Morgajel is Not Amused
I generally don’t like to talk about money on here because it’s depressing, but this bothered me so much I had to say something.
It’s going to cost us about $5k to get the movers to move our stuff from one apartment to another. The drive is too far for jackie and I to do in multiple trips, we lack the manpower we had during moves in college, we have more stuff, and the cost of movers would be negated if we had an accident during the 12 hour drive. On top of this we have a $600 insurance payment that just showed up for the car and $2500 in taxes we owe the IRS. In other words, we had a crapload of bills popping up for the month of april.
That adds up to a lot of money we don’t really have.
Jackie and I figured we’d simply take out a loan through her credit union- she’s done it several times in the past and always been good about payments, etc. They’ve treated her well and she’s never had a problem with them before.
We figured $8300 should be enough to cover everything we needed… come to find out her credit union only allows $5k unsecured. We have enough in savings that we can swing the rest of it, but it’ll be tight and we’ll end up flat broke. So we talk about getting the $8300 secured.
Well, that almost worked… it seems in order for the credit union to give her a $8300 loan, we need collateral (hence secured), which is understandable. Since we don’t own the car (still paying) and don’t own a house, they offered to pay off our car for us and we’d just owe them instead of toyota. Now we only have to pay one company instead of two- sounds great, in theory…
Until they tell us the interest rate is almost twice what we were paying toyota. Oh, and it’s only for 4 years, so are payments are not only jacked up from the loan, but from paying the car off early. Oh you want to make it 5 years? Lets just add another couple percentage points to the interest…
So rather than paying 3.9% of 15k for the car + whatever for the loan, we’d be paying 8% on 15k for the car + the 8300 loan
(rough guess- over 9k in interest). Our payments would go up $200 a month or so- pretty much a lose-lose situation.
So, we talked to them about just getting a 5k unsecured loan- we’d keep the 3.9% for the car, but we’d be paying a “fairly reasonable” 13% on the 5k for 3 years, and our savings would be destroyed paying taxes. That’d be around 2k in interest on the moving loan. The thing is, our credit card has a lower rate.
In the end, we found it was easier to bump our Credit Card limit up enough to cover it, and while the percentage is higher (9.9%), it’ll only be over the 5k, with our savings being obliterated in the process for taxes.
So now we’ll be paying 3.9% on the 15k for the car still, and 9.9% on the 5k for the loan (rough guess- over 3k in interest on car + 1.5k in interest on loan= 4.5k interest). The total amount owed in interest would be half of what it would be if we took out the secured, and at least 500 less from the unsecured loan. On top of this our minimum payment will only go up $100 or so, and we’ll have a flexible pay schedule. No penalty for paying off early, no BS games with paying “interest first,” etc.
So the moral of the story? Credit cards aren’t all that bad. Credit Unions are not that good. And this is coming from someone who hates credit cards and being in debt. Oh, and yes, I played fast and loose with the numbers (owed*percent*years rather than the pert equation).