Serious decision..need help

Discussion in 'Credit Talk' started by Shantel, Jun 7, 2001.

  1. Shantel

    Shantel Well-Known Member


    I went to the credit union today and they won't give me a line of credit. It has to be a closed end loan. AND, instead of the 7k I asked for, they bumped it down to 5.5k.

    How my question is...should I do this? They want to control to whom the check is being mailed to. It pisses me off, but whatever because I was going to use it to pay off credit cards anyhow.

    But the thing is, if I don't use the 5.5k now, they'll have to re-pull my CR and "semi" go through the process again.

    I wanted to put my Sears in it, but I'm not ready yet. Sears is on 0% APR, until 9/1.

    They will not close the accounts.

    I have 1.9% APR on Discover until 9/1. I have an Associates credit card that is closed, that I wanted to get rid of. I've already transferred my Providian MC to my Discover.

    Should I keep the loan, put what I have left into it and deal with Discover's 2-cycle billing? I hate this..I had it all planned and they are messing me up!
  2. Shantel

    Shantel Well-Known Member

    By the way, I haven't signed ANYTHING!

    And I meant to say, I don't know if they will close the accounts. I forgot to ask. I'll have to call tomorrow and see. If they do, I guess that answers my question because I don't want my accounts closed....well, I guess on the one hand, like's already closed. And Circuit City, they can close that. But I DEFINATELY don't want my Sears account closed.
  3. Doug

    Doug Well-Known Member

    12.00% right now and your paying additional interest, you have some great promo rates that are not ready. I would say NO to the loan.
  4. greyfox

    greyfox Well-Known Member

    Have you talked to your loan officer about the possibility of putting your loan application on hold for a few months? Is that what you meant by having to semi go thru the whole process?

    Also, since this is already June and your teaser rates end the first of September, is the amount you would gain with the smaller interest rate for only a month or two worth having another hard inquiry on your credit report? You might do the math on that and then make a decision.

    I though you were the only one who could close your accounts???? Experts??

    GEORGE Well-Known Member

    BALANCE TRANSFERS ALWAYS SAY "We will not close your account for you even if the balance transfer pays off the account"

    The fine print on a loan MAY give permission (POWER OF ATTORNEY) to close the account.
  6. Shantel

    Shantel Well-Known Member

    Doug and Greyfox...

    Thanks for responding. As for your question about putting the loan on hold...I have until 8/6 to close. I've already been approved for the 5.5k and they won't have to put me through the process again.

    But what I mean by "semi" going through the process again is this:

    Say today, I take my Associates cc at 19.9% and have that paid off by the loan and don't do any other credit cards. Then in August, I want to add my Discover card...they'd have to pull my CR and "re-approve" me. Now what the branch manager said that it shouldn't be a problem since they approved me for this amount already. However, the point is that if I don't use it now, then I'll have to be re-approved each time I want to add something to the loan.

    This is why I wanted to have a line of credit rather than a loan.

    I thought about my CR having those hard inquiries which is why I walked away sort out things before I did something stupid.

    As far as them closing the accounts, I don't know how they close accounts for you. I'd be interested to know. Judyputy said when she got a consolidation loan that they closed hers so maybe she could shed some light on the subject.

    Now Doug, as for what you said, I will ONLY be charged interest on what I use. So if I don't use 5.5k, I won't be charged interest on it. Right now, 12% sure beats 20%...especially on an already closed account. The other thing is...who's to say when Discover would give me another offer to transfer balances? How much interest am I going to start accumulating with their 2-cycle billing once my teaser rate expires? Would I be better off with the 12%? These are the questions I'm pondering.
  7. Reshod

    Reshod Well-Known Member

    Personally speaking I would take the loan.

    Even if the close the accounts, you still have an allotted amount of time to reopen the accounts if you so choose.

    They are not dictating things here, you ARE!!

    So if it is their policy to send the money out to the creditors, FINE!! Even better.

    If they are Visa, Mastercard, or Amex, even better, over pay them. Then you can use the refund as a personal loan of sorts.

    The Credit Union does not know the balances on your accounts and I assure you that they will not monitor your accounts.

    Take advantage of it.

    Why not, its already there and at your disposal.

    Good Luck
  8. Shantel

    Shantel Well-Known Member


    No, they don't know the balances, but I have to show them the bills.

    And after I close (or they close) the accounts, how long do I have to reopen them without have them pull a hard inquiry?

    Also, couldn't the CU pull my report and see what I have done and make me pay the entire loan off if I'm "bad"?
  9. Reshod

    Reshod Well-Known Member

    Very Valid point of showing them the bills. What is their purpose behind this? Do they not trust you or something?

    Are you currently paying on an auto loan?

    What are the balances are you CC's?

    Can you obtain a copy of the agreement? If so, see of there is a clause which states that you have to close the accounts?

    Also, see if there is a clause which states that you must use the money in a specific manner?

    And what are the penalties if any, if you do not adhere to the clause.

    Then Shantel, you will need to do a balancing test, to see if the interest outweighs the consequences.

    Good Luck,
  10. GEORGE

    GEORGE Well-Known Member




    This is really helpful if there is a BALANCE TRANSFER FEE attached...
  11. the other

    the other Well-Known Member

    Discover always has teaser rates. You will not have to wait for them to offer a new teaser, there is always one available. At least this has been my experience, and I have been taking advantage of these teasers.
  12. mj

    mj Well-Known Member

    They cannot (CANNOT) close an account for you - you can give them permission to do that. I did that on a home equity loan years ago - but none of the issuers closed the accounts. One rep told me that unless it's on a letter written by you, with your original signature, they won't close.

    As to the flexibility - a line of credit is usually at a higher rate than a closed-end line.

    PRevious advice was good - close on the loan in August, dump your soon-to-be higher interest rate stuff, and scold yourself for going too fast (I've done it too... oh well). In the long-run, you're probably saving money, so be happy.

    Also, put the cards away once you pay 'em off. It's VERY easy to re-load 'em up (no matter how many times you say you won''s EASY).

    Best of luck-
  13. GEORGE

    GEORGE Well-Known Member

  14. VJ

    VJ Well-Known Member

    A line of credit is also harder to qualify for in most cases, especially one for 5.5k. A 1k LOC would be easier to qualify for.
    It was smart to wait and think.
    I would be up-front with the loan officer and tell him your concerns about the amounts changing.

    Think about asking them if you could get the installment loan for 4.5k and a 1k line of credit to make it easier for you to adjust your final payments based on the same pulled original credit report.

    Also, call your accts to see what their time frames are for you re-opening accts in good standing.

    Lines of credit are a very nice thing.They also rip your fico when you go over 50% utilization, Hard.
    Good luck,
  15. GEORGE

    GEORGE Well-Known Member


    So if you need $10,000 you better ask for $20,000...SO YOUR 50% ???
  16. Shantel

    Shantel Well-Known Member


    This is so much info to digest! Anyhow, as far as the interest rate is concerned, it was the same for both...12%. But obviously, it was harder for me to qualify for the line of credit.

    I tried to explain to the manager (because I was in the branch about to close on the loan) what my concerns were but I guess I didn't atriculate it. Probably because I didn't know what they all were and so many were swarming in my head.

    I have the application papers here so I'll review them and see what they say.

    I'm not sure what the poster who said I'll be upset because I moved too fast. I haven't actually. They probably wouldn't have approved me for 5.5k if they saw I had a Discover Plat and a Action Plat that have NOT hit my credit report yet. So now was THE best time, while they are still invisible.

    I'm going to keep it and put Sears there and my Associates and CapOne...Sears and CapOne ONLY if I don't have to close my accounts. If I have to close the account then I'll transfer Sears to my Discover and deal with the 2-cycle billing. I mean, how bad can it be? LOL...don't answer that. Once I see, I'm SURE I'll be dumping every dime I have onto it to get rid of it.

    I'm going to go ahead and transfer my Circuit City to my Discover and just pay on my Providian Visa. It should be paid off in a few months.

    That way, instead of having 7 or so payments, I'll only have 3....good deal (I hope).

    If anyone else has anything else I need to consider, please please share! And thanks to everyone who already has!
  17. judyputy

    judyputy Well-Known Member


    I can try and shed some light onto what we did during ours. Remember, it was years ago. We got a consolidation loan for all of our credit cards. We had to take in our bills and the person who handled our loan called each place and got a pay-off balance for each card. They sent the checks and had us sign a paper requesting that the accounts be closed. The did let us keep a few cards. But most they wanted closed. Now at the time I think I was paying 22% or more so at 7.9% (I think that's what it was) it was great. But, cc rates are lower now, especially with teasers.

    We also had to take out insurance on the loan in case something happened so that they would be paid off. The concern they had was that they would pay off the cc's and we would run them back up. They approved the loan only because we wouldn't have any cc payments anymore. They wouldn't have approved it along with more cc payments, they didn't think we had the income to handle both.

    I never thought about trying to re-open the accounts after they paid them off. I don't know how much they will check after the loan. What I would do is wait until about aug. 1st and then use the whole loan. You won't save anything for the last month or so on the teasers. If you don't put everything on the cards, then use the teasers for what's left.
  18. SisterGirl

    SisterGirl Well-Known Member


    Was there a particular reason they would not do it as a line of credit vs closed end loan ?

    I have had my line of credit for about 6 yrs now(Bank One) & I think it is MUCH better than what they are offering you.

    Now,I did not at the time have my account w/the credit union yet,but when they pulled the bureau to approve me for the account....they saw that I had the $5000.00 unsecured line of credit(they actually made me an offer to change my account to them,but Bank One trusted me when virtually no one else wanted my business...& that is why I stay w/them).

    BTW,my current unsecured line is $10,0000 & the credit union BARELY wanted to meet me 50% on the $5,000.

    Told them ..."Sorry boys,but I've came a long way w/this Bank One & I refuse to bite the hand that fed me".

    Sister Girl
  19. amaineman

    amaineman Well-Known Member

    Our local credit union has a standard letter asking creditor too close the account, borrower signs, encloses card cut in half and they mail the check.

    I know someone who did this with a $4,000 providian card.

    Took a 6.9% $17,000 used auto loan with extra equity ($4,000) used to pay off credit card.

    60 days later providian would not reopen account. Perhaps the new debt changed the ratios too much.

    Credit unions seem much less flexible than credit card companies these days.
  20. Shantel

    Shantel Well-Known Member

    Hmm...let's see, where do I start?

    I don't know why they wouldn't do a line of credit versus a closed end loan. I have a silly collection item that was reinserted on my Equifax but I'm disputing it and I told them that. Maybe that's why they wouldn't do it. But the branch manager told me they wouldn't do it because they wanted to have control over who the checks were sent to. (Apparently that's what the loan officer told him because I was sitting there when he called).

    I tried to get a credit card from my bank (Wachovia) and they said my score was too low. I'm sure credit cards are easier to get than lines of credit. If I could have, I almost certainly would have gone there.

    Now when I was there, I had to take my bills. I don't know if there was to be other paperwork (i.e. letters to my creditors closing the accounts) that I would have had to sign because we never got that far. BUT, he was going to cut the check THAT MOMENT! He was using the bill to get the account number and balance for the check. I was shocked...I had no idea he was planning on cutting the check right then!

    Anyhow, I dare NOT try to get a line of credit from my bank with that stupid collection on there. And it's with Colletech...didn't someone here say they were trying to sue them or something? Anyhow, if Junum doesn't get them off, I'll write the dreaded "money for deletion" letter. But from what I'm hearing, people aren't having much luck with that.

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