Jump to content

Sign in to follow this  
joeydtx

Pay loan for better rated loan and payment

Recommended Posts

Still in the reprocess of rebuilding from BK, I decided to get a loan to help with my mix and have a bit extra for this season.  I got it from Avant (as mentioned I am still rebuilding so terms will suck) $4200 / 36mo / 29.95% / 167.71/mo.  where I plan to hold this money for a bit to combine it with additional resources from my regular pay then pay off the loan for a better loan rate thru my credit union... who has a Secured Shared option at 3.10% and at 4k my payment would drop to 76$.  My question here is, how long should I keep the Avant loan open to build some history.

 

After this, will be my last credit item for 2 years while I let everything marinate and let things age.  I have enough in my cards where I am comfortable, i just want to do this to build a better CU relationship (possible condo shopping after the two year mark and want to go thru them for the mortgage)

Share this post


Link to post
Share on other sites

I would close the loan immediately.  

 

This installment loan is very expensive, and the only things "extra" you get for the holiday season are more debt and exorbitant interest.

 

If you have no other open installment loans and you are determined to have one, open up a secured installment loan with a credit union.

 

When it's time to get a mortgage, shop for the best available terms from a number of mortgage companies to avoid making an even bigger, more expensive mistake that will impact you financially for the entire term of the loan.

Edited by cv91915

Share this post


Link to post
Share on other sites
40 minutes ago, cv91915 said:

I would close the loan immediately.  

 

This installment loan is very expensive, and the only things "extra" you get for the holiday season are more debt and exorbitant interest.

 

If you have no other open installment loans and you are determined to have one, open up a secured installment loan with a credit union.

 

When it's time to get a mortgage, shop for the best available terms from a number of mortgage companies to avoid making an even bigger, more expensive mistake that will impact you financially for the entire term of the loan.

Thanks for the advice, so don't even let it age at all for any history?  Just open the Secured Installment now, and pay it off now?  Like I mentioned, I know rebuilding is expensive so I do not mind paying a bit of interest if it makes things look good down the road... or would paying it off now look just as good?

Share this post


Link to post
Share on other sites
20 minutes ago, joeydtx said:

Thanks for the advice, so don't even let it age at all for any history?  Just open the Secured Installment now, and pay it off now?  Like I mentioned, I know rebuilding is expensive so I do not mind paying a bit of interest if it makes things look good down the road... or would paying it off now look just as good?

Rebuilding is expensive when you get installment loans with 30% APRs.

 

Get a secured loan from a local bank or CU.  You will earn interest on your deposit that will partially offset the (much) lower APR. 

 

The FICO score benefit of having a single open installment loan only lasts until the loan is repaid anyway.  

 

Since you've already opened the loan (and presumably also paid an origination fee - either upfront or rolled into the loan itself) you might wait until it reports and then check your FICO scores immediately to see if the score impact is even worthwhile.  At that point, if it is, just repay the Avant loan and open a secured loan instead.

Share this post


Link to post
Share on other sites

Agree with CV on this one.  The minor benefit you may get from this loan does not outweigh the massive amount of interest you are paying on this loan.  

Share this post


Link to post
Share on other sites

Adding another concurrence that the additional time the loan is open is NOT worth the cost that exists in this case.  The loan itself will be reporting for at least a decade.  To pick up a few points (which is ALL it will be) is NOT worth 30%.  Put money into a share secured loan that costs you single-digit interest if you HAVE to have a loan.  That also gives you the advantage of building a relationship with your small local lender that will more than benefit you down the road...

Share this post


Link to post
Share on other sites

Thanks all for the help, I will definitely get it paid and closed before the first payment is needed.  The origination fee was deducted from the 4200 (around 200) but I will just chalk it up to a cost to get a chunk of money in hand to aid me in this plan of mine.  As cv91915 mentioned, I will also not used the "extra" and put it all towards the new loan as well.

Share this post


Link to post
Share on other sites

Avant is terrible to work with. One Main isnt much better...but at least doesnt have prepayment penalties. 

 

If you dont need the loan.. Pay it off ASAP and close it. Start putting money aside in savings and get a secured card if needed.

 

 

 

 

 

 

Share this post


Link to post
Share on other sites

All fine and good to pay it back if you havent spent of the money but what if you have? What if he cant pay it off for 6 months or so?

Share this post


Link to post
Share on other sites
On 12/3/2018 at 5:55 PM, tdslf said:

All fine and good to pay it back if you havent spent of the money but what if you have? What if he cant pay it off for 6 months or so?

In the original post the OP says he has no plans to spend the loan proceeds.  If he does spend them, then obviously he needs to make the loan payments until the time at which he can pay it off.  Paying the loan on time isn't going to hurt him any, the consensus of the advice was that the benefit he would receive to his FICO scores was not worth the insane amount of interest he was paying on the loan.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Sign in to follow this  




  • Today's Birthdays

    1. tmkats
      tmkats
      Age: 44
    2. Kmlingo5
      Kmlingo5
      Age: 36
  • Member Statistics

    • Total Members
      177,720
    • Most Online
      1,528

    Newest Member
    J9196
    Joined

About Us

Since 2003, creditboards.com has helped thousands of people repair their credit, force abusive collection agents to follow the law, ensure proper reporting by credit reporting agencies, and provided financial education to help avoid the pitfalls that can lead to negative tradelines.
×
×
  • Create New...

Important Information

Guidelines