NeedRelief Posted March 21, 2007 Report Share Posted March 21, 2007 A friend of mine is interested in giving this a try. I told him personal loans are a good way to get in over your head. He says it's a good deal, so I'm hoping someone one on here is familiar with this, and can answer a few questions.Supposedly, Citi Flex Line of Credit, is a line of credit offered by Citibank, that can be used to pay off debts which have a higher apr, or if you just need extra money for large purchases. After the line of credit is paid off, it can be reused over and over. So it sounds like a revolving line of credit.In exchange, Citibank would require a monthly payment of $400 at 12.24% interest, for a $15,000 loan. Is this a good deal? How much of the $400 would actually go towards the bill? How would someone figure out the finance, interest, etc? At $400 per month, how much would he actually end up paying in the long run?Also, Citibank determines how much of a loan you'll receive by your yearly income and credit. My friend has good credit, but how much of a yearly income would he "probably" need to receive a $15,000 loan? The minimum income requirement is $8000, and the loans range from $2000-$25,000. He is not behind on any of his bills, but has $8000 in total outstanding balances on credit cards, etc. This is the 3rd time they've sent him a pre-approved offer for this.He states anything less than a $10,000 loan, is no more than a credit card that would add to his debt. But if he could get at least that much to pay off all his debt which doesn't exceed the amount of the loan, it's a good deal. By the way, his credit cards all have a 24% apr or higher.It sounds fishy to me, and I think he'd be better off just paying off all his cards, and not using them anymore if he wants to clear it all up. But then I'm close to bankruptcy, so what do I know. lol What do all of you think? Link to comment Share on other sites More sharing options...
divemedic Posted March 21, 2007 Report Share Posted March 21, 2007 The interest would change as the loan pays down, but to start about $155 per month would go to interest. Link to comment Share on other sites More sharing options...
NeedRelief Posted March 21, 2007 Author Report Share Posted March 21, 2007 The interest would change as the loan pays down, but to start about $155 per month would go to interest.What?? That's a lot of interest. How would I explain to him how the interest is calculated? Link to comment Share on other sites More sharing options...
divemedic Posted March 22, 2007 Report Share Posted March 22, 2007 APR divided by 12, times the average balance of the account for the month. That will get you in the neighborhood.To be exactly on the money, it is the APR divided by 365 times the average daily balance. Link to comment Share on other sites More sharing options...
direred Posted March 22, 2007 Report Share Posted March 22, 2007 Even simple interest shows that much:15000 * (.1224 / 12)= 152.99999999999997 Link to comment Share on other sites More sharing options...
NeedRelief Posted March 22, 2007 Author Report Share Posted March 22, 2007 APR divided by 12, times the average balance of the account for the month. That will get you in the neighborhood.To be exactly on the money, it is the APR divided by 365 times the average daily balance.Cool! I'll let him know. He'll probably still take the deal since the interest decreases as time goes on. BTW, is this a good deal? What is the norm in terms of apr for this much of a personal loan? Link to comment Share on other sites More sharing options...
IHateCAs Posted March 22, 2007 Report Share Posted March 22, 2007 Just to clarify, the interest rate does not go down, but the amount of your payment going towards interest goes down. For instance, on a 15,000 loan. You pay $400. $150 goes to interest, $250 goes to principal. Next time the interest payment is slightly lest because the principal is $250 less. Link to comment Share on other sites More sharing options...
jiggajoe Posted April 1, 2007 Report Share Posted April 1, 2007 I just received one of these solicitations:From $2-$25,000 at adjustable 13.24%Does anyone else have any experience with the Citi Flex Line?Is it a credit line like a credit card, or is it a loan?Is is worthwhile?It seems to me it's like a loan that when you pay it back, you can just re-borrow the money over and over... How would something like this show up on your credit report? Link to comment Share on other sites More sharing options...
Ahntara Posted April 2, 2007 Report Share Posted April 2, 2007 A line of credit is a revolving account. That means any LOC will impact your utilization numbers. They are usually score-killers. Is this LOC secured by a house? Home Equity Lines of Credit (HELOC) can be a quite, useful and relatively inexpensive way for homeowners to access their equity in property. Closing costs/fees generally run about $500-$1500 as opposed to 3%-5% of the total cost when refinancing. But, once again, they hit your score hard by dinging in the utilization category which can hit for (up to) 30% of the total number. Link to comment Share on other sites More sharing options...
direred Posted April 2, 2007 Report Share Posted April 2, 2007 It's weird how little info there is on this on the various credit boards.No one has said if it reports as revolving -- or what. Link to comment Share on other sites More sharing options...
jiggajoe Posted April 2, 2007 Report Share Posted April 2, 2007 A line of credit is a revolving account. That means any LOC will impact your utilization numbers. They are usually score-killers. Is this LOC secured by a house? Home Equity Lines of Credit (HELOC) can be a quite, useful and relatively inexpensive way for homeowners to access their equity in property. Closing costs/fees generally run about $500-$1500 as opposed to 3%-5% of the total cost when refinancing. But, once again, they hit your score hard by dinging in the utilization category which can hit for (up to) 30% of the total number.So your saying it's like having a credit card?It would probably be worth having the account for a rainy day And to answer your question, it was an unsecured line of credit- Pre-approved Link to comment Share on other sites More sharing options...
jiggajoe Posted April 2, 2007 Report Share Posted April 2, 2007 It's weird how little info there is on this on the various credit boards.No one has said if it reports as revolving -- or what.VERY WEIRD how little.....I can barely find any info with a Google search ???? Link to comment Share on other sites More sharing options...
Ahntara Posted April 3, 2007 Report Share Posted April 3, 2007 Unsecured Line of Credit = Revolving account.It's like a CC, but without the card. You may receive checks that will allow you to draw money from the account. There may be different rates/charges for cash advances, as opposed to purchases. That's typical for revolving accounts. This account will calculate in the Utilization category.I hate LOC's because they factor at 100% utl. even when only a portion of the available credit is used. But, if the loan works for your needs and financial strategy... Link to comment Share on other sites More sharing options...
jiggajoe Posted April 3, 2007 Report Share Posted April 3, 2007 Unsecured Line of Credit = Revolving account.It's like a CC, but without the card. You may receive checks that will allow you to draw money from the account. There may be different rates/charges for cash advances, as opposed to purchases. That's typical for revolving accounts. This account will calculate in the Utilization category.I hate LOC's because they factor at 100% utl. even when only a portion of the available credit is used. But, if the loan works for your needs and financial strategy...I find that very interesting and unfair that it would count as 100% utilization even if you have only a partial balance. If I accept, I would only want the account to show that I have credit available to me. I probably would never use it unless I had a situation...Can you point me in the right direction to find out more information about this type of credit? You seem knowledgeable on the subject and I seem to be having difficulty in researching for myself. Link to comment Share on other sites More sharing options...
Ahntara Posted April 8, 2007 Report Share Posted April 8, 2007 I'm not sure anything is publised about it, so, sorry, can't point anywhere...My experience is emphirical and comes from reading thousands of CR's.The 100% utl. thing is ugly but actually does make sense. (BTW, my personal exposure to this has only been with HELOC's, so I don't know if this applies to personal, unsecured, LOC's also)Let's say you are approved for a $100,000 HELOC. Generally, terms are 10 years, interest only. You are only required to pay the interest until the ten years is up, but at some point, the principle is due.Next year, you decide to install a swimming pool and withdraw $40,000 towards to pay the contractor.Your utl. is NOT 40% (as in 40% of $100,000). Your utl. is 100% (because you accessed 100% of $40,000). Clear as mud?The following month, you pay $10,000 in principle to reduce your interest payment, or utlization, but your utl stays 100% because now you have accessed 100% of $30,000. it doesn't matter what the total amount available to you is set at. FICO-based scoring programs use the total owed (at any point in time) to calculate utl.In other words, all the effort you put into paying down CC's is worthless if you have even one HELOC. As I said before, I've seen these loans kill RE Investors with perfect payment histories because of the manner in which they calculate. Fair Warning!Once again, my experience with this comes from HELOC's, not personal LOC's. I don't know if you will have the same experience. Link to comment Share on other sites More sharing options...
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