I need a loan

[GMO2003]

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I was hoping somebody could offer me some advice on how to apply for an unsecured loan. I have decent credit with a 653 credit rating. My debt to credit ratio is a bit high. Nonetheless, I need $15,000 to pay various things off. Does anybody have any suggestions or lenders they would recommend. Is lendingtree.com a good resource?

thanks

 

[beriberi]

It really depends where you are in your training. If you are in your last year of med school, there are a number of "application loans" with very good terms (i.e. Keybank). If you are a resident, there are a bunch of programs (none of which I am familiar with) that offer loans to residents and send me mailings on a regular basis.

I was unimpressed with lendingtree when I used it to look for a mortgage. The people it hooked me up with were unprofessional (one asked me what I was wearing while I talked on the phone with him), slow and not available.

Just my two pennies.

 

[NinerNiner999]

Bankrate.com has a very good comparison of the latest rates for various types of loans. If you are a homeowner, consider a home equity loan or line of credit. If you have a good student loan lender and have not yet consolidated, they may provide you with an unsecured loan as well, and offer consolidation packages to incorporate some of your private student loans (if any). If you have credit card debt and are in residency, you can also "float" the balance to zero-percent cards as they come and go (just cancel each card after you transfer the balance).

Provide us with some better information regarding your current situation (type of debt, student or resident, etc) and we may help you more...

 

[GMO2003]

Bankrate.com has a very good comparison of the latest rates for various types of loans. If you are a homeowner, consider a home equity loan or line of credit. If you have a good student loan lender and have not yet consolidated, they may provide you with an unsecured loan as well, and offer consolidation packages to incorporate some of your private student loans (if any). If you have credit card debt and are in residency, you can also "float" the balance to zero-percent cards as they come and go (just cancel each card after you transfer the balance).

Provide us with some better information regarding your current situation (type of debt, student or resident, etc) and we may help you more...

Type of debt: credit card
I am a resident

My updated credit score which I recently checked is 720...I have 62% available credit and have 0 accounts that late/delinquent

I do not own a home and I am currently renting. My student loan debt is around 23k which I am paying $81/month with a very low interest rate. I just have some much credit card debt that I'd like to consolidate and pay monthly at a resonably low interest rate

 

[RedBlanket]

I'm in the same boat. I'm getting hurt with credit card finance charges left over from med school and the interest rates are high enough it's taking me much longer to catch up than I expected.

Student loan debt is a whole 'nother issue, but I'm now looking for a pretty substantial bank loan of some kind to wipe out my credit card debt and have a lower interest rate. Hopefully I can catch up faster so I can lower my debt/available debt ratio to push my score high enough to get a loan when I go house shopping this spring. Basically I'm in a similar boat to GMO2003.

I'm an intern and am working on consolidating my student loans now, seems like a good time to "consolidate" my consumer debt too. If anyone has any specific companies who work with residents or have generally good rates, please let me know.

 

[NinerNiner999]

I would NOT opt for a loan of any type at this time. Find a good zero-percent rate credit card and transfer your balance over to it. There are cards out there that offer this rate for 1.5 years. Be sure you don't pay a balance transfer fee and close the account on your card after you transfer it (that way your credit rating remains the same). You cannot beat a free zero-percent loan. Pay as much or as little as you have to.

Alternatively, if you have bought more than four years ago (when rates were 2-3% higher on average), you can refinance your home and lump your credit card balance into the refinance, making your payment probably close to what it is now.

If you really want to be smart, transfer your balance and open a Roth IRA. As a resident (and single earning below 65k per year, married below 110k/year combined) you can make a $3000 annual contribution ($250/month) to this fund. The Roth allows you to pay your taxes now on your investments, instead of when you retire. I don't know how much you plan to pay on your credit card, but if it is in $500/month range, it would make sense to split the payment between a zero-percent interest card and your monthly ROTH IRA contribution. Just my 2 cents...

 

[PCN]

good topic. Sorry for being stupid about this, but can you explain more about this Roth IRA. Why is it adventagous to pay taxes now instead of later. My wife and I were looking at opening a retirement account through her job, 403b, where an employer would match a part of the money you put away. How is the Roth IRA different?

I am actually a fourth year med student. With my credit card loans, what I did was take out 12,000 in medex loan which has an interest rate of about 6.5 and paid off my credit cards which were at a higher rate. I have 150,000+ in my school loans plus my wife's school loans which I just consolidated, so I am basically in debt upto my neck. The only word I can say at this point is "defferment". Any advise what else I can do? BTW, opening another line of credit with a credit card counts negatively against your credit score, even if you close your current credit account. I don't want to screw around with my credit score b/c I want to buy a house/condo when I start my residency. Also there are no banks that I could find that would transfer your balance with 0%APRx1.5years and have no transaction fee (usually 3-5% one time fee).

PCN

I would NOT opt for a loan of any type at this time. Find a good zero-percent rate credit card and transfer your balance over to it. There are cards out there that offer this rate for 1.5 years. Be sure you don't pay a balance transfer fee and close the account on your card after you transfer it (that way your credit rating remains the same). You cannot beat a free zero-percent loan. Pay as much or as little as you have to.

Alternatively, if you have bought more than four years ago (when rates were 2-3% higher on average), you can refinance your home and lump your credit card balance into the refinance, making your payment probably close to what it is now.

If you really want to be smart, transfer your balance and open a Roth IRA. As a resident (and single earning below 65k per year, married below 110k/year combined) you can make a $3000 annual contribution ($250/month) to this fund. The Roth allows you to pay your taxes now on your investments, instead of when you retire. I don't know how much you plan to pay on your credit card, but if it is in $500/month range, it would make sense to split the payment between a zero-percent interest card and your monthly ROTH IRA contribution. Just my 2 cents...

 

[beriberi]

This is my somewhat informed opinion on how to distribute money that you are saving for retirement, admittedly simplistic.

ALWAYS contribute to a retirement account where the money is being matched (like the 403b mentioned, this is rarely true with resident 401k or 403b). It is a great tax deferred method of saving, and cannot be beat when the money is being matched. (You contribute 3% of salary $1500, employer contributes 3% of salary--$1500, then you have $3000, a one hundred percent instant return). Always contribute at least the maximum matched (if employer will match up to 4%, you should contribute 4%).

THEN contribute to a Roth IRA. IF tax laws stay the same, you will never owe taxes on this money, no matter how much it grows. Also, if you are going into medicine, you have a limited number of years before you cannot contribute to a Roth because you make too much money. $3000 per year. (BTW, if you and a spouse put 3k a year in for the next 4 years--residency, for example--invested at 8%--not unreasonable--for 32 years, you will have 400,000 dollars to draw off of without tax penalty.)

IF you have money left over, you need a tax advisor to help you sort things out.

 

[NinerNiner999]

good topic. Sorry for being stupid about this, but can you explain more about this Roth IRA. Why is it adventagous to pay taxes now instead of later. My wife and I were looking at opening a retirement account through her job, 403b, where an employer would match a part of the money you put away. How is the Roth IRA different?

I am actually a fourth year med student. With my credit card loans, what I did was take out 12,000 in medex loan which has an interest rate of about 6.5 and paid off my credit cards which were at a higher rate. I have 150,000+ in my school loans plus my wife's school loans which I just consolidated, so I am basically in debt upto my neck. The only word I can say at this point is "defferment". Any advise what else I can do? BTW, opening another line of credit with a credit card counts negatively against your credit score, even if you close your current credit account. I don't want to screw around with my credit score b/c I want to buy a house/condo when I start my residency. Also there are no banks that I could find that would transfer your balance with 0%APRx1.5years and have no transaction fee (usually 3-5% one time fee).

PCN

A ROTH IRA taxes your initial contribution, which is only up to $3000 per year per person. You pay your tax when you invest. Would you rather pay tax on $3000 once and never again, or on $400,000 when you take it out (like a traditional IRA)?

Look in the mail - you will recieve offers for 0% cards all the time. Give those companies a call and see what their fees are. Although, since you have already paid off your credit cards, you will have nothing to transfer.

As for your medex loans - I'm afraid you are stuck with those at 6.5% I don't imagine rates for small loans will drop again the next several years.

Consolidation was wise at this time, given rates were low. Did you do a spousal consolidation? If you did, you may have lost out on some tax breaks and (Hopefully not) if you ever divorce, the spousal consolidation can become a problem.

A 403B is a decent plan if they match your investment and you can front-load your taxes. As BeriBeri mentioned, do this first and then go with the IRA. The Roth IRA is basically fixed at 8% (which is much safer than a 403B) and given that you are married, of you can contribute $500 per month into that account ($6000 for you AND your wife) it may have better tax benefits that investing the same in your 403B. Also make sure you can roll over the 403B when the time comes.

Buying a house in a good market with good resale will be the single best investment you can make, even for a limited time period such as residency. We purchased a home for $238,000 in May and it has just recently been assessed for $295,000 this month. We have already earned $57,000 in the past five months 😉

If you do buy a home and plan to move in three or fewer years, this may not work out well unless you pay an extra $200 per month towards the mortgage principal, which will help defray closing costs on the home when you sell it...

 

[PCN]

Thanks for a great explaination.

I am a little naive about this but the reasoning behind getting a Medex loan was very specific. Like yourself I am looking to buy a house/condo in the low to mid $200,000. I have a good credit history but not very established, as this is going to be my and my wife's first house. I have not talked to many people about this, but simply from reading on the web I am affraid of having a difficult time getting a sufficient loan to be able to buy a house that we want. I figured that by clearing my credit cards by transfering the money to a Medex loan would improve my credit score, b/c the educational loans are not going to be looked at. This is in contrast to getting a different credit card with lower APR (even 0%), where the lender would still see high credit card debt. Moreover, in buying a house for low to mid $200,000, even with a 10% downpayment, I would pay $20-25K, money which I don't have. Again, my reasoning to clear credit cards now, is that I will be able to tap into this line of credit to help with the down payment. Once I am in residency, my wife and I will have sufficient income to paydown the credit cards.

Do you guys have any advice for me to do anything different. Again, thanks for the help, so far the advice has been great.

Thanks PCN.

A ROTH IRA taxes your initial contribution, which is only up to $3000 per year per person. You pay your tax when you invest. Would you rather pay tax on $3000 once and never again, or on $400,000 when you take it out (like a traditional IRA)?

Look in the mail - you will recieve offers for 0% cards all the time. Give those companies a call and see what their fees are. Although, since you have already paid off your credit cards, you will have nothing to transfer.

As for your medex loans - I'm afraid you are stuck with those at 6.5% I don't imagine rates for small loans will drop again the next several years.

Consolidation was wise at this time, given rates were low. Did you do a spousal consolidation? If you did, you may have lost out on some tax breaks and (Hopefully not) if you ever divorce, the spousal consolidation can become a problem.

A 403B is a decent plan if they match your investment and you can front-load your taxes. As BeriBeri mentioned, do this first and then go with the IRA. The Roth IRA is basically fixed at 8% (which is much safer than a 403B) and given that you are married, of you can contribute $500 per month into that account ($6000 for you AND your wife) it may have better tax benefits that investing the same in your 403B. Also make sure you can roll over the 403B when the time comes.

Buying a house in a good market with good resale will be the single best investment you can make, even for a limited time period such as residency. We purchased a home for $238,000 in May and it has just recently been assessed for $295,000 this month. We have already earned $57,000 in the past five months 😉

If you do buy a home and plan to move in three or fewer years, this may not work out well unless you pay an extra $200 per month towards the mortgage principal, which will help defray closing costs on the home when you sell it...

 

[NinerNiner999]

PCN - Do not ever, EVER, worry about buying a home as a physician. Bank of America, Sun Trust, and a few others offer a doctor's loan, which is a zero down payment, zero PMI, lowest rate mortgage. Many of us on this site have taken advantage of it (myself included). Some states have a minimum credit score cutoff of 700, others 720 - depending on where you are going for residency. DO NOT WORRY about buying a home - you will be just fine...

 

[la gringa]

question - do most (or any) residency programs offer 401k or 403b? or are you only left w/ option of roth ira? i was arguing w/ my dad about this the other day...

 

[beriberi]

I don't mean to keep hijacking this thread along the lines of retirement info...

Most programs I looked at had a 401k/403b. However, I don't think any of them matched contributions. So, while that provides a tax deferred way of saving, I am not taking advantage of it through my program.

A caveat: most people will qualify for a special tax CREDIT (not deduction, you don't have to itemize to take it) for contributions to an 401k their first year out of medical school (when they only have 1/2 a year of salary on their tax return). The credit phases out as your income goes up. So, it makes sense to contribute to a 401k (or to a spouse's) if you may qualify for the credit. You actually get a percentage of the money that you contribute back.

I also will say that I agree with Niner--float those credit card balances around. Don't worry about having room on your credit cards for a down payment--there are plenty of programs to get you a house with little or no down if your credit is good.

A link to info on 401k tax credit:
http://www.irs.gov/newsroom/article/0,,id=107686,00.html

 

[PCN]

thanks for the reply,

I looked at the bank of america website and did not find anything that would be physician specific (doctor's loan). A loan as you described would be great. Can you tell me where I can find this info specifically on the bank of america website or other website. I appreciate all of your help.

PCN - Do not ever, EVER, worry about buying a home as a physician. Bank of America, Sun Trust, and a few others offer a doctor's loan, which is a zero down payment, zero PMI, lowest rate mortgage. Many of us on this site have taken advantage of it (myself included). Some states have a minimum credit score cutoff of 700, others 720 - depending on where you are going for residency. DO NOT WORRY about buying a home - you will be just fine...

 

[NinerNiner999]

Those loans are not advertised. When the time comes (I.E. a month or so before the match) go into Bank of America or Sun Trust and ask a loan officer - they will be more than happy to help you.

 

[mosche]

thanks for the reply,

I looked at the bank of america website and did not find anything that would be physician specific (doctor's loan). A loan as you described would be great. Can you tell me where I can find this info specifically on the bank of america website or other website. I appreciate all of your help.

One place that you might check is Tower Mortgage Physician Loans. We bought our home through them and were VERY satisfied. They have many financing options -- based on your credit score. With a median score of 670, they can arrange 100% financing; with a score as low as 630, they will still arrange a 95% loan.

I told our rep., Trudy Harris, that I would recommend her to anyone who was/is interested. I am not sure of the phone number at the moment, but when I find it later, I will post it. BTW, even if you are not graduating soon, call them. I called a year before my loan and they helped me to get all my ducks in a row, so I was able to have extra leverage in the negotiations!

Good Luck!