Ask MetaFilter questions tagged with loan

Exchange rate for repaying debts?

Weng — Mon, 21 Dec 2009 16:41:42 -0800

FinanciallyCluelessFilter: If I borrowed money from a friend in British pounds (when I was in the UK) and am now repaying him in Australian dollars, should I be repaying him at the current exchange rate, or the historical exchange rate at the time of the loan? I'm guessing the latter, but I'm interested to know other people's opinions / if there is a standard practice. I just noticed that the difference between the current exchange rate and that of a few years ago, would make a couple of thousand dollars difference in the total of the debt repayment. (On a related point, should I/he be factoring in the actual fees for currency exchange?)

What is the best way for me to try to get a debt consolidation loan?

drjimmy11 — Thu, 03 Dec 2009 22:17:49 -0800

What is the best way for me to try to get a debt consolidation loan? I have around $20k of credit card deb. The interest rates vary, some are quite high and some are decent. I have a decent salary and I could pay it off in a few years, but I would prefer to get a debt consolidation loan and pay that instead.

The issues:
1. My credit score isn't very good, around 650 at the moment. When the financial crisis hit, a bunch of my cards closed my account or lowered the credit limit right down to the balance I was carrying. Ratio of debt to available credit is the main thing holding my score down- prior to the crisis it was up around 700.

2. I have one debt consolidation loan from my credit union already. This will be paid off in about 3 more payments. This was a "special offer" they had and I'm not sure they offer any specific debt consolidation loan right now. I also owe my bank about $3500 on a Visa card they issue. I've had an account there for about 9 years now and in general they've been great.

I'd like to get a loan to pay off some or all of the debt. A good interest rate would be nice, but I realize that's probably not going to happen in the current climate and with my crummy credit score. My main goal is get the debt off my credit cards and get my credit score back up.

So my questions are:

What's the best way to approach my bank about this? I don't want to just randomly start applying for loans without knowing if I'll be accepted. I'd like to get a little more insight into the process they use:
-Will I help my chances if I pay off the credit card they issue first? -Will it significantly help my chances if I finish paying my current loan before asking for another one?
-How much of a factor is the amount I ask for? I would be happy even being able to borrow $10k or so. When asking for these kind of loans, does it make sense to just ask for a high amount, and then they will meet you with what they're willing to lend, rather than just saying "no?" I think that's how it happened last time.
-Does it hurt my credit score to apply for and be turned down for a loan?
-If anyone has insight into the inner workings of giving loans, I'd be curious to hear an estimate of what kind of credit score is generally needed to get a loan like this.

Finally, is there any website that would help me find other banks that might be willing to give me this loan? Or are there any other novel solutions to revive my credit score I'm missing? I realize no one is lending much money right now, so the only answer may well be "just pay it off yourself."

Other data:
-I don't want to go into debt consolidation or bankruptcy.
-I rent and lack many other valuable assets. My car is old and beat up.
-I am in California.

This is not a referendum on the wisdom of my past financial decisions. Thank you.

What are my best options if I only need a car for a year or less?

frippsie — Wed, 04 Nov 2009 04:34:03 -0800

My car lease is ending soon. I thought I wouldn't need a car for any longer than my lease terms. But now I do. What are my best options if I only need a car for a year or less? I only got this car because I accepted a job and moved to a city where a car is necessary for reliable transportation. I didn't expect to be here for longer than two years because my job is very stressful, and I see it as a stepping stone to something better. (I don't want to get sidetracked as to why I'm still here, but rest assured it's not the situation I want to be in.) I'm leaving my current job in a year's--or less--time. I would most likely be relocating to a place where I don't need a car at all.

However, I do still require reliable transportation for the rest of the admittedly indefinite time I am here. So should I get a new lease, buy out my current lease, buy a different car, or what?

Complications: I don't have the cash to buy my leased car outright--I'd have to get a loan. I don't want to be stuck with trying to unload the car in the middle of a lease or before the loan is paid off. Unfortunately, public transportation and walking/bike riding aren't good options for me. I do carpool sometimes, but I don't want to be begging rides 100% of the time.

I know this sounds a bit all over the place...that's why I hope AskMe can help me think about this more clearly, and hopefully offer some good suggestions! Thanks in advance.

Is there any way to estimate what a car & car insurance would cost me if I moved to San Francisco?

scazza — Tue, 20 Oct 2009 12:16:16 -0800

What are ways to estimate what a car and car insurance would cost me if I moved to San Francisco? I'm looking for what it would cost to have a reasonable, eco-friendly (not necessarily a hybrid, probably not a hybrid) car for 2 people in San Francisco. Something like a hatchback that's 1-2 years old. I live in NYC now so I have no idea how to go about estimating insurance and car loan payments. Resources? Thanks!

(There is a question about this from 2005, but I think things may have changed by now.)

How do you fund a startup with (virtually) no collateral?

ohyouknow — Thu, 08 Oct 2009 10:51:48 -0800

I need an SBA loan yesterday. My business is in startup mode, I'm already fielding new orders, but I need startup capital to get this thing off the ground. To keep this simple I won't go into great depth about my business model. The short version is that this is what I've been doing for the past 5 years very successfully, I was the one driving the business where I was at previously, and all of my former clients have been calling me for assistance. But in order to make this work I need about 35k in capital and I have no collateral. I do have excellent credit, about 30k in untapped credit, and of course my 401k... but I really don't want to touch any of these things. Each time I model out my plan I anticipate (worst case scenario) that I will be out of debt by month 4. But how do I get to month 4 without cash?

I live in San Francisco and have contacted the SBA here, but it's a long process. There is one organization that had me fill out a one page form online for an "instant SBA" and I was summarily rejected (because I don't have collateral, which I thought wasn't supposed to be an issue for an SBA, but I digress).

I know SBA applications are way up and banks are more hesitant than ever about granting them... so any guidance you could give about how to proceed would be much appreciated.

And feel free to MeMail me if you'd like to know more about the specifics. Thanks in advance!

Citiassist assistance

Sara Anne — Sat, 03 Oct 2009 11:30:53 -0800

In order to pay for graduate school a few years back, I took out two CitiAssist loans to pay for food and rent. A couple of years on, I've consolidated all of my federal loans, but the CitiAssist loans can't be consolidated with federal loans. A couple of years on, I have the kind of paycheck that one gets with a degree in the humanities. I've kept up on the loans, but the interest rate just ballooned again, and soon I will have to start choosing between my student loans and health care. I'd like to refinance the CitiAssist, but I don't know where to start looking, and the Citibank website is incredibly unhelpful (surprise!).
And please, I don't need a lecture about my lack of financial savvy- I know that I've gotten into a mess, I need some guidance about how to start being financially wise.

It's payback time! Or is it?

Anonymous — Mon, 28 Sep 2009 14:08:32 -0800

Is Girl legally obligated to pay back her half of a 401k loan? Boy meets Girl. They fall in love, move in together and get a joint bank account where both paychecks are deposited and all bills are paid. Boy takes out a 401k loan to pay off debt and gives half what he takes out to Girl so she can pay off some of her own debt. Loan payment is taken directly out of Boy's paycheck.

Several months later, the relationship ends. All money in the joint account is split evenly (including Girl's last paycheck) and Girl moves out. Boy states he expects Girl to repay her half of the loan. She once verbally, and once in an e-mail, agrees to pay back at least $100 a month.

Ignoring the moral obligation, (and I cannot stress enough how we should be ignoring the moral obligation) is Girl legally obligated to pay back her half of Boy's 401k loan? Does the e-mail constitute written agreement?

Extra info: Girl broke up with Boy, and they both live in Texas. In Girl's defense, she is asking so she fully understands the situation, not because she plans to screw Boy over. Any links you can provide would be helpful.

Can we afford this $445,000 house? How can you tell?

Anonymous — Sun, 20 Sep 2009 15:16:38 -0800

Can we afford this house in California (just an example)? What "rules of thumb" or other measures should I use to determine what is "affordable"? I have used many of the on-line "calculators" but I feel like there are too many variables which are not explained and there is too much variation. Can you look at our situation and help suggest how much house we can afford while remaining fairly conservative? What other "rules of thumb" or standard rules should I consider when determining how much house we (or anyone) can afford?

Total income: $120,000/year
House price: $445,000
Loan: FHA with 3.5% down
(the down payment is not set at this amount but it is so common that we use it when making comparisons).

We're fairly frugal and save more than average. We're both local government employees. The house is in Northern California (Bay Area). The house included above is just an example.

Conservative rule of thumb for front end debt-to-income (DTI) ratio -
28% of your pre-tax income = reasonable annual payment (before considering tax benefits):
$33,600/year
or
$2,800/month

Conservative back end DTI ratio:
36% of pre-tax income minus other debt payments.
We have about $600 of debt (student loan) payments/month.
$43,200 - 7,200 = $36,000
or
$3,000/month

I have received several "Good Faith Estimates" (GFE) for a loan in these conditions - the highest GFE (with most fees filled in) places our monthly payments at $2950.

Is that reasonable based on our income? How do you make that decision?

The tax rate for the city at issue is 1% (low) and no flood insurance is required. This is included in the GFE above. We also have a reasonable emergency fund.

Email questions/suggestions/issues to canweaffordthishouse@gmail.com

Thanks mefites!

How to manage my debt and life as a whole

thegreatcokeolympics — Sat, 19 Sep 2009 12:34:41 -0800

How do I get my life on track with high debt and a chronic medical condition? So i'm 26 years old and have been completely on my own since i was 18. I come from a working class family who lives in a small dying town with no jobs. I knew if I was going to make something of my life in any way, I had to get out of there. Being so young and inexperienced, it's not like I could get a well paying job to support myself. And it's not like my family had any money to give me.
So 5 years ago, I took out many many loans and used that money to move myself across the country to " the big (and expensive) city" to attend college and hopefully start a new life there.

I also used the student loan money to pay for everything I would need to live on (mainly rent because the dorms were more expensive than studio apts, food, and school supplies) and even then it still wasn't enough, so I also worked full time in addition to going to school full time, just to make ends meet.

On top of this, to make matters more complicated, I also have a chronic medical condition. I have had it mildly since I was 10, but never had it addressed, or even diagnosed as to what it was, since my family lacked health insurance.

It was still fairly mild even when I moved here, but through the years got much more serious and I am now in constant daily pain and have some serious breathing issues. I tried to get health insurance on my own, but no plan would cover me due to the pre-existing condition. So I had no choice but to pay out of pocket for all medical expenses. Of course I had no out of pocket money to spare, so I used credit cards to pay all my medical bills.

And I never had enough credit to pay for anything medical that would truly diagnose me, so I resorted to many expensive pain management treatments only to be left with my condition progressively getting worse.

Now flash to present day, 5 years later, and I am $60,000 in debt from school, $10,000 from credit card debt. The job market is scarce and no one is hiring on staff. I've been taking very low pay freelance gigs which don't even amount to half of my expenses.

Currently, my bare minimum expenses amount to $1150 per month.

One of them being a health plan I pay 400 a month for after puting myself on a long waiting list for a government health plan that teams with private insurers to give coverage to high risk people. With this plan I was also able to finally get the tests I needed to diagnose me, only to discover (upon confirmation of 6 different doctor opinions to be sure) that I need a surgery that will cost a minimum of $30,000 depending on where I get it done, while knowing full well my insurance plan will most likely not cover because it is not a common surgery, though results are typically favorable.

I also pay 400 a month to see a physical therapist who I have been seeing for a year and a half and is the only source of pain relief I have found to help me (Insurance only covers 25% of 12 sessions a year, which I have already maxed out) Then pay 300 a month for my credit cards and 50 for my cell phone. And every 3 months, pay 150 forbearance fee for my student loans. That is it.

I had to leave my apartment and move in with a friend who is letting me stay there rent free until I figure something out. They are also fortunate enough to make a decent living and have been loaning me money to help pay my bills, eat their food, and use their computer. If anything, they've almost become my surrogate parent and it makes me feel like shit for puting them in that position, but I simply don't know what else to do.

I would get a second job anywhere I could find, but not only have those jobs even been hard to come by, but my health simply won't allow it at this point. I am extremely distressed, depressed, and hopeless. The biggest issues of all is the health and everything else seems to stem from it to make all the other problems worse. I don't know how much more bare minimum I can get in terms of cutting my budget when I'm already miserable and in so much pain.

I have considered going on disability, but I don't know if I would count since I still have been able to work, so long as the work isn't strenuous and I don't have to be on my feet all day.

I've considered welfare and bankruptcy but I'm not too sure how they work or if I would have to give up making enough money to pay for everything I need just to qualify. Or if bankruptcy will just ruin my credit enough to never be able to rent again.

I want to be responsible and make the best choice that will benefit me in the long run, but I don't know what that is or where to go. I really need some advice or clarity on this, so anything anyone has to say, please I'd love to hear it. Thank you.

Where to hide the money?

odi.et.amo — Sat, 19 Sep 2009 07:15:22 -0800

How can I figure out the minimum amount to keep in my checking account? Basic financial stats: I pay for everything I can (including bills) with my American Express for the cash back bonus. A few utility bills are withdrawn from my checking account, as well as rent. I pay my CC bill from checking, and my paycheck is deposited there. Income > Expenses.

My only debts are student loans (at such a low rate that I have no intentions of paying it off early), and about 4k left on a car loan that I could probably pay off now if I wanted to.

I'd like to make the most out of my savings account, though, and even though I feel like this should be easy, I can't figure out how little I need to keep in checking. Is there an easy way to figure this out? I know I can move some money to savings now, but I'd love a formula to figure out how much that should be (in addition to the money that I have automagically transferred every month).

Side question - should I put this extra money towards my car loan instead so that I can start saving even more each month? The interest rate on the car loan is between 5-6% if I recall. Online savings is with INGDirect which is somewhere around 1.4%.

Is there any way I could get a loan or mortgage?

lgyre — Thu, 17 Sep 2009 12:47:37 -0800

Can I get a loan or mortgage in any way? We currently live in a building that we more or less own. Technically, we own an LLC, and the LLC owns the building (and that's all it does), so home equity is probably out. We would like to buy a new house about half the value of this one, preferably without selling. However, that would require a loan, and we have lousy credit. Details: Our current building is completely paid off. We are self-employed and our income is not impressive, but our expenses are low. I'm sure we could afford mortgage/loan payments, and we'd be happy to sell our current building to pay off the loan if for some reason we weren't able to come up with the money.

Our credit is pretty much non-existent because we don't have credit cards, house or car payments. We can't get credit cards at this point, as far as I can tell. We do have utility payments that we pay, but not always incredibly punctually.

Family members might possibly be willing to cosign. Would that be enough to do it, if they have good credit?

I'm not particularly frightened of high interest rates, I just want to know if there's any chance this could happen. If so, how can I tell reputable loaners from crazy internet scams, considering that we probably won't be dealing with a major bank (or is this an incorrect assumption?).

Taking a Loan in a Foreign Country

Giovanna123 — Thu, 03 Sep 2009 20:33:17 -0800

I would like to know if I took a bank loan in another country and had the money wired to me here in the US, around 160K, if the IRS would tax that amount. I called them and apparently they didn't know because they could not answer the question. I will have to pay back that loan so i would imagine that the amount wouldn't be taxed here (as long as i prove to the IRS that i got the loan).

Buying a house with 5% down: FHA vs. Conventional with 95% LTV?

unclezeb — Wed, 26 Aug 2009 13:58:11 -0800

House Mortgage-filter: FHA vs. Conventional 95% (LTV) Mortgage? Found a calculator, but it's limited and we're seeking hive mind wisdom instead. We (me an Aunt Zeb) and several friends are separately considering buying homes in the California Bay Area, but we all need help deciding between a FHA mortgage and a conventional mortgage with 95% Loan to value (LTV). We've used the calculator, but it won't allow calculations for houses over $249,900. Our friends are looking in the range of $300k-400k houses.

Using some the following numbers as assumptions, please help compare the Conventional 95% LTV vs. the FHA mortgage:

House price: $350,000
Down-payment: $17,500 (5%)

Interest rate: 5.250% conventional vs. 5.375% FHA

FHA funding fee: 1.75% of the loan amount, can be financed ($6125) onto the mortgage. No such fee for a conventional loan.

Insurance:
FHA 0.5 - 0.55% / month (~$150) (FHA insurance cost) - required for 5 years.
vs.
0.9 - 1.9%/month (~$210) (private mortgage insurance) - may be terminated after 1-2 years.

Initial equity: +$XXXX(?) for the conventional loan?

Big question: Which is the right loan for us / our friends in that hypothetical scenario?

It seems the difference would be a slightly higher monthly payment for a conventional loan while paying PMI (about 2 years), then it would be less than the FHA loan monthly cost. After 5 years of the FHA insurance the two would be about even with a slight edge for the conventional loan. So, assuming they plan to own the house for 10+ years, which is the right loan for them? Are we missing anything that will have an impact on these figures

(Side question: I've heard an FHA loan may be "transferable" if the house is later sold to an FHA loan qualifying buyer ... can someone explain? And why/if this is not an option for a seller holding a conventional loan?)

Car loan and CarMax

crapmatic — Mon, 24 Aug 2009 14:22:23 -0800

Are there reasons I should avoid CarMax auto financing and go with my local bank? We're intent on buying a used car this week at CarMax and my wife wants to use their in-store financing to keep the whole thing simple.

I know conventional wisdom posted all over the Internet holds that you should line up financing at your bank, on the other hand I think it's common knowledge that CarMax is not run like a shark tank. So my question is whether I need to be on guard getting a loan with them and what I might want to watch out for doing the deal. Our time is more important than merely saving a few bucks, which is why we're doing CarMax and trying to get it over with as smoothly as possible, so a few APR points or a few hundred dollars here or there is not a big deal.

I'm already doing a little due diligence by calling both places, but I'd like to know what to ask for or look for. My bank rep admitted to me that their rates aren't as good as dealers right now; she said they offer 8%, no downpayment, and require 2 years of tax returns (I'm self employed). The guy at Carmax would not answer any questions about downpayment, rates, or paperwork requirements until I submit to a credit check. So that's where I'm at now. Both places appear to allow early payment without penalty (this is even stated on the CarMax site) so maybe it's all good and I need to relax.

$20k Loan on $79k Home?

rougy — Mon, 17 Aug 2009 17:19:48 -0800

House loan advice needed. Should I take out a loan against my house while I'm trying to sell it? I need some help from some people familiar with numbers and money.

I'm between a rock and a hard place. The only good thing I have is my house, which is completely paid for, and recently appraised at $79k.

It's for sale, and I think it will sell within the next three to six months—twelve months tops—but I'll need some resources to keep me alive during that time.

I'm thinking of taking out a short-term, two-year loan for $20k and living on the money and using that money to pay back the loan until the house sells, but I'm not a money person and I don't know if that's a wise move to make.

I could really use some good advice. Thanks.

Should I buy a car right now?

LolaGeek — Wed, 22 Jul 2009 19:07:31 -0800

Weighing the pros and cons of buying a car in the near future. Should I? (And if so, what should I get?) I have a 2002 Ford Focus with about 85,000 miles which was purchased used in 2003 and and paid off last year. My mom bought the car and the loan was in her name because I was in college at the time, but as soon as I graduated I started making the payments myself (still in her name). When it was paid off she transferred the title to me. On the way to the auto tag place, the car started doing this weird shaking thing and stalled out. I had that issue fixed, but it seems like ever since that day, little problems have cropped up every few months that involved replacing a worn out or broken something-or-other. If I'm going to trade in the car, I'd rather do it while it's still in relatively good shape, before something major happens to it.

Arguments for buying a car:
- It's probably an awesome time (economically) to buy a car.
- The end of the model year is coming up.
- Kelley Blue Book says I can expect to get a trade-in value of $2000+.
- I have a bit of money saved up, and could make a decent down-payment.
- My credit score is over 720.
- I can get a vehicle loan from my credit union at 3.99% APR for 1-24 months or 4.99% APR for 25-60 months.

Arguments against buying a car:
- My current car isn't really that old or in too bad shape.
- It sure is nice not having that $200 payment every month.
- Even though my credit score is good, I have very little history. My current car was paid in my mother's name, and my husband's name is the only one on the mortgage for our house. The only credit things I have in my name are a credit card (paid in full every month) and my student loan (small).
- My company is getting bought by another company, and even though nobody knows what's going to happen in the future, I could possibly be laid off in the next 3 months-2 years.

Sub-question: For years I've been saying my next car would be a hybrid, but now that I'm really looking into them, I don't know if the increase in price is worth the potential savings in gas. Then again, I'm all for saving the environment. But I hate losing trunk space to a battery. Any opinions on getting a hybrid vs. just getting a newer Focus? (Also, Ford is currently offering a $1500 rebate of some sort, but it looks like that deal is ending August 3...)

How can I get someone to pay off a loan that I co-signed for?

Anonymous — Wed, 22 Jul 2009 10:43:38 -0800

What is the next step in getting someone to pay off a loan that I co-signed for? 5 years ago I co-signed a private loan (through Citibank) for a (former) friend who is an international student (and this is in the United States). (Not a great idea, I know.) I became worried about his intention to pay a year ago and had him sign a statement that he would pay down the loan by $1500 by September 2008, which he did and would pay off the remaining balance (~$5000) by September 2009.

I sent him an email reminding him about this upcoming payment, as we haven't spoken for a year, and he hasn't replied.

More details that may be useful:
- I'm concerned because he may be leaving the country by the end of the year when his student visa and OPT are up. He may also be trying to overstay his visa.
- He had been paying ~$25/month on this loan while he was in school. He was pretty flaky about paying on time and regularly though.
- He has also racked up quite a bit of credit card debt and has co-signed loans with other people. He has also been bad about paying bills on time. I am most concerned about getting my co-signed loan paid off.
- I have mentioned to him that incurring debt in the U.S. and then leaving the country will possibly put his ability to get a visa - work, tourist or otherwise - in jeopardy.
- He is now out of school and is currently working and making decent money, according to mutual friends and Facebook. I don't think that paying off this loan would be difficult if he is living frugally.
- Waiting for him to pay it more slowly is a possibility, but not a route that I'd like to go, as he is from a country with low salaries (~US$200-400/month for someone with his English skills and degree) and little/insecure Internet, and money transfers are expensive.

If he does in fact not pay off the balance by September 2009, what are my next steps? YANML, but some ideas on how I could proceed would be helpful for my own knowledge and as to use as a gentle threat. I'd like to be able to say to him something like: "If you don't pay the balance as we agreed last year, I will have to take you to small claims court" (or whatever the next step is.) Or perhaps I am SOL and this is why you don't co-sign loans for people. TIA!

So wait, who owns my house now?

edjusted — Mon, 13 Jul 2009 12:09:18 -0800

We recently paid off our mortgage (finally!) and got a Substitution of Trustee and Deed of Reconveyance. Some of the info on it looks confusing and/or wrong. We've called the county recorder's office and Wells Fargo, and the people there said everything is correct, but they didn't seem too sure of themselves it just looks wrong. Here's the part I'm confused about. Wells Fargo was the lender, and the paperwork reads as follows:
...Whereas, the indebtedness secured byt he Deed of Trust, described below, has been paid and satisfied; Now, Therefore, Mortgage Electronic Registration Systems, inc, it's address being (blah blah)...being the present legal owner and holder of the indebtedness secured by said Deed of Trust, does hereby substitute and appoint Wells Fargo Bank, it's address being (blah blah)...as successor Trustee, and the Trustee(s) under said Deed of Trust, having received from the Beneficiary under said Deed of Trust sufficient directive to reconvey, detailing that the obligation secured by said Deed of Trust has been fully paid and performed, does hereby reconvey unto the parties entitled thereto, but without any covenant or warranty, express or implied, all rights, title and interest which was heretofore acquired by said Trustee(s) under said Deed of Trust.
Original Trustor(s): me and my wife Original Trustee: Southland Title Original Beneficiary: Mortgage Electronic Registration Systems Inc as nominee for Home Loan Center

So, if I'm reading this correctly...apparently Mortgage Electronic Registration Systems (MERS for short) was the original deed holder? And they're transferring it to Wells Fargo?? Shouldn't it be transferred to my wife and I? Or, thinking about this again, is this maybe just step 1 in a multi-step process? Can anyone shed some light on this?

What's my best road out of debt

letstrythis — Sat, 04 Jul 2009 20:22:37 -0800

I am in debt to the tune of about 20,000 in credit card debt. However, I have great credit, (739) which I've finally cleaned up after a horrible year of ID theft. Most of my debt is on one credit card at 12% APR. I make about 35,000 a year, rent, and don't have any equity or a car. At the rate I can afford to pay at this point (450/month) I'll be in debt for about 8 more years. This seems unreasonable. Should I take out a personal loan, sign up for several low APR credit cards that offer no interest for a year, etc... I live off what I make at this point, and look forward to a credit card-free future. Thanks!

401K Loan Default: When is a disbursement not a disbursement?

Anonymous — Thu, 02 Jul 2009 08:22:01 -0800

I discovered today that I have defaulted on a 401K loan in the amount of $3,896.31 ... help me figure out what the penalties will be & if the confused-sounding rep at Fidelity really knew what she was talking about. I discovered today that I have defaulted on a 401K loan in the amount of $3,896.31 due to a combination of Fidelity being inept (they sent the notice to an incorrectly spelled street address) and my HR dept. giving me bad info (they told me the loan would be suspended while I was out on FMLA, but it was not). Fidelity informs me that
a) my payroll deduction payments will stop and cannot be restarted - to repay now I'll need to pay by coupon/check;
b) my defaulted loan will continue to accrue interest until paid off;
c) even if I pay it off within 60 days of the date of default (June 30th), I'll still have to pay the IRS penalties & the amount will still count as part of my taxable income.

I know you are not my tax professional but I don't have a tax professional, and can't afford at this moment to hire one, so you'll have to do.

1) Is the info I got from Fidelity correct? I'm a bit puzzled that it will both be considered a disbursement and still need to be repaid with interest. That seems like double dipping to me. I have previously (many years ago) had a 401k loan turn into a disbursement (due to end of employment) and it was just a disbursement - there was never a demand I also repay.

2) Can you help me calculate what my penalty payment will be (not counting the additional tax I'd need to pay with amount as part of my taxable income)? Will it be a flat 30%, or is it more complex than that.

3) I am expecting a large insurance settlement within the next few months. This money will not be taxable. If I put some of this not-taxable money into, say, an IRA, what (if anything) will this do to offset the tax hit I'll take for this disbursement.

Again, I know you are not my tax professional. Our finances are very tight (what with FMLA and medical bills and so forth) until the claim settles, but if I can avoid penalties by repaying within 60 days, that will be another stick to use to encourage my attorney to get things wrapped up.

Other things you may need to know: I'm in the USA. I was on unpaid medical leave for 12 weeks but have now returned to work. My employment status has not changed.

Thank you for your help.

How can I get an emergency loan to pay the rent?

Anonymous — Thu, 25 Jun 2009 10:13:24 -0800

How can I get an emergency loan to pay the rent? About a year ago I quit a job to start a business. The business was a website and I correctly assumed that once it was built it would require very little effort to maintain. I figured I was a couple years away from it becoming particularly popular and planned on getting a job (even temping) after it was completed. I had enough money have to be out of work for about nine months after my project was completed. In the first three months I searched for a job and it was pretty hopeless. I got depressed and more or less gave up for a couple months. I, more or less, snapped out of it eventually and have been looking for a job, any job since my needs aren't that great. I just haven't been able to get anything together so far. I don't have any credit cards or any debt. My expenses are low probably just a thousand dollars a month so I don't need a lot and am willing to pay sort of usurious rates if I need to. Calling on friends and family is not an option. What sort of options do I have?

Should I pay off my car loan or save that money for down payment for home?

zavulon — Tue, 23 Jun 2009 07:54:48 -0800

Should I pay off my car loan before getting a mortgage, or use that money for down payment? I'm currently shopping for a home and saving for a down payment. I have ~ 16K left on my car loan. I can either pay it off quicker, saving money on the interest... or save that money for the downpayment.

What should I do? The interest rate on the car loan is higher than the mortgage I would get.. so theoretically, I would save money by paying it off earlier - BUT the money that would go toward paying off the car loan is the money that will not go towards my downpayment.

Any help would be appreciated.
Thanks!!!

Payment schedule for dodgy debtor

southof40 — Mon, 22 Jun 2009 15:52:50 -0800

How to determine how much I'm owed by someone who's not going to pay regularly ? (in Excel preferably). I lent $x as a favour to a person I knew on the basis they would make six monthly payments of $y - the idea was they were paying me an interest payment of 7%.

It's pretty clear now that rather nice picture of life is not going to be how it is.

In the best case what's going to happen is that they're going to make more than six payments and they're not going to be monthly (the worst case is I get an expensive lesson in life).

I want a model I can use to show how much is outstanding at the end of each month and then add the interest onto the principal.

There's an awful lot of 'if you borrow this much how much will the bank charge' stuff out there but I need something which will cope with irregular payments and recalculating the principle based upon the interest received.

Something in Excel would be great but just a desciption of how it should be done would do.

Scared of going to prison due to tax payments. Need advice...

Anonymous — Sun, 21 Jun 2009 19:11:31 -0800

Scared of going to prison due to tax payments. Need advice... Please note:
*I was based in the UK.

*I know my spelling and grammar is terrible, I have learning difficulties.

* I now live in a EU country

I recently ran a company for 2 years, 1st year went very well and paid all the taxe for the company, myself and the staff contributions. 2nd year I was hit hard due to rates rising and customers going bankrupt. Which left me in no position to lay-off all the staff and leave the company premises. I tried to keep the company running but was failing to keep up with loan repayments and tax. I barely had enough to survive to pay the bills. I notified companies house that I will no longer be trading in the UK. They asked to write them a letter and I managed to get my accountant to sort out. However taxes was owed to the tax man in which I cannot close the company. There is no chance of getting out of it without declaring myself bankrupt. Which in my proffession means I cannot become a professional in that field anymore. I cannot risk this.

So I decided to move abroad to a country in Europe to start fresh. I left all my personal debt behind for personal loans which started up the company in the first place. My old company will becoming struck-off soon as lack of communication. I have been living abroad for about 8 months, starting up from scratch. Same again, finding it hard to pay bills but without owing anyone where I live. (I will no longer loan money). However I recieved a letter from one of the banks that I owe £800 too, I had not left any information of my wareabouts. They have thretened to take my belongings (Which I don't have any, apart from clothes and work computer). I'm baffled on how they found my address.

I owe approx: £30,000 spread out between banks, loans and credit cards. I leave no bad debt for my company apart from the 2nd year tax in which I lost everything.

I owe approx £3,000 in tax. I had to pay my old staff by selling equipment in the office. Nothing left on the old company is left.

My question is:

* Can the money I owe in the UK get shifted to my countries debt handlers? and risk bailiffs at my door?

* My debt: I have been told if I leave the UK for more than 5 years. The money owed will be cleared. However I have to stay annonoymous in my new address. Is this true?

* I know my company is being struck off in the UK, but the tax I owe. Can I risk getting jailtime for this?

* If I visit family in the UK could I be arrested?

* If I become a registered resident of the new EU country. Could I be tracked by other owed banks in the UK?

Bankrupsy isnt an option :(

I'm having sleepless nights over this and feel like its the end of the road.

I really appriciate any serious response, I know I'm bad for owing money to the banks. But that money was personal to setting up the company in the 1st place.

Help me avoid being a loan shark.

Salvor Hardin — Sun, 21 Jun 2009 07:08:54 -0800

What's the scoop on the interest rates charged by Kiva's microfinance institutions? I am interested in lending some money via Kiva.org. Kiva has gotten pretty positive press, and the concept makes a lot of sense to me. However, I have heard conflicting and worrying things about the interest rates (averaging around 20%) charged by the regional microfinance institutions that Kiva uses to actually lend the money.

I have heard both that the interest rates are usurious, and also that they are way better than other interest rates that are available in impoverished areas of the world. It seems a bit suspicious that Kiva doesn't tell the lender (as far as I can tell) what the interest rate charged on their loan is. This FAQ from kiva.org seems to explain the high interest rate pretty reasonably, but IANAeconomist, so I feel like I could get suckered. This AskMe question has a bit of a side thread about this topic, but it wasn't very conclusive.

So: What's the real deal about Kiva? Do they suck the life out of poor people with predatory interest rates? Or is it the shining beacon of a new and better way to alleviate poverty? I also welcome any other insight about the pros/cons of kiva.org. Thanks!