I’m looking at a personal loan of $18,000 on LendingTree. One offer has a 21.04% APR with an estimated monthly payment of $463. My question is: does the $463 already include the 21.04% APR, or is the APR added on top, making the actual payment closer to $560?
Also, I’ve heard people say that 21.04% is too high for a personal loan. Where should I look for a lower APR of 10-15%? My credit score is around 650-700, depending on the source.
Another option I’m considering: would it be smarter to get a credit card with a 0% balance transfer for 21 months and then take out a personal loan for the remaining balance?
If those were my only two options, I would definitely choose the balance transfer. While there’s typically an upfront fee of around 5%, which would add $900 to your $18,000 debt, for 21 months, every dollar you pay will go directly toward reducing your balance. I’ve played the balance transfer game for a while; it’s not perfect, but it’s better than taking the loan.
Your loan offer should provide a breakdown of your payments. I’d assume that the $463 includes the interest portion. That rate is quite high and would take a long time to pay off.
My advice is to track every dollar you spend and make some adjustments. Consider changing cell phone providers, eating out less, dropping cable, and looking for coupons or mail-in rebates. You’ll be surprised at how much you overspend on everyday items. Put those savings toward your debt, and you’ll be able to pay it off much faster.
The loan had a five-year term. Additionally, my budget is flat right now. I’m still making my regular credit card payments, but I’m having trouble making extra payments. It’s challenging for me to pay down the sum by adding more credit to the card because of the $330 interest I already pay on my existing credit card, which is at 30.15 percent, with the balance transfer. My friends are tired of hearing “that’s not in my budget” but it shuts them up from pestering me to do things that cost money.
That loan is extremely unfavorable. You didn’t mention the term, but my amortization calculations suggest it’s likely around 66 months. If that’s the case, the total loan amount would be approximately $30,500, which includes about $12,500 in interest. This is based on your quoted monthly payment, which addresses your question directly. If you were to increase your monthly payment, it would help reduce both the loan duration and the interest paid, but they’re expecting at least $463 per month.
Considering it would take 66 months to pay off a credit card in just 21 months, even if you were to transfer the entire $18,000, you’d need to pay around $857 per month before interest kicks in. This raises the question: if you’re contemplating that and can afford it, why would you choose to pay over $12,500 in interest instead of opting for a 0% interest option?
I’m a bit confused about your intentions and goals. Are you implying that you would need a personal loan for the remaining balance because you might not be approved for the full $18,000 on the 0% card?
In any case, this is a significant amount of money at an outrageous cost.
The loan is for five years, or sixty months. and every two weeks, I get compensated. I would set up an automatic payment for the $300 each payday, which would come up to an additional $2244 year.
I would take out a personal loan to cover the remaining sum on the credit card after paying off as much of the balance as I could in the 21 months with the $300 payment every two weeks. Although 21% seems high for the loan, it’s better than 30.15%, which is what I found my current credit card was slowly approaching.
While it’s not a perfect solution, it helps ease the burden of having to pay $330 in interest on my existing credit card each month.
That clarifies the purpose of this shell game for me. I initially thought it aimed to improve an already bad debt situation, but you didn’t mention the existing credit card debt. So yes, focusing on minimizing the total interest paid until you reach a zero balance is the best approach. You’ll need to pay extra on the loan, especially since it has such a long term and high interest. Generally, you’re on the right track; the challenge will be sticking to your plan. Any changes could worsen your debt situation compared to where you started. This means that once you choose a path, you shouldn’t make any new purchases or add to your debt, as that would compound your issues negatively.
Best of luck with your decisions! If I were in your position, I would create a spreadsheet to compare both options, including my targeted payment schedules and amounts. Run the numbers until the balance reaches zero, then calculate the total interest paid for each option, and choose the one with the least interest.
With your credit score, you are not eligible for a 0% transfer card. Hell, with that score, you’re not going to receive a 21% card.
What is the interest rate you are currently paying on the loan? Only when there is a cheaper interest rate, no exorbitant transfer charge, and you won’t just go out and take on more debt is it a sensible idea to move debt around.
I found that my CC’s apr has gradually increased to 30.15%. Anything, then, is preferable to that. I’ve cut back on my spending, relocation costs incurred some significant costs, and people are sick of hearing “that’s not in my budget,” to the point that they no longer invite me to events. So because I’m no longer enjoyable, I suppose that indicates I’m on the correct track.