About a year ago I had a lot of credit card bills and other things that my father paid off for me. Right now it totals around $8,300.00. He is charging me interest and holding it over my head. It's getting to the point where I can't live under the same roof with him. My question is, what kind of a loan can I apply for. I am not a homeowner. I just don't know what to do. Megan
Dear Megan:
To find out if you can get a loan for $8300, you need to call your bank or other lending institution and submit an application for a loan. To get the names of lenders that make this type of loan, look in your phone book yellow pages under "Loans".
To get a loan for $8300, you will most likely have to put up sufficient collateral to guarantee repayment of the loan. Without collateral, your chances are not very good of getting a loan for this amount. Your only other alternative is to have somebody co-sign with you to guarantee repayment of the loan.
Dear Susan & Co.,
Can I get one HUGE loan to pay 1st and 2nd mortgage plus all credit cards? Who determines the interest rate that I am putting in your calculator. I use 8 percent, but who would give me that? I'm talking 225,000, with good credit and 75,000 income. About 1900 a month. Mark.
Dear Mark:
In order to get a $225,000 loan, you will need collateral that appraises for at least that amount, or more. Generally this is your primary residence. Without adequate collateral, I don't know of any creditor that will consider any large loan.
You determine the interest rate that you enter into our calculator. Loans at 8% are readily available, provided you have adequate collateral and good credit. You just have to shop around.
Dear Susan & Co.,
I am writing in regards to an interesting E-mail that I received recently concerning lower interest rates. The jest of the letter was that because I have been called to serve, on active duty, in a hostile fire area, I can write to my finance companies including my mortgage company, and request that they lower my interest rates to 6% and they reference the soldier and sailor relief act as amended in 1974. Can you tell me if this is true and if so what do I need to do to make it happen?
Thanks from a concerned sailor. R.R.
Dear R. R.:
I'm familiar with the Soldiers' & Sailors' Civil Relief Act of 1940 (SSCRA) but I'm not familiar with any amendments, specifically the 1974 amendment that you mention. I've tried to research for any amendments but was not successful in locating any revisions to the act.
The SSCRA states if, prior to entering active duty, a member incurs a loan or obligation with an interest rate in excess of 6%, the member will, upon application to the lender, not be obligated to pay interest in excess of 6% per year. There is no other provision, that I am able to ascertain, that allows for a reduction in interest for any other reason.
If you have any questions about whether there are provisions to the SSCRA, or any amendments, that apply to you, contact your Legal Office for more information about your rights under the SSCRA.
Dear Susan & Co.,
I was in 2 car accident and I'm waiting for settlements to come in that should be of good size. I am not working at this time and have got myself in debt with my credit cards. I need a loan but I don't believe I can get one at this time because of not being able to work until the doctor releases me. I was working at the time of the accidents but I did odd jobs at my job and did not go back to my position. And I had to take a lot of time off because of the accident so I left that job because it wasn't fair to my employer and my body wasn't healing. I do have an attorney working on both accident cases because I do have some permanent damage. Is there any way I can get a loan that I can pay back when my settlements come in. Thanks, Dawn
Dear Dawn:
When a creditor is considering extending credit to an individual, the creditor will look at three primary factors, known as the three "Cs"... Character... Capacity... Collateral. Character... how have you paid your bills in the recent past. Capacity... do you have the capacity (i.e.: money) to repay the debt. Collateral... do you have anything to put up as a guarantee you will repay the debt. Lacking any or all of these three "Cs" can disqualify you for credit. Unfortunately, without you having a job and the ability to repay a loan, you lack the 'capacity' to repay the loan. Because of this factor, I don't see that a creditor will make you the loan you desire.
Dear Susan & Co.,
My family has been involved in the rehabilitation of a low income apartment complex with over 80 apartment units. After two years, we have completely removed crime and doubled our revenues. The business was owned by a company with 4 partners who were looking to get out of the business. In order to facilitate the rehabilitation they took a loan on their personal merits. Now they want to walk away from the business and they want us to assume the loan. My family's personal borrowing capacity has been exhausted and we do not qualify to assume the loan even though the business itself is very profitable. What is the best way to take over a loan if your business has a very good turnover for 2 years? Thank You. Sagar
Dear Sagar:>
There are too many unknowns for me to give you a specific answer. For example, you say your family's borrowing capacity is exhausted. Does that mean you are too far in debt to acquire more debt ? You say the business is very profitable. Have you put together a business plan so you can show a lender you will remain profitable in future years and be able to repay the loan ? I suggest you check with the Small Business Administration (SBA) and Service Corps of Retired Executives (SCORE) in your area for assistance. You should be able to find their phone numbers in your phone book.
Dear Susan & Co.,
I cosigned for a young man to obtain credit. He ran up a $5,000 tab and now refuses to make any payments. He also owes me money for loans and payments I have had to make on the credit card. Do I have any rights? Lonnie
Dear Lonnie:
Sorry. In cosigning a loan, you signed away your rights and signed up for responsibility. A cosigner is legally responsible for repayment should the primary borrower (the young man) fail to make payment for any reason. Even if he dies, you are responsible for repayment.
The loan shows on your credit report as well as his. So his delinquency appears on your report. Also, the cosigned amount is added to your debt-to-income ratio. If the cosigned balance pushes your ratio too high, a new loan application for yourself could be denied.
What can you do? Ask the young man to close the account. (Since you are not the primary, you probably can't close the account.) If he has hit the credit limit, he has no more use for the card anyway. You can at least pay down a closed account without fear of more charges.
If he won't close the account, you'll have to continue making payments to protect your credit history and hope fervently that the lender doesn't raise the credit limit.
I'm sorry your trust was betrayed and you learned the hard way about cosigning.
Dear Susan & Co.,
My wife and I have been talking about consolidating our credit card accounts by going to CCCS soon. We owe about $31,000 plus 2 car loans. Also, the IRS has sent us a 90-day letter telling us to pay $16,000 for a 1992-93 audit conducted last year. I plan to apply for a Small Business Administration loan in order to buy new equipment for my company and generate additional income to get us out of this horrible situation.
What information should we take to the appointment in order to come up with the best plan for our situation. We feel bankruptcy or sending letters to creditors will hurt our chances of getting the SBA loan. Thanks for your help. Charlie
Dear Charlie:
When you call for an appointment, you will be sent forms asking for all resources (income, assets), a listing of your household expenses and a list of all debts owed. This information is essential to assessing your situation and possible solutions. All information is kept confidential. No calls or letters are sent without your say-so.
I understand your apprehension regarding letters affecting the SBA loan. But be aware that your debt-loan and IRS deficiency may be bigger factors in the decision. I figure your credit card payments are upwards of $600 a month and a $16,000 payout to the IRS is about $450 monthly. Adding car payments, you probably make debt payments of about $1650 each month, apart from housing costs.
But I'm only estimating. I don't have a full picture. In a counseling session you and the counselor will develop that picture and explore your options. I urge you to call CCCS (1-800-873-2227) as planned.
You're in a rough place. I wish you the best.