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Questions About Debt Consolidation Loans Wells Fargo

Debt Consolidation and Loans…?

I’m 22, I make $16.50 an hour (~$37,000 yearly) and my rent is $550 a month. I have $5600 worth of debt from citifinancial, I have $4600 worth of debt from Canadian Tire Mastercard.

I’m trying to get a car, which I have a 99 Acura 1.6 EL lined up for $5000 cert and e-tested, so I want to consolidate my debt, and, preferably, put that car in it, so a big lump sum of about $15, 000 ideally with a monthly payment of $350 or so (I need to reduce payment to afford a better apartment, have a baby due). I’ve been approved by Wells Fargo for $10,000, and Citifinancial, when I called to get my pay-off amount, said they could refinance my loan up to $10,000 again. Prior, I had applied to TD, and they said that despite the fact my credit was ‘perfect’ (Wells Fargo said it was “amazing”) they could not approve it because it was too much “non-TD debt“. I’ve never missed a payment in 4 years of having cards and such.

What should I do? What sort of APR should I bargain for? Any other ideas?
I should also say that I don’t know what the APR is on my Citi loan but I can only imagine it’s horrible. The Canadian Tire Mastercard is at 10.25%.

My theory is that if I put everyone on a 5 year loan this will enable me to afford the car, insurance for the car, the debt itself, gas and the extra bit a month that I would need to get a 2 bedroom apartment for the baby. I don’t know if I should just take what Wells is offering me.. pay off the Mastercard… and use half of it to buy the car.. or pay off city.. leave the mastercard.. or what. I also don’t know what a reasonable APR would be from Wells, their ‘rate calculator’ for the US says about 12% APR, their Canada website doesn’t seem to post rates.

Industry Expert answers:

If you can swing a loan for $15,000 you’ll probably be better off in the long run. If you’re getting a loan for the car you’re not going to get a good APR regardless of credit just because the value of the loan is so low that they will charge a higher APR to make money. Since your credit is good try to push for 10% or lower. Over 5 years that would give you a payment of $320. You already pay about 10% on one and maybe more on another. I’m guessing your take home is somewhere around $2,200/month so after rent right now you have about $1650 left for other expenses, back out $350 for a loan and you’re down to $1300. It’s getting lean at that point after you tack on car maintenance, utilities etc. If you need a car right now then there isn’t much you can do but if you could squeeze by without a one for a year you could pay off one of those credit cards or close enough to pay off. That might put you in a slightly better position. Another option, but a riskier one would be to buy the car then see if you can get an introductory rate for balance transfer from a credit card for 0% for a year. I had one from Citi Bank that after the year went to 9.99%. If you did that and paid off $350/month you could have the whole lot paid off within 4 years. But that option includes a lot of if’s and I don’t recommend it.

Where is the best place to take out a personal loan for both debt consolidation and some personal items?

I want to take out a loan to consolidate my debts and to invest in some things to spruce up my home. What is a good place to do this? I have heard Wells Fargo is good. Are they? Any other suggestions? I’m looking for like the $10,000-20,000 range.

Industry Expert answers:

Go through a local bank that you know and trust. Stay away from online firms. You need to have good credit to get this type of loan. Many people who get debt consolidation loans quickly find themselves in twice as much debt as when they started….because it’s simply too tempting to start using all that newly available credit that was paid by the consolidation loan. Most people do not have the discipline to stop using credit….so if you get this type of loan, contact your credit card companies after the debt has been paid off by the loan and request voluntary credit limit reductions to under $500 to avoid the temptation of using all that newly available credit again.

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