Ask Your Question

Angie's List Answers is the trusted spot to ask home improvement and health questions and get answers from service companies, health providers and consumers. For ratings and reviews on companies in your area, search Angie's List.

 
 
or
Submit
Top 30 Days Experts
Rank Leader Points*
1 kstreett 240
2 Guest_9020487 110
3 Guest_9190926 105
4 GoldenKid 100
5 ahowell 95
6 KnowledgeBase 95
7 skbloom 80
8 Guest_98024861 70
9 Guest_9311297 70
10 Guest_9400529 70

*Updates every 4 hours

Browse Projects By Category

Question DetailsAsked on 3/16/2017

566 credit score looking for online installment loan. Need $2500 to pay off other small loans. Employed full time

Do you have the same question? Follow this Question


1 Answer

0
Votes

With a low score you are probably going to be pawned off on one of the damaged-credit third-party credit companies, charging 14-28% a year interest. Ideally you would get a loan from a credit union (usually lowest rates, then commercial banks, then loan / finance companies in that order from lowest to highest rates) but generally you have to be a long-term established customer with a reasonably large ($1000+ average account balance for them to give you an unsecured personal loan, but with full-time employment (especially if you have been there a year or more) they might open a new account for you and give you a loan. Some also give a better rate or are more likely to give a loan if you set up direct deposit of your paycheck at their institution (or ask your current bank about that if you currently have direct deposit).


Unless this is for an appliance you cannot do without (like a stove) or necessary medical or auto repair expenses or such, I would suggest that if you have poor credit you should be working on improving that by paying off your bills, and only buying things you can afford with cash, or with a credit card you ONLY use when you already have the money set aside to buy important items with it, using the credit card to build credit rating.


Since you are talking a consolidation loan (consolidating smaller loans into one with hopefully a lower avaerage interest rate), you need to be sure first that they are not going to sock you with a large processing fee that increases the amount you owe right up front. Then look at the interest rate you need for this to make sense - tally up all the loans you are looking to consolidate, each multiplied by it's respective interest rate. Add those numbers up, then divide by the total of the loans - this is the effective average interest rate you are paying. For instance, say you had loans of $500 @ 12%, $1000 @ 14%, $1000 at 8% - those loan amount times interest rate total 60, 140, and 80 = 280. Divided by the $2500 loans total amount gives 11.2% average interest rate. If the consolidation loan will have an application fee or processing fee or such then the calculation is a bit more complex because you will be paying it back plus interest on that amount too.


Another consideration - depending on whether you have the leeway to pay off these loans preferentially - paying minimal amount on all but the highest rate one first, and paying the highest rate one off as quickly as you can with extra payments, then that reduces your average rate quickly so a consolidation loan would have to have a lower rate than otherwise to be a bargain.


Of course, if looking to stretch your payments out (pay less each month than now) if that is what is necessary given your income you may need to do that, even though it means more total payments overall.


One other possibility - depending on what your loans are for, if only one is very high rate (compared to what you would get on a personal loan - probably about 9-14% if you have collateral to cover the loan, probably more like 15-24% in most states for an unsecured loan, so may beno better than rate you are paying now, though might be able to stretch it out to longer payment term) and you can cover the other payments OK, might be best (especially if you can't get a better rate on a new loan) to just refinance part of the debt to lower your total payments, then try to pay off the high-interest rate loan as fast as you can. Of course, if you can get a better rate than the highest rate loan, than that is the one to refinance to pay off first, to get into lower overall interest payments.


Of course, WHY uyou have a 566 score count a lot too - if low because you do not csarry credit or have credit cards or a mortgage, you are in better chape looking for a loan than if it is because you have had defaults or bankruptcy or such.


If not up to figuring the benefit yourself, your local Consumer Credit Counseling agency (should be free) can help you figure out the equivalent payment breakevens and costs of stretching your loan out - as can any honest loan officer.


Personally, I would be VERY leery of online loan places - not only because a lot of them are shady at best, but also there is nobody local to go talk to if there is an issue. About the only non-bank/credit union type polaces I would consider would be big-name financial institutions (major insurance company loan divisions, GE consumer credit, and Intuit loans which has a pretty good reputation from what I hear).


Answered 1 year ago by LCD




Related Questions


Terms Of Use
|
Privacy Policy