There was some timely information in the September 15, 2014 Wall Street Journal about current trends in borrowing/lending money. Rates on consumer loans are coming down because of more competition. Online lenders are starting to make new car loans at very low—0% to 2%—rates. Fixed rate private student loans can be cheaper than federal student loans. All this is possible, but it requires top credit scores to get the best deals. Home buyers can also benefit, especially in the higher end market. Interest rates on regular mortgages are set by the investors who buy the loans, like Fannie Mae and Freddie Mac. Larger, jumbo mortgages are generally held by the banks who make the loans, and they are lowering the rates to attract desirable customers. This shift may allow qualified buyers to get more house without having to pay a higher interest rate. Again, note that excellent credit scores, substantial assets and an existing relationship with the bank will be part of the package.
New car buyers now have alternatives to the car maker’s captive finance companies or banks. Credit unions and online lenders are getting into the mix. The loans can be secured by the car or other collateral, or unsecured with outstanding credit histories. One online source referenced in the article is offering loans with fixed interest rates as low as 1.995%. If you don’t like going online, the average rate offered by credit unions for a four or five year new car loan was 2.64% and 2.74% according to the article. When dealing with a credit union, you usually have to meet certain eligibility requirements to become a member and be able to borrow.
Historically, student loans offered by the federal agencies were a better deal than private lenders. Rates were fixed and there were patches available when and if the borrower got in financial trouble. Borrowers with the proper credit history can find money at rates from 2% to 2.5% less than federal Plus loans. Also, the federal loans may have origination fees in the 4% range. Please note that the federal loans offer more flexibility if the repayment plan hits a bump in the road. The Fall, 2014 USAA magazine had some ideas for paying down student loans. First, there is a “repay student debt” tool at www.consumerfinance.gov to help you understand your choices. If you have a job in the public service arena, there is the Public Service Loan Forgiveness Program. Some military service can be combined with a civilian public service job to meet the requirements of the program. Enrollment information is available at www.studentloans.gov. As mentioned in the final paragraphs of the article, the best solution is to do your homework before college and make sure the school you choose is the right fit scholastically and financially. Americans owe 1.2 trillion dollars in college debt. Be prudent.
Life has a way of getting in the way of living. There are days when nothing seems to go right; there are times when despair is the norm rather than the exception. In 1 Kings, Elijah was in a funk. He asked God to let him escape from life, to die. Instead, God sent an angel who told him to “get up and eat”. As written in a Forward commentary, when needed most, God so often has a way of reaching into our lives, providing people, experiences and unexpected periods of rest to rescue us from our doldrums. Angels show up, not because we call, but because God sends them. We are then fed whatever our souls are most in need of, to fill and revive us so we may continue on our journey to greater heights. From Proverbs 3: “Trust in the Lord with all your heart and do not rely on your own insight; in all your ways acknowledge him and he will make right your paths.”
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