The transmission in my car blew out on Monday. I've only had the car since July so it's a real bummer. It's a newer car with high mileage so it's not under warranty (I almost bought the extended warranty and I'm really kicking myself now!) so I've got to come up with $3,400 for a re-manufactured transmission. I am having the work done at a reputable transmission shop where my best friend's brother and dad work, so I am certain that I am not getting screwed.
I have the cash to pay for the repairs, but it will completely wipe out my emergency savings. Other than my savings, I also have an investment account that I could pull money from in the event of another emergency, but that would be a last resort because I invested the money when the market was near its lowest point. Pulling money from that account now would be a huge mistake.
The day before my transmission blew, I had contacted my local bank where I've been doing business for ten years to inquire about a secured personal loan (to be secured by either the investment account or my car) as a means to help rebuild my credit. If approved, the investment account could be used as security, but the money would stay in that account and I would still get the investment benefit.
Initially, my plan was to borrow around $1k for 12 months at 6.7%. However, I was advised that the minimum I could borrow would be $5k (same rate). Considering my situation, should I just apply for the $5k loan, to be secured by my investment account, to pay for my transmission? To keep that rate, the minimum payback would be 36 months, but I could pay extra on the principal balance/pay off early without penalty.
I'm leaning toward the loan route. It will provide me with two things: cash to pay for my transmission and help me with credit rebuild.
Opinions?
I have the cash to pay for the repairs, but it will completely wipe out my emergency savings. Other than my savings, I also have an investment account that I could pull money from in the event of another emergency, but that would be a last resort because I invested the money when the market was near its lowest point. Pulling money from that account now would be a huge mistake.
The day before my transmission blew, I had contacted my local bank where I've been doing business for ten years to inquire about a secured personal loan (to be secured by either the investment account or my car) as a means to help rebuild my credit. If approved, the investment account could be used as security, but the money would stay in that account and I would still get the investment benefit.
Initially, my plan was to borrow around $1k for 12 months at 6.7%. However, I was advised that the minimum I could borrow would be $5k (same rate). Considering my situation, should I just apply for the $5k loan, to be secured by my investment account, to pay for my transmission? To keep that rate, the minimum payback would be 36 months, but I could pay extra on the principal balance/pay off early without penalty.
I'm leaning toward the loan route. It will provide me with two things: cash to pay for my transmission and help me with credit rebuild.
Opinions?
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