Episode 46 Transcript – 20k LOC @ 10.5%

Hello! You’re once again live with Jessi Johnson. I have a funny story today to tell. Actually, really not funny at all. I was minding my own business, as usual of course, went into CIBC. I have my chequing and savings bank account with CIBC. I have my paychecks coming in and my bills are paid and it’s all neatly organized. In the past I’ve had some customer service issues with CIBC, not to pick on them. I figured, I’m already with them, have been with them for a long time, give them a shot because I wanted to get a line of credit. I make good income, my credit’s clean. I might have had a few blemishes from high school but that was eleven years ago I guess. I’m a pretty good client and I’m looking to get a whopping $20,000. I’ve got basically no debt other than my mortgage and my car, a little bit of credit card. $20,000 you’d think that would be a pretty easy line of credit to get. I understand there’s a bit of a credit crunch going on but I really learnt how bad it was today. After and hour and a half of selling myself to a broker at CIBC, an hour and a half, they said, “Congratulations! You’re approved subject to conditions of more documents”. I already sent in everything, NOA’s, T4′s, whatever, they want more for $20,000. Yeah, I know! Get this, you might need to sit down, I am! You’re approved at prime plus 6.5%. No, I’m not kidding. No, I’m not smoking anything to come up with numbers like that. Wow! Unbelievable! I almost had a heart attack. I asked her, 6.5%? She said, “No, no. Prime plus 6.5%”. I mean a line of credit unsecured should be prime plus 2%, plus 3% absolutely tops if you’ve got bad credit. But 6.5% means I’d be paying over 10.5% right now for a $20,000 line of credit. Not going to lie, I was holding back some profanities. The point that I’m saying is, it sucks for one, but the credit crunch is having a deeper effect on us than we realize and I think your best situation is if you’re looking to do some leveraging through line of credits or purchase a home through a line of credit it might be a very good idea to go get that line of credit now or use your existing line of credit. Pull that money out, put it somewhere where it’s safe, bank account, whatever. That way you can use it later because people are getting their credit cards reduced right now. More so in the States but definitely in Canada. Line of credits cut back down and when you’re trying to get a simple line of credit, victims like myself are being charged 6.5% on a mere $20,000. I’m Jessi Johnson, I need a beer or a glass of wine to suffer from such horrific news. You have a good day. You can reach me at www.firsthomeinfo.ca. Bye!