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SneakySuspect

Are loans ever offered at less than prime?

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As the title states -- are PSLOCs ever offered at less than prime (eg prime - 0.15%)?

Perhaps this is a silly question and the answer is an obvious no. I'm not up to speed on loans and interest rates and such.

I was just wondering if it was worth negotiating if someone had a great credit score and no existing debt.

Edited by SneakySuspect
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It certainly seems quite rare for law students, but as Pzabby said it's quite common for Med students.

I have exhausted all big 5 banks in my hometown and none were willing to give me just prime let alone below prime. This may change depending on the representative and your financial situation (for example, I have undergrad debt and only started building a credit history 6 months ago).

Getting prime would be good enough, and you should push for it when negotiating. Sadly for us prime is quite high right now at 3.95% (I think ?). You can always google it as well, it changes every few months.

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On 1/11/2019 at 12:08 PM, thedraper said:

It certainly seems quite rare for law students, but as Pzabby said it's quite common for Med students.

I have exhausted all big 5 banks in my hometown and none were willing to give me just prime let alone below prime. This may change depending on the representative and your financial situation (for example, I have undergrad debt and only started building a credit history 6 months ago).

Getting prime would be good enough, and you should push for it when negotiating. Sadly for us prime is quite high right now at 3.95% (I think ?). You can always google it as well, it changes every few months.

Prime is remarkably low right now. From 1935 to 2008, the prime interest rate has only been lower than 3.95% for two months – February and March of 2002, when it sat at 3.75%. 

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1 hour ago, BlockedQuebecois said:

Prime is remarkably low right now. From 1935 to 2008, the prime interest rate has only been lower than 3.95% for two months – February and March of 2002, when it sat at 3.75%.  

Where are you getting that from?

Just this past summer it was 3.45%. December 2017 3.20%. June 2017 2.70%. etc... 3.95% is relatively high. I've noticed the changes quite obviously while working at a bank.

https://ycharts.com/indicators/canada_prime_rate_monthly

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1 hour ago, thedraper said:

Where are you getting that from?

Just this past summer it was 3.45%. December 2017 3.20%. June 2017 2.70%. etc... 3.95% is relatively high. I've noticed the changes quite obviously while working at a bank.

https://ycharts.com/indicators/canada_prime_rate_monthly

Yes. We’re in a period of record low interest rates, and have been since the 2008 crash. That’s why my post excluded the period from 2008-present. 

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3.95 is nothing. The BoC wants the rates back up and is going to keep raising them. Days of cheap debt are coming to a close. 

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10 minutes ago, easttowest said:

3.95 is nothing. The BoC wants the rates back up and is going to keep raising them. Days of cheap debt are coming to a close. 

This is a silly statement, too. It’s entirely possible (or even probable) that a recession will hit in the next few years and cause interest rates to stagnate or fall again. Predicting long term interest rates is a fools errand. 

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2 hours ago, BlockedQuebecois said:

Yes. We’re in a period of record low interest rates, and have been since the 2008 crash. That’s why my post excluded the period from 2008-present. 

Given that law school is only 3 years, and three years ago rates were 2.70%, I think it's sort of fair to say they are quite high right now.

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1 hour ago, easttowest said:

3.95 is nothing. The BoC wants the rates back up and is going to keep raising them. Days of cheap debt are coming to a close. 

Did the BoC not just decide to leave rates untouched a couple weeks ago? Surely if all they wanted to do was raise it they would have.

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1 minute ago, thedraper said:

Given that law school is only 3 years, and three years ago rates were 2.70%, I think it's sort of fair to say they are quite high right now.

No, it's not. No reasonable person speaks about interest rates the way you are. Go ask anybody in banking, finance, business, or the law what interest rates are like right now – they'll all tell you debt is cheap. 

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1 minute ago, BlockedQuebecois said:

No, it's not. No reasonable person speaks about interest rates the way you are. Go ask anybody in banking, finance, business, or the law what interest rates are like right now – they'll all tell you debt is cheap. 

No doubt if you take a long-term approach like you are then yes it seems cheap. But I am talking short-term, which is perfectly rational considering most law students will be making interest-only payments while in school.

 If I started law school two years ago I'd be saving almost 50% on interest.

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14 minutes ago, thedraper said:

Did the BoC not just decide to leave rates untouched a couple weeks ago? Surely if all they wanted to do was raise it they would have.

I encourage you to do your own research about the Bank of Canada's stated intentions.

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1 hour ago, thedraper said:

No doubt if you take a long-term approach like you are then yes it seems cheap. But I am talking short-term, which is perfectly rational considering most law students will be making interest-only payments while in school.

 If I started law school two years ago I'd be saving almost 50% on interest.

Well no, you wouldn’t be, since PSLOC are floating, not fixed. 

It’s also not at all logical to make a statement that “interest rates are quite high right now” based on a two year window. Interest rates are low right now. Anybody staying that interest rates are “quite high” is wrong, plain and simple. 

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17 minutes ago, BlockedQuebecois said:

Well no, you wouldn’t be, since PSLOC are floating, not fixed. 

It’s also not at all logical to make a statement that “interest rates are quite high right now” based on a two year window. Interest rates are low right now. Anybody staying that interest rates are “quite high” is wrong, plain and simple. 

While in school most will only be making interest payments, not touching principal, so the interest while in school matters much more. If it increases when you're out of school and paying interest + principal then your decreasing outstanding balance will offset higher interest rates.

How can you say someone can't narrow down a window and compare rates within that window? That's just ridiculous and I don't see how you can say otherwise, especially given students are in school only three years and I am referring to interest-only payments.

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On 1/11/2019 at 12:08 PM, thedraper said:

I have exhausted all big 5 banks in my hometown and none were willing to give me just prime let alone below prime. This may change depending on the representative and your financial situation (for example, I have undergrad debt and only started building a credit history 6 months ago)

I spoke with an advisor from RBC today and they offered prime right out of the gate without negotiating. I prefaced the conversation by saying that I had read online that Scotia's plan was quite favourable but I banked at RBC and would prefer to keep everything in one place if they were competitive... not sure if that had an impact or not but the way she phrased it made it seem like it was a pretty standard offer. 

 

 

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1 hour ago, thedraper said:

While in school most will only be making interest payments, not touching principal, so the interest while in school matters much more. If it increases when you're out of school and paying interest + principal then your decreasing outstanding balance will offset higher interest rates.

 

This isn't a financially savvy way to look at interest rates. You should be looking at the cost of borrowing over the length of the loan. 

1 hour ago, thedraper said:

How can you say someone can't narrow down a window and compare rates within that window? That's just ridiculous and I don't see how you can say otherwise, especially given students are in school only three years and I am referring to interest-only payments.

Well first off, you didn't say interest rates are quite high compared to the record low rates of the last few years. You said they're quite high. And second off, because your idea of "quite high" is skewed and wrong. But here, let's try this: can you find me a single article, anywhere, that argues that a 3.95% prime interest rate is high? Because I can find you a whole whack of ones that recognize the reality of the situation – interest rates were and are at record lows, with interest rates dropping below the current rate only once during the nearly 83 year period between 1935 and 2008.

If you think 3.95% is "quite high", you would gasp at the double-digit prime interest rates of 80s. 

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17 minutes ago, BlockedQuebecois said:

This isn't a financially savvy way to look at interest rates. You should be looking at the cost of borrowing over the length of the loan. 

1 hour ago, thedraper said:

Would that not depend on your ability to repay the loan? I'm much more concerned about not going bankrupt while I am in school making payments that are not even touching the balance of the loan. 

 

18 minutes ago, BlockedQuebecois said:

Well first off, you didn't say interest rates are quite high compared to the record low rates of the last few years. You said they're quite high. And second off, because your idea of "quite high" is skewed and wrong. But here, let's try this: can you find me a single article, anywhere, that argues that a 3.95% prime interest rate is high? Because I can find you a whole whack of ones that recognize the reality of the situation – interest rates were and are at record lows, with interest rates dropping below the current rate only once during the nearly 83 year period between 1935 and 2008.

If you think 3.95% is "quite high", you would gasp at the double-digit prime interest rates of 80s. 

Why are you taking it out of context? Why would I be talking about the 80s on this forum and on this particular thread? You're just being silly.

Would you not agree that 3.95% is "quite high" compared to 2.70%? Any rational person considering my statement in the context of this forum and PSLOC's would agree that it's quite high.

You're just arguing for arguments sake, which seems to be a pattern of yours.

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1 hour ago, scottbeowulf said:

I spoke with an advisor from RBC today and they offered prime right out of the gate without negotiating. I prefaced the conversation by saying that I had read online that Scotia's plan was quite favourable but I banked at RBC and would prefer to keep everything in one place if they were competitive... not sure if that had an impact or not but the way she phrased it made it seem like it was a pretty standard offer. 

 

 

Yea, when I decide on a school and actually accept the offer I'll go back to negotiate, I'm certain I'll be able to get prime.

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I think you’ve demonstrated a fundamental inability to understand how these loans work or what should be considered when evaluating them (not to mention an inability to understand the fact that interest rates despite being “quite high” to you, remain at an effectively record low levels). 

You would do well to do some research into historical interest levels and the BoC intent before agreeing to attend law school and taking out a PSLOC, if you’re under the impression that a 3.95% prime rate is high. It is unlikely that interest rates will remain historically low for the life of your loan repayment. 

And at the very least, you should refrain from giving others financial advice. 

Edited by BlockedQuebecois

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