Author Topic: E1 Grade Loan... 6% interest!?!  (Read 5022 times)

jpildis

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GS

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Re: E1 Grade Loan... 6% interest!?!
« Reply #1 on: September 14, 2013, 07:24:23 PM »
It's because he's in the Army.  There was a law passed that servicemen can get all their loans reduced to 6%.

yojoakak

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Re: E1 Grade Loan... 6% interest!?!
« Reply #2 on: September 14, 2013, 07:35:25 PM »
http://www.military.com/benefits/military-legal-matters/scra/servicemembers-civil-relief-act-overview.html

"Clarifies and restates existing law that limits to 6 percent interest on credit obligations incurred prior to military service or activation, including credit card debt, for active duty servicemembers. The SCRA unambiguously states that no interest above 6 percent can accrue for credit obligations (that were established prior to active duty or activation) while on active duty, nor can that excess interest become due once the servicemember leaves active duty A? instead that portion above 6 percent is permanently forgiven.  Furthermore, the monthly payment must be reduced by the amount of interest saved during the covered period. "

jpildis

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Re: E1 Grade Loan... 6% interest!?!
« Reply #3 on: September 17, 2013, 10:11:48 AM »
Thanks for the info... I didn't know that.

PrimeRisk

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Re: E1 Grade Loan... 6% interest!?!
« Reply #4 on: September 19, 2013, 04:34:53 PM »
Wow.  Well I had heard about this type of service member relief, but hadn't considered the implications to this type of investment.  As I understand it, it would not apply to new loan applications if the person is already on active duty. 

Did LC give you any notice that the rate was changing or did you just discover it?
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PennySaved

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Re: E1 Grade Loan... 6% interest!?!
« Reply #5 on: September 19, 2013, 11:22:04 PM »
I love the long and involved Qs and As.  Those were the days.  You could ask anything.  Then LC changed it to preset questions only allowed. The questioner is trying to talk the borrower out of making the  loan at 16.4%  !!

Quote
Q: Paygrade? If enlisted, end of enlistment contract and intent to reenlist? Any article 15s or fitness test failures during your current enlistment? What household debt would not be consolidated by this loan? Thank you.
A: (04/09/2011-17:26) - O2 no failures or flags. We would be paying off both of our credit card debt to prepare for our first baby thank you

Q: HI, I'm interested in funding your loan, but I have a few questions first. 1) Since this is a debt consolidation loan, please list your debts, interest rates, and the amount you pay every month. For instance CC1 $2000, 23.9% APR, $200/month. Alternately, To make the task easier, you can go to: https://www.readyforzero.com/snapshot to create a verified report of your credit cards that does not include your name or personal information, by enabling the "Public Snapshot" feature and pasting the provided URL in your answer. I apologize in advance for the number of questions. We only see 14 metrics from your credit report (DTI, Credit score, info about credit lines, RCB, Payment history, etc.) and some basic information about you (location, salary, employer, rent/mortgage, etc.). Most lenders have very strict standards regarding who we lend to, your answers to these questions, will help us decide whether to fund your loan or not. There are hundreds of people on lending club looking for funding and some will go home empty handed. Thanks in advance for answering my questions. Sincerely, -LL Herndon, VA
A: (04/11/2011-19:44) - Good evening, per your question: CC1 - $3400/12%/$150 a month, CC2 - $1500/18%/$150 a month, CC3 - $1100/20%/$100 a month, CC4 - $1500/18%/$150 a month, CC5 - $3700/25%/$150 a month, CC6 - $800/0%/$100 a month, CC7 - $700/0%/$100 a month. Thank you for your response.

Q: Hi, Think of debt consolidation as a tool (like a tablesaw); when you know how to use it, it can help you build a house; when you don't know what you are doing, it can cut your fingers off. This is infinitely more confusing than figuring out a tablesaw. Calculating interest on a multiyear loan can be difficult. I use an online calculator to do the math for me: (www.bankrate.com>Calculators>mortgage payment calculator or credit card Debt payoff calculator) This Lending Club loan: $17,500 @ 16.4% will cost you $875 in an origination fee and $8257.66 in interest which totals $9132.66 (over the life of the loan) Your current debt is at several different interest rates. If my math is correct, the average interest rate on your debt is the same as the rate on this LC loan, but you are not paying an origination fee. So you will be paying the same $8257 in interest but you'll save $875 if you do not accept this loan. It is a bit more complicated than that because you pay more than the minimums every month. The reason this LC Loan will cost you more is because you are refinancing several loans that have an interest rate LOWER than the LC rate. If you only refinance loans that have a HIGHER rate than this LC loan (CC2, CC3, CC4, CC5)...you could call LC and relist at $7800. LC will give you a lower interest rate and you will have a better chance of reaching full funding. Lending Club Loan $7800 @16.4% = $3680.56 in total interest + $390 origination fee. If you keep paying above the minimum (at your current levels), you can have this loan paid off in 16 months and owe $1326 in interest and origination fee. CC2 - CC5 average interest rate is 21.6% at your current payment level you will pay off these credit cards in 17 months and owe $1323 in interest and no origination fee. Still not seeing the savings huh! You've basically broken even. If Lending Club lowers your interest rate to 14% (I just pulled that number out of thin air, I don't feel like calculating what it will actually be) assuming you continue to pay the same amount, you will owe $1185 in interest and origination fee. You will save $138. You could do a little better by just refinancing the really high interest rate CC5 only. Bottom line. If you can afford to keep paying the same amounts to your credit cards, the smart money move is to DECLINE this loan. If you cannot afford to keep making the same level of payments, the smart money move is to REDUCE the principle amount of this loan to $7800. Sincerely, -LL Herndon, VA
A: (04/12/2011-15:54) - Thank you very much for the insight. For CC's that states 0% interest, they are actually over 20%. I had forgotten they were 0% for the first year, which ended this month. I do not believe I can keep making those payments as we are starting new. But I will definitly keep your advice and maths in mind for the future. I do not forsee this mistake being made twice. Thank you again.

Q: Hello! I see that your credit card debt is about $10,000 but your loan amount is for $17,500. What would the additional $7500 be used for?
A: (04/12/2011-19:14) - Hi, I have noticed one CC missing after your question. It is $3500/18%/$200 a month. Sorry about that and thank you for catching that. Any extras will be put into savings account and/or put towards paying off the loan.

Q: Thanks for the additional info, I figured the 0% were teaser rates, I just hoped they had 6 months or so left on them so that you could pay them off. Given the new rates, your average will be 18.66%. When you factor in the origination fee, you're just down two or three percent which I believe works out to a couple hundred bucks over the life of the loan. All things considered, that's not bad. I'll add some funds to your loan. Sincerely, -LL
A: (04/13/2011-12:00) - Thank you for your support, didn't realize that 0% was just a year. Again, thank you to all of you.

klumclovey

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Re: E1 Grade Loan... 6% interest!?!
« Reply #6 on: October 14, 2013, 02:17:03 AM »
Forms of debt like credit card debt or personal loans according to the IRS, have an expiration date, or a statute of limitations that specifies how long the creditor has to collect the debt from the borrower. After the debtís expiration date passes, lenders can write the debt off completely and claim a tax break. When they do, they are supposed to issue the borrower a 1099-C form, which discloses the amount of canceled debt. That counts as taxable income. This year, a record number of 1099-C forms are set to be issued, according to USA Today.