Thursday, January 6, 2011

Should I get a Loan to pay off Debt

So... I had an idea. I could get a loan and pay less to pay it back then I am currently paying right now. Right now I am doing this with the assumption that i am paying $550 - $650 for my current credit card and car payments each month.

I am going to be talking about an obscenely large amount of money.

For the loan I am taking a rough guess as to what I still owe totally and a little extra for emergencies for the $30,000. For the $50,000 I was adding in college as well.

My main goal was to find a loan payment that would still be covered by un-employment if i happened to loose my job. Thus I could still make payments and look for a job at the same time. Or if I got my Bachelors in two years I would be able to move to New York City to start looking for a better job and still be able to pay the loan and other bills.

So if i got a loan to pay off my debt right now at:
loan = $30,000
Years to pay = 10
interest rate = %6
monthly payment = $333.06

I could pay off my car and all my credit cards and still have a cushion left over. OR to use the left over to make a large pay back.

I would still be saving money.
I could actually pay you rent every month and still save up money.

a loan for $40,000 @ 10yr would be payments of $444.08 which I don't see as being all that great since it wouldn't cover school. now if i did $50,000 @ 15yrs to cover school, debt and emergency cash...

loan = $50,000
Years to pay = 15
interest rate = %6
monthly payment = $421.93

That I could still handle. I could pay for school and keep the rest in my HSBC hi-interest savings and make some money off it that I could put towards paying it off.

For school I wouldn't have to pay it all in one lump sum. Plus I would get money back from school in my taxes. Which I could turn around and put back into the loan or savings account.

Key Bank only offers personal loans for 5yrs which will not work at all for this.

HSBC doesn't do personal loans just mortgages which doesn't help my situation.

M&T does a general purpose secured loan for 10yrs.

Now, after i poked around on the M&T site i found their calculator to see what kind of intrest i could get. for a new york resident wanting a $50,000 loan the interest rate would be %5.49 Which is lower then what I did my base numbers on.

loan = $50,000
Years to pay = 10
interest rate = %5.49
monthly payment = $542.38

%6 isn't that much higher of a monthly payment at $555.10

loan = $30,000
Years to pay = 10
interest rate = %5.49
monthly payment = $325.43

At this point i would actually have to go in and talk with someone at M&T back to see what my options are. to see if I could really get that %.49 rate and if I could get $500,000 for a 10yr loan.
 if I can't get a 10yr loan, regardless of the amount, there is no real point to me getting a loan.

These numbers are not counting large sum payments made after I get my tax return back. depending what I get back. This would be able to give me the chance to get the principle paid off faster and lessening my interest paid over time.

If I could get the loan, finish school and get into NYC I could have a better paying job in about 2 1/2 years. I would have no car payments and no credit card payments. I would have and emergency build up that I could use for paying back the loan if needed that would not take away for what ever current pay check i would be getting. It would also allow my to make larger payments and knock it down faster.

The sooner we discuss this the sooner I can start school and stop worrying about what I am doing with my life. I can't keep living how I am. If taking out this loan can allow my to make the changes that I need then this is what I need to do.

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