughts would be greatly appreciated

 

As long as he has not had any new "recent credit" for the past 1-2 years he should be fine with other credit card companies seeing the new loan on his CR. However if he has any baddies or a track record of smaller payments and carries large balances this could be a MAJOR concern if he makes a large payment (they could decrease his CL or close his credit card account). If he wants the loan, I would recommend only taking if there is no recent new credit accounts & inquiries. Then he should deposit the loan money into a bank account & advise him to pay down his cards slowly like over 6-7 months. I would not recommend paying them off in 1 or 2 large payments, expecially if he has a track-record of making are small payments. You don't want to raise any eyebrows from making large payments to quickly especially with Barclays (they are probably the most sensitive to new accounts & payoffs), I dont think Cap1 would even hick-up about it, and I dont have enough experience with Citi to comment on them.

Edited April 5, 2013 by creditmmax

[Alexa530]

The will do a hard pull on all 3 bureau's, and from what I have read, it is extremely difficult to get the advertised 7.99% rate. I know of people with 740-750 scores that do not get the 7.99 rate. You won't know the rate they offer you until you apply, and also be aware that this is reportedly a loan where they add the accrued interest to the balance UP FRONT, so say you borrow 15k, and the interest is 6k for a total of 21k. Even if you intend to pay it all off in month #2, you pay them all of the accrued interest, and there is no refund of accrued interest. They don't have a pre-payment penalty because they already compounded the interest into the debt. So basically, you can't pay them off early without paying them the interest.

 

It is even in their FAQ's:

 

http://www.discoverpersonalloans.com...vice/faq.shtml

Q: Can I pay extra each month or make additional payments to pay my loan off early?

A: Yes and we won't charge you or penalize you for doing

so

.

(Please note you will not receive a rebate of any finance charges if you pay off your loan early).

Because they add compounded the interest and tacked on the total interest at the beginning, they've already added it into your total loan amount due.

 

If you have a good score, and history you are better off trying to get a LOC with a credit union (PenFed or NFCU if you are eligible). The rate will be much better.

Edited April 5, 2013 by Alexa530

[Imma make it rain trick]

Greetings:

 

My SO who has very good credit got an offer from Discover Personal Loans. He has a big credit line with Discover ($18k limit, small balance currently). He wants to apply for the loan to pay off his other cards (Barclays, Citi and Cap 1) so he has the balances consolidated into one payment. I think he would be better off with a credit union as it seems from the research no really ever gets approved for the 7.99 rate. I am also concerned with the potential for this to have an adverse action on his existing cards. Additionally, it appears that the pull all three bureaus a la Cap One? I personally don't think it is worth the hit to his CR for the inquiries but I am wondering if anyone has any feedback.

 

Any thoughts would be greatly appreciated

 

Instead of that... he should do a BT to a Slate card for 18 months at 0% in my opinion. That's the lowest percentage youll get 0% with 0 fees.... my .02

[NorthCol]

Don't fall for Discover Personal Loans. They have no prepayment option, meaning you will pay the FULL amount of interest due over the loan duration, even if you choose to pay it off early.

[NorthCol]

The no prepayment term is also buried and disguised in their fine print. They are hoping that you will sign without asking anything about this.

[SomeGuyInCA]

I think they have changed these terms. I got this looking them up TODAY:

 

 

What are the benefits of a simple interest loan?

Simple interest is the least complex way to calculate interest and usually results in less interest charged as compared to compound interest which is typically used by credit cards. Simple interest is calculated on the outstanding principal only. Compound interest is calculated each period on the original principal and on accrued and unpaid interest. Personal loans are simple interest loans.

AND

Can I make extra payments or pay-off my loan early?

You may prepay all or part of your loan at any time without penalty.

 

If you follow the link provided in the post byAlexa530, the language is entirely different than what she quotes, and there is NO mention of finance charges. There is however a very clear statement of how interest is calculated and it is by period.