Loan Management

Loan consolidation

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erb1953

Joined: 31 Dec 2007
erb1953's page
Posts: 549

1003 Magic Points

Subject: Loan consolidation

Sun Jan 06, 2008 1:44 am

My daughter is about to consolidate all her debt, it is a pretty large sum, they just moved their double wide to a new piece of property and they can now take out one loan to have the land, house and other long term items on one payment and lower their intrest rate. The lady at the bank told her that if she could make one extra payment a year that it would shave off so many years of the loan, saving the a pretty good sum of money, I told her that this would be the best thing to try and do, but not to get all stressed out for something that will take a long time to pay off, she is a worry wart and is already thinking about 15 years down the road, she has not even signed the paperwork yet. I think she will do what she says she will do, she is a penny pincher in the worst way, her situation has forced her into this way of thinking. What are you guys thoughts on loan consolidation?

Lunchtime

Joined: 29 Dec 2007
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Posts: 128

16 Magic Points

Sun Jan 06, 2008 2:01 am

consolidation can be a good thing, and if it is her intention to make the extra payments she can do it if she sets her mind to it. You just put back a little extra each month by taking the monthly payment amount, divide it by 12 and then she will know how much she has to put away to make this possible.

what she needs to remember that this is an extra payment, not something that she is committed to do, so she should not be getting all worked up about it. If she can do it fine, if not, maybe make one extra every year and a half, either way it will cut the life of the loan. Banks always put out this type of information to make the persons borrowing the money feel better about taking out a long term loan. She will be fine, she should not worry about something like this, this early anyway.

erb1953

Joined: 31 Dec 2007
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Posts: 549

1003 Magic Points

Sun Jan 06, 2008 12:47 pm

Thank you for the reply lunchtime, you said pretty much what I told her that it is not a commitment, if it was it would be in the payment book, she should not get all stressed out about it. One think you did say, about the one every year and half might ease her mind, of course she will be figuring where that will put her and how long it will take her to pay it off if she does that. Like I said, she is a worry wart.

Dadummy

Joined: 15 Nov 2007
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Posts: 638

176 Magic Points

Subject: consolidation

Mon Jan 07, 2008 3:42 pm

sometimes you dig a bigger hole if your not careful. make sure you check the rates and fine print get rid of all the cards you pay off and dont get new ones.

goodnatured

Joined: 03 Nov 2007
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Posts: 2476

2725 Magic Points

Tue Jan 08, 2008 1:23 am

True, it is silly to open new cards to pay off old ones, but in the case of a bank loan, it is wise to get rid of all your never ending credit card debt, the key is too NOT get anymore once these ones are gone. So many people do this, pay them off, owe on the loan that they paid them off with and then go get new ones. Right back into the same old hole, with more bills than you can handle. Becareful.
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Goodnatured,

Trying to become and stay debt free, thank you for all your help and support!

Morningstar

Joined: 17 Apr 2007
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Posts: 608

15 Magic Points

Wed Jan 09, 2008 6:38 am

I used new credit cards to help eliminate my debt--I took advantage of one year, no interest deals...took a $75 hit (balance transfer fee), but saved hundreds on interest payments. The real key is to not add more debt to an already high balance due.
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I don't dream since I quit sleeping

goodnatured

Joined: 03 Nov 2007
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Posts: 2476

2725 Magic Points

Thu Jan 10, 2008 12:13 pm

True, morningstar, I think this is where people make the biggest mistake, they do a consolidation and then figure that they have all this money left over each month and bam, the cycle starts all over again.

erb, what your daughter can do after she consolidates is put money aside and act as if it is a bill, then she won't be so tempted to fall into this trap.
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Goodnatured,

Trying to become and stay debt free, thank you for all your help and support!

SunDevilsFan

Joined: 09 Nov 2007
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Posts: 194
Location: Sunny Arizona

6594 Magic Points

Sat Jan 12, 2008 6:42 am

That's another good way, Morningstar!! Unfortunatley, many people aren't as determined and responsible as you have shown. But it is still a good approach, and doable, if one knows what they are doing...

Dadummy

Joined: 15 Nov 2007
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Posts: 638

176 Magic Points

Sat Jan 12, 2008 5:22 pm

consolidateing is great if you dont plan on getting any more credit cards or debt, but face it not many people can afford not haveing some credit cards best thing to do is pay them off one at a time. i paid minimum payments on them all but one then when i got it paid i started on the next and so on. i tried the consolidation deal you just dig deeper if you dont have some stash.

SunDevilsFan

Joined: 09 Nov 2007
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Posts: 194
Location: Sunny Arizona

6594 Magic Points

Sat Jan 12, 2008 5:26 pm

paying one card at a time is the "snow-ball" approach... This is one approach I think is easier to do...

fred333

Joined: 22 Jan 2008
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Posts: 28

814 Magic Points

Tue Jan 29, 2008 6:53 pm

I think it all depends on how big of an amount we are talking about.
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Trying to find debt settlement in my life.

Lunchtime

Joined: 29 Dec 2007
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Posts: 128

16 Magic Points

Wed Jan 30, 2008 12:19 am

Pay as much as you can towards your bills and get rid of them as soon as possible. The more you pay now, the less you pay later.

Guest

Fri Feb 08, 2008 3:03 am

It is always good to pay as much as possible and get rid of bills as quickly as you can, but keep in mind that you can't build a good credit history if you don't pay on them for a period of time.

August

Joined: 09 Jan 2008
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Posts: 144

10 Magic Points

Fri Feb 08, 2008 3:05 am

That is true guest, in order to establish a good credit history you need to establish a good credit history. Making at least 6 months of payments on time will be ok and then you can pay it off with out affecting anything.

charles.armbruster

Joined: 14 Mar 2008
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Posts: 27
Location: Mesa, AZ

1355 Magic Points

Sat Mar 15, 2008 5:43 am

A neat trick is to pay the 'late fee' as an additional principal payment each month -- the figure is right there on the payment coupon, just specify that it's for 'principal'.

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