Question: I can take out a line of credit from 5k to 25k. The interest rate can be as low as 6.99%. I’m far more interested in getting a low rate than I am in borrowing a specific amount. A month ago, I was turned down by the same company for a 25k line of credit b/c I already had a few credit cards (with ZERO outstanding balance) through them. My Experian rating was 711, it probably dropped a few points. What tips can you offer me to get the highest amount of money at the lowest rate?
I plan to invest in the stock market with this money. I know it’s risky, but so is spending it on a vacation, which they suggest I do. Should I not tell them my plans?
Answer: If you’re going to speculate (buying stock with borrowed money is not investing) in stocks, you can borrow money to do this from your broker. You will need to set up a margin account to do this. Because the loan is secured by stock in your account, you can get favorable rates, anywhere from 1.5% or so above to 1% below (for really good customers) the published broker’s call loan rate, currently 4%.
If you are an experienced investor, you will already know that using borrowed money is playing with fire. If you are not, be prepared to get burned. .they will put you in high risk and bump up all your interest rates. And I certainly am not going to help you do something this dumb.
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