So, I have quite a bit of credit card debt. Nearly all of my cards are maxed out. I don%26#039;t want my credit score to drop because of the maxed out cards, so I checked out a loan to pay off all the cards. My bank approved my loan (13K), but gave me a 24.99 variable apr. The payments are $366/mo for 86 months. This is about $30 less than what I%26#039;m paying right now w/minimum monthly payments. If I take the loan, I will have all of it (or the lions share anyway) paid off w/in a year. I%26#039;m debathing whether to take the loan (and the huge interest rate) and pay off my credit cards now and potentially save my credit score, or forget the loan and just pay off the cards over the next year, and let whatever might happen to my credit score happen. Any thoughts?
Should I take this loan??
Your credit score has already suffered by maxing out your cards but as long as you make payments on time then it won%26#039;t get any worse and will start improving eventually. Unless you%26#039;re already paying close to 25% interest on your cards then you probably don%26#039;t want the loan. Get an accountant to crunch the numbers for you and see where you%26#039;re better off. Maybe one monthly payment with 25% interest is less then what you%26#039;re paying on your cards. But keep in mind that since it%26#039;s a variable interest loan they can always raise the interest higher.
Should I take this loan??
no the interest rate is toooo high you will be paying back more than you took out
Should I take this loan??
I would just pay the minimum(or more if you can) on the cards as the cards apr is prob about 19.9 or so. As long as you keep paying every month, your credit score should be ok. You dont need to take out a loan and put yourself further into debt.
Should I take this loan??
The 24.99% loan...what are your credit card rates? Surely their not too much higher than this. If you pay down the cards as they are, your credit score will improve, right? Why do you need a good score?....to borrow money. If you are maxed out, are you gonna borrow more money before paying these down or off?...that%26#039;s not a good idea. One thing you might do is call the banks of the cards with the highest balances and ask them to lower the rates. If they say no, just tell them then that the next 0% offer you get in the mail, you will move the balance or the majority of it to a new bank. They%26#039;ll get the picture.
Should I take this loan??
If you are saying you can pay off your credit cards off in the next year without the loan that is the way to go. You can not get out of debt by taking more debt on.
If you are not planning on any major purchases having a lower credit score now is not going to hurt you. As you pay down the credit cards you will notice a rise in your score. Then when they are all paid off you will be in much better shape.
Should I take this loan??
It is saving you only $30 and you%26#039;ll have expenses for making the loan. I%26#039;d say it is not a good option. I%26#039;d suggest two possible approaches:
1) Shop around for a better loan - either one that lowers your payments more or especially has a better interest rate. Possibilities include using www. bankrate.com , or www.prosper.com . Or...
2) Keep the remaining loans. However work on paying them down. Commit yourself to a few months to get your accounts paid down to something manageable. Work overtime, take an extra, part-time job for a couple of months, stop going to McD%26#039;s and putting the money you save into payments,etc.
A good strategy is: Pay absolute minimum on all but the one account with the smallest balance. Make extra payments as large as you can on this until it is paid off. Then take the payments you were making on the small loan and start making extra payments on the remaining loan with the smallest balance. Do this, and your monthly payments will quickly shrink.
Once everything is comfortable, do something good for yourself to celebrate, and promise yourself you%26#039;ll never let your finances get so stressful again.
Good luck.
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