Personal Finance

Line of credit interest rate

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  • Nov 17th, 2012 3:57 pm
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Sr. Member
Sep 7, 2010
596 posts
20 upvotes
Scarborough

Line of credit interest rate

My bank (CIBC) offered me an unsecured line of credit at prime + 3.5%. And does not require a credit check. I was thinking of taking it even though I have no use for the money right now. Is this a good idea? Do other banks offer better rates?
Goodlife Fitness SUCKS
32 replies
Deal Addict
Dec 28, 2008
1382 posts
169 upvotes
Toronto
That is a pretty standard offer for something pre-approved.

If you want a better rate then you're going to have to do a full application with proof of income, credit check, etc.
Sr. Member
Sep 7, 2010
596 posts
20 upvotes
Scarborough
What would be a good rate? It'd probably be worth it to do a credit check if it meant getting a lower rate, would it not? I just figured the bank didn't find it necessary to do one since I got my mortgage with them a few months ago..
Goodlife Fitness SUCKS
Member
Apr 29, 2006
429 posts
78 upvotes
Toronto
Prime + 3.5% is pretty good compared to what I got. I only use it as a chequing account really but it is Prime + 7.95% but I hope to re-finance it later anyways.
Newbie
Aug 28, 2006
67 posts
1 upvote
It depends on what leverage you have, I re-negotiated the rate on my unsecured LOC before I decided to move my mortgage to a different bank ... ended up getting prime + 1% for unsecured.
Deal Addict
Dec 28, 2008
1382 posts
169 upvotes
Toronto
ladybaby wrote: usually it is p+1 :razz: :razz: :razz:

That is a typical secured rate.

I'd imagine P+1.5-2.5 to be a decent unsecured rate.
Member
Apr 29, 2006
429 posts
78 upvotes
Toronto
P+3.5% unsecured is pretty sweet. I would take that in a jiffy if offered. However, TD has extended my LOC a few times, no credit checks or proof of income required. I'm happy to take them.
Deal Fanatic
User avatar
Oct 22, 2007
6110 posts
1117 upvotes
Mississauga
Based on what I've read I'll assume prime (3.0 %) is a great rate for a secured LOC?
Sr. Member
Sep 7, 2010
596 posts
20 upvotes
Scarborough
ladybaby wrote: I'm a student. :facepalm: :facepalm: :facepalm:

Then saying it's "usually" prime + 1% doesn't make sense if it's only a special offer for students..
Goodlife Fitness SUCKS
Sr. Member
Sep 7, 2010
596 posts
20 upvotes
Scarborough
macbcomm wrote: It depends on what leverage you have, I re-negotiated the rate on my unsecured LOC before I decided to move my mortgage to a different bank ... ended up getting prime + 1% for unsecured.

I don't really have any leverage of that sort.. maybe moving my RRSP to this bank would count (although I'm not sure if that's in my best interest..)?
Goodlife Fitness SUCKS
Sr. Member
Sep 7, 2010
596 posts
20 upvotes
Scarborough
So.. supposed to be signing the papers today. Should I ask for a better rate (and decline the LOC if they don't give me one)? Hold off and shop around? Or would I be a fool not to accept?

I'm just concerned that accepting this one may make me ineligible for better offers in the future..
Goodlife Fitness SUCKS
Member
Feb 23, 2009
284 posts
19 upvotes
Toronto
Jack Bauer wrote: So.. supposed to be signing the papers today. Should I ask for a better rate (and decline the LOC if they don't give me one)? Hold off and shop around? Or would I be a fool not to accept?

I'm just concerned that accepting this one may make me ineligible for better offers in the future..

An unsecured LOC does not cost you anything to setup, so it's available to you at anytime. You should always try to negotiate a better rate, the worst they can say is 'no'.
Sr. Member
Sep 7, 2010
596 posts
20 upvotes
Scarborough
Detox99 wrote: An unsecured LOC does not cost you anything to setup, so it's available to you at anytime. You should always try to negotiate a better rate, the worst they can say is 'no'.

Is there not an opportunity cost? IE I may not qualify for a lower rate LOC in the future, when I would have had I not taken the offer now. Or would simply closing this LOC negate any potential downsides?
Goodlife Fitness SUCKS
Newbie
Nov 17, 2006
36 posts
11 upvotes
Just checked my LOC (unsecured) and for some reason, they've dropped my rate from P+2% to Prime without me asking.
Has this happened to anyone else? I only use my LOC as a checking account.
Member
Jun 15, 2009
245 posts
77 upvotes
Victoria
Prime + 3% is a good rate. I've currently got an unsecured LOC with BMO at prime + 4.25. The lady I spoke with on the phone today that was a good rate for unsecured and said a HELOC would be 4.25% - 5.0% depending on my credit, meaning prime +1.25 to prime + 2.0. Looking for ways to lower my interest costs but the HELOC isn't worth it right now. I'd need to have my house appraised, legal fees, it all adds up. Meanwhile I noticed while talking on the phone that the limit on my unsecured LOC was bumped up from $25k to $30k without any mention to me. Cool.
Deal Addict
Jun 27, 2005
1071 posts
148 upvotes
Toronto, ON
honsolo wrote: Prime + 3% is a good rate. I've currently got an unsecured LOC with BMO at prime + 4.25. The lady I spoke with on the phone today that was a good rate for unsecured and said a HELOC would be 4.25% - 5.0% depending on my credit, meaning prime +1.25 to prime + 2.0. Looking for ways to lower my interest costs but the HELOC isn't worth it right now. I'd need to have my house appraised, legal fees, it all adds up. Meanwhile I noticed while talking on the phone that the limit on my unsecured LOC was bumped up from $25k to $30k without any mention to me. Cool.

+1

Prime + 3% seems good - I've got a unsecured LOC with PCF at Prime + 3.25%.
Deal Addict
Dec 31, 2009
1568 posts
154 upvotes
Scotia has really been pushing me lately, with a pre-approved mail offer and a couple phone calls in the last couple weeks. I don't even bank with them, all I have is a crappy Scotia Visa that I've hardly used since my 2% cashback-on-everything promo ran out on the Momentum last spring. I just changed it to a no-fee card, which has no features other than a 14.99% rate...and I'll also hardly ever use. Man, Scotia has the worst Visa's in the country.

Anywho....The letter in the mail offered me 30k for their Catch-Up RRSP LOC and it would be Scotia Prime + 1.0% (which comes to 4%) if I open an RRSP with them and use the LOC solely for the purpose of depositing it in that same RRSP. Any other investment outside of Scotia isn't allowed. (edit. the guy on the phone said the other day it can go into any kind of Scotia investment. It doesn't necessarily have to be in an RRSP./edit)

But I got a couple calls in the last week and they're offering me a 10K LOC at Scotia Prime + 4%, so that would be 7%. I can use it for anything I want and I'm pre-approved. No credit app. I can call my local branch and tell them to send me the cheques for it.

I certainly don't need it, but I'm tempted to take them up on the offer just to have it around. And you guys are making it sound like 7% isn't that bad of a rate for an unsecured LOC. I guess I'll gnaw on it for a few days.
Deal Expert
User avatar
Mar 23, 2009
22529 posts
8938 upvotes
Toronto
Wow, unsecured rates really suck these days. I'm glad I hung onto my old ING unsecured at prime + 1.7.

However, I never use it, as my HELOC is prime + 0.5.

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