Commissioning Loans

[twidget]

I just saved a boat-load of money by switching to USAA!

^Yup. When I took my USAA Commissioning loan I shopped around at NFCU and others. Navy Fed had done away with it and that was August 2004, so it's been dead for a while. USAA rates are 3.59% by the way for the Commissioning loan.

Actually, it is 2%. I just called and got one. Thanks for bringing this thread up. I didn't apply for it initially, but since I'm still under the 18-month window (by two weeks), I thought I'd check it out.

I had to open a USAA checking account, and have to have my Direct Deposit sent there, but that's about it. It took about 20 minutes on the phone. They're mailing some forms for me to sign and send back then the money will be deposited.

 

[heynowlookout]

Actually, it is 2%. I just called and got one. Thanks for bringing this thread up. I didn't apply for it initially, but since I'm still under the 18-month window (by two weeks), I thought I'd check it out.

I had to open a USAA checking account, and have to have my Direct Deposit sent there, but that's about it. It took about 20 minutes on the phone. They're mailing some forms for me to sign and send back then the money will be deposited.

Anymore info you have on this would be appreciated, ie phone number/contact person, etc. I talked to USAA a few weeks ago about a commissioning loan and the best they offered me was 3.59%.

 

[IRfly]

These loans sound like a really sound deal. I have about $12,000 in student loans at close to 6% that I would love to pay off ASAP. When can we apply for these loans? Pre-OCS, during, after?

Thanks in advance!

These loans sound like a really sound deal. I have about $12,000 in student loans at close to 6% that I would love to pay off ASAP. When can we apply for these loans? Pre-OCS, during, after?

Thanks in advance!

Wow...Out-of-state student at Cornell finishes with only $12K in loans...That's impressive.

Anyway, having been around the financial markets myself quite a bit, here are my two cents...
First, borrowing money while hoping to invest it for a greater return is, at best, a risky game--especially if you're talking about margins as small as one or two percent profit. You have to figure in taxes, but also plan for unforeseen expenditures. Also, you'd have to have pretty good financial discipline. "Making a profit" by dumping 25K into a savings account over a number of years would be like watching paint dry, especially if you want to buy a new car, take a vacation, etc. And if you've got that kind of discipline (relatively few people do), then there are other avenues of investment as well, such as bonds (I don't think that the U.S. government will be going bankrupt soon...). In general, though, borrowing to invest in low-risk savings accounts is not a good idea, especially as the markets keep an edgy eye on inflation (the Fed minutes from yesterday indicated a "cooling off" in interest rate hikes, which could mean that they don't any longer view inflation as an immediate threat, but anything is possible, especially in the energy markets). Talk to a financial professional.
Some things I WOULD do, though: 1) Pay off any high-interest debt that you might have. If you bought a car when your credit wasn't so great, either refinance it through USAA for ~3.59% or just pay it off. Get rid of credit card debt, but don't close the accounts. Any in-store credit (Sears card, Dell, whatever) usually has massively high interest. 2) Take care of immediate needs before investing, thereby making sure that you have accomplished something tangible with your loan. This is more of a mind game, but it will help you not think about the large chunks of cash sitting around making $100 a month. So take a vacation, help out your family, whatever to make sure that you won't be sitting around thinking, "Man, I sure wish I had just a bit of that $25K I put into ....." 3) Diversify--the golden rule of investing. Dropping all of your eggs in one basket is unwise, especially if that basket is a risk-carrying investment like a fund.

Two questions, now...
1) What are the monthly payoff amounts for some of these loans? The $5K Navy mutual loan? The $20K USAA loan?

2) Can anyone offer some insight on the pros/cons of advance pay vs. a loan?

 

[hourocket]

Well because of this site, I called up USAA yesterday and got the loan. Here is the info...
Amount: $25,000 Term: 5 years Payments: 439.27 at 1.9997%
You have to open a checking account and put your LES (ie your pay) into that account while you have the loan. Other than that, besides behind qualified, which if I am with a divorce and soso credit, most people should.

I agree with IRfly, we are taking this and paying off debt because we have a good bit due to divorce and college and at 2%, you just cant beat those payments.

 

[Cornellianintel]

Wow...Out-of-state student at Cornell finishes with only $12K in loans...That's impressive.

Cornell's four endowed undergraduate schools don't actually have in-state/out-of-state tuition (since they're completely privately endowed) so tuition is uniform. At about $42,000 a year, though, I was really blessed to get out of there with so little debt. Good scholarships and parents, I guess.

Great financial advice, btw.

Best,
cac

 

[RiceOwl06]

Well, having just recently applied and received the USAA loan, I can make some of my own observations on this loan matter. I got the loan at an APR of basically 2 percent, which amounts to payments of approximately 442 dollars over the 5 year life of the loan. But that doesnt start until July. So right now, if I wanted to, I could(and have) put it into a money market account, and basically make 4 percent on money that I haven't earned. And, if I wanted to, after I start having to make payments, I could just have them withdraw the payments from this account to pay off the loan, and I would have a few extra dollars a year for this little bit of work. This loan will cost me 1543 dollars of credit over the next 5 and a half years. I don't want to do the math for calculating how much an account where I'm withdrawing money from will make, but I can tell you it will be more than that. Also, I know inflation was mentioned in the last post, but one has to also remember that you are paying the loan back in inflated dollars, so you really do not need to worry about inflation. Thus, as stated earlier, you can basically earn yourself some extra cash with a little bit of paperwork. Obviously, if you plan on spending the money in the near future as I plan to do, it is great too. Even if they did offer those crazy .9 percent financing on cars as they did before, us MIDS probably wouldn't get accepted due to our credit ratings.

Obviously there are caveats when investing, as buying on the margin can lead to serious problems. Also, as many investors will likely warn, it is best to spread your money out and invest at different periods of time. That way, you are less at risk to fluctuations in the market. So this would be a disadvantage of investing your money in more risky areas all at once. Also, having 450 dollars a month tied up in investments might be a little much if you are not in the right financial situation, with money tied up in other things like mortage payments, car payments, etc. But ultimately, if done safely, it can basically be free money for you, or it can be a nice way to allow you to spend money on things you will buy in the future, like a car

 

[Logico]

Can we back up for a sec for us flunkies?

What is a "commissioning loan"? Why are they better than other loans? Web-site reference anyone? (on my way to Google)

Thanks

 

[HH-60H]

They are just loans that a few banks will give you around the time you get commissioned. Sometimes called career starter loans. The banks that do them usually give good interest rates.

 

[Fmr1833]

Cornell's four endowed undergraduate schools don't actually have in-state/out-of-state tuition (since they're completely privately endowed) so tuition is uniform. At about $42,000 a year, though, I was really blessed to get out of there with so little debt. Good scholarships and parents, I guess.

Great financial advice, btw.

Best,
cac

You said endowed.

 

[IRfly]

Well, having just recently applied and received the USAA loan, I can make some of my own observations on this loan matter. I got the loan at an APR of basically 2 percent, which amounts to payments of approximately 442 dollars over the 5 year life of the loan.

What was the amount of the loan?

 

[Cornellianintel]

You said endowed.

Heh

 

[RiceOwl06]

What was the amount of the loan?

That was for a $25,000 loan from USAA, with payments deferred for ~8 months. Thus the total length of the loan is ~68 months, but I am only making 60 payments.

I guess that is another thing people may want to take into consideration. You can take a loan out from USAA up to 18 months before your commissioning date, and defer on payments until 3 months after commissioning. But then the length of the loan will increase, so the amount of money you will pay back to them will be higher.

 

[KimberlyD]

We didn't defer but when I was asking questions we were told you could take the loan up to 18 months prior to Commissioning & defer for up to 6 months after Commissioning & that no interest would accumulate during the 18 months prior or the 6 months afterwards (if we had chosen to defer). I cannot say that this is 100% true (b/c we didn't do it so I can't prove it & USAA is known for telling different people different things) but a friend of my husband's is deferring for 6 months after his Commissioning (so he won't begin repaying until next November) & he said he was told the same thing ab no interest accumulating.

 

[RiceOwl06]

When I was about to get the loan I thought that when they deferred the loan, they would do so at no interest. But I looked at the paperwork, and it says that interest accrues from the start of the loan. My contract that I signed says the same thing. That is why my quoted payments are higher than hourocket's for example. It is the same loan at the same rate, but I have to pay more because my payments are deferred. Also, they only let you defer up to 3 months now, at least as of a month ago.

 

[KimberlyD]

We got the loan maybe 2 weeks ago & my husband's friend got it last Thursday, we were offered a 6 month deferral & his friend took it. Like I said, it's who you talk to there however I am going to call his friend & have him reread his paperwork to check on the interest thing.