Looking to apply for a loan

GOALS:

• Pick up a used car (under $40 $0.00)
• Refresh my apartment (budgeting up to $10 $0.00)

THE SITUATION:

• Working full-time, steady gig
• Monthly take-home $1767
• Living solo; I can swing about $100 a month for payments.

A few questions: 🤔

• Which bank is going to give me the best deal on a loan like this?
• Should I go with a fixed or variable interest rate?
• What kind of term am I looking at?
• Is this all getting a bit too ambitious for my current income?

So, you're looking at needing roughly $7,500 in cash. One way to handle that might be taking out an unsecured personal loan. I believe interest rates tend to hover somewhere between 6.5% and 8% annually, though I suppose you should probably browse through some Chase or Wells Fargo sites to get the exact figures. If you were to stretch the term out over seven years, your monthly payment would likely land around $257. (I think some banks actually offer terms as long as ten years, if that helps.)

Ultimately, it’s entirely up to you whether that's something you can realistically afford. Provided you aren't already weighed down by other significant debts, you should theoretically meet the credit requirements for an amount like that.

Some banks are offering non-purpose loans with terms stretching up to 12, or even 15 years

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I wouldn’t recommend jumping in just yet. You should probably sit on your cash for at least a year to build up a cushion for furnishing an apartment—not to mention seeing how much harder life feels when you're living on $700$267 less per month. Once you've figured that out, then you can look into taking out a loan.

You should be totally fine making a monthly payment of $333. I think most banks let you borrow up to about a third of your take-home pay now, so in your situation, we're talking roughly $589 a month.

The real question is... what kind of apartment renovation are we actually talking about for $750? It sounds like maybe just some minor touch-ups or something small.

Here’s a calculator you can use:

https://www.chase.com/personal/loans/calculator

Go ahead and play around with the numbers. I guess if you're looking at that total amount ($375), a monthly payment of maybe $110 over 7 years seems about right. For a term and amount like that, the interest rate almost doesn't even matter—the difference in your monthly bill might only be the cost of two or three coffees, so it's basically negligible. Still, if I were you, I'd probably just go with a fixed rate to keep things simple.

As for picking a bank, honestly, I bet the rates won't vary by more than a few bucks between the cheapest and most expensive options in this case.

neondriver5 said:I wouldn’t recommend jumping in just yet. You should probably sit on your cash for at least a year to build up a cushion for furnishing an apartment—not to mention seeing how much harder life feels when you're living on $700$267 less per month. Once you've figured that out, then you can look into taking out a loan.

though I suspect the thread title itself provides the necessary clarity here. The individual clearly wants a loan.

Thanks for all the tips and info. 🙂

Honestly, I’d much rather just save up than take out a loan, but I need a car right now. I’ve been putting off buying one for ages. (I don't live in Washington, D.C., but I travel back home to see family constantly... anyway, I'm always shelling out money for trains and buses.) 🙂

In the meantime, I’m just poking around online whenever I get a chance, trying to find the best way forward. Like I mentioned earlier, I was planning on using part of the funds to renovate my apartment. So... what's stopping me from just taking out a mortgage for home improvements, using some for the place, and the rest for the car? Do banks actually check how you spent the money later on? Like, do they demand receipts or anything like that?

Here’s a spreadsheet where I compared two different loan options at Chase. The amount is 75 $0.00 because that's the bare minimum for a home improvement loan.

Man, I can't quite wrap my head around it, but I don't think they're actually running checks on you... I mean, I suspect they're probably just looking for an itemized cost breakdown instead.

Since there’s so much "I think" and guesswork going on here, maybe it's better if someone else weighs in. 😁