Unsecured Loans

hello,
i’ve been looking around for an unsecured loan/line of credit to consolidate some debt, reduce interest rates and basically feel more comfortable about my financial situation. i’m not a citizen of the US(i live in cali), but well on the way of getting there (been living here 10 years now). i have a pretty decent credit history with no blemishes, but credit card balances are a bit high with one over the magic 90% mark. i have paid off a car loan. i have a good job, and i rent so I can’t get a home equity line.

it seems that some banks are not prepared to extend unsecured loans to non-citizens, some banks are not prepared to extend unsecured loans at all, and the rest want to offer small amounts at high interest rates(18-20%) which is higher than my credit card aprs (avg 11-13%).

im also considering going to graduate school fairly soon, and considering student loans to pay for it. i am not a flight risk. i have a good stable job. why is it so difficult to prove this to a bank? why is it so much easier to get a bunch of credit cards(that I dont want to use anymore)? what can I do?

thanks
nick

oh forgot to add, i do have a greencard

Try MBNA. I was able to get a consolidation loan with a 7 year term and an APR only 2 points higher than my average credit card. You may be able to do better, depending on your credit score.

Hm, your answer got me curious. I’ve never applied for any sort of loan short of a car loan, but why would a consolidation loan have a bigger APR than the credit cards it is supposedly replacing? Woudn’t that somehow defeat the point?

That’s what I was wondering. A few years ago, I had about 6000 dollars scattered across a few cards. I went to lending tree to find someone to consolidate them. I finally got a call from MBNA and they offered to give me a $6000 loan at something like 22%. In shock, I told her that the HIGHEST APR I had was something like 19% and that was an in store CC (Best Buy I think). She went on to tell me that it’s going to take me 10 years to pay off the debt blah blah blah (even though I explained to her that I’ve never paid a minimum payment in my life and I generally put about $500-$1000 towards my credit cards each month), I asked her if that was as low as she could make the interest rate. I think she may have lowered it to something like 21.5%. I told her that she was insulting me and wasting my time and I hung up. Oddly, MBNA went on to make two additional credit inquries, but that’s another story. So anyways, why would it me so much higher? The only reason I can think of is becuase you get the feeling you’re catching up. If you had you’re debt scattered accross 5 credit cards, you might be making $100 in minimum payments, whereas with one debt the minimum payment might be $75. The interest will rack up faster, but you FEEL like you have more money. Also as far as your credit report is concerned, if you slip one month, I suppose it’s better to be late on ONE payment and not all of them.

So I guess consolidation is more of a scam than anything else. Kind of like check cashing places and their ilk, making poor people poorer through bad decision making.

Actually, the longer you take to repay, the bigger the chance you’ll lose your job, get hit by a meteor, or whatever.
My assumption on these loans was that the longer term introduces more risk, which is then factored into the loan as higher APR, justifying the higher risk in the minds of stakeholders at the lender.

I can’t speculate on the whys and wherefores of your troubles getting a debt consolidation loan because I’ve never tried it. But I thought I’d toss out another option for reducing your payments, at least: do you ever get those low-interest balance-transfer offers - either on new cards or existing ones? They’re only for a limited time (a few months to a year) and you have to be careful with them - like, a single late payment can cause the rates to jump, sometimes to punitive levels. Also if you’ve got other debt with them typically your payments go to the lower-rate debt first (so it’s not so good if you plan on continuing to use that particular card). And you need to pay attention to what happens with the rate when the teaser rate goes away (you could do another balance transfer to another card perhaps?).

Anyway - used carefully, that sort of thing can work in your favor. You can usually transfer balances on multiple sources at the same time. There may be a small fee (there was when we did this about a year ago, but the teaser rate was 0% for a full year, so it was worth it). If you keep making the same total $$ of payments, you should see your balance drop dramatically over the teaser period.

nick, I don’t believe you will be able to consolidate(to your advantage) at this time.

As you are considering school, then I take it your financial condition isn’t all that
bad, so consolidate isn’t best even if you could. You want to PAY, not shift. So the first thing is to make a list of your debts, balances and payments and tighten the belt to pay off entirely the smallest debt and continue doing that until you will comfortable.

If you have accumulated the “necessary unnecessaries” like cell phone, broadband, cable TV, health club memberships etc, bite the bullet, get rid of those expenses so you can reduce the cards.