Line of credit
 

I was recently contacted by my bank about opening a line of credit. I would like to open one in case of emergencies however the rate they gave me was prime + 3.75%. Now I want to negotiate it down but what's a good way to do this? What's a reasonable rate to ask? A friend of mine has prime + .5 unsecured which is ridiculous. Would asking for prime + 1.5% be reasonable?

The higher the credit amount, lower the rate.

If you do all your business with that bank, use that as leverage.

What does your friend do that he has P+.5 as a rate?

Students usually have prime+.5 but that's on a professional student line of credit.

Wow your friend got a smoking deal.

I have prime + .5% but its on secured LOC with BMO. I have a huge credit limit though.

Wow that's a sick deal, I have prime + 3%

Should I bother going to another bank to get a quote? I don't want a credit check done

You'll most likely be able to negotiate a better rate if:
1) You've been with the Financial Institution for a decent amount of years
2) Have good credit
3) Have multiple products/services/accounts at one FI.
4) Have a mortgage or a secure line of credit that bank can have collateral over.

my staff rate is prime+1% :okay:

I have a LOC with interest rate sitting at prime from CIBC, it was a promotional interest at the time not sure if its still available

I have prime +3 when I asked for 15k

Anybody have a line of credit from a credit union? Would their rates typically be lower than the banks?

Im with Prospera.

I have a 30k LOC at prime + 1.75.

I have perfect credit, and a mortgage threw Prospera. I never really shopped around, or negotiated.

Secured or Unsecured?

Unsecured

I think mine is prime + 1% but I honestly don't know as I never use it. IIRC, I have a $25k limit.

Bank of credit union?

I only got offered prime + 3% @ RBC and I have been with them forever.

As a BMO employee, we get basically the best rates that are possible for customers. My PLOC (unsecured) was setup at P+3.0% which I assume is the default for a walkin but was then adjusted to P+1.25%. Since they gave that to me, that means there are at least some customers who are also receiving this rate - though I don't work in a branch and have no idea what the qualifications might be.

Mark

got mine prime + 3% at 15k at td. wanna try 30k in the near future.

shiet, mines like prime + 7% i think for 5k. I haven't use it in like 4-5 yrs.

Someone educate me, what is the difference between secured and unsecured?

well one is secure and the other is not.

if you have equity in a property you can use that as collateral, i.e. if you default on your LOC, the bank can claim against your property - because of this the bank's risk is much lower thus you will get a lower rate. Almost anyone with a pulse and equity in a property can get a LOC at prime + 0.5% up to about 80% LTV (means you must have >20% equity always - this may be out dated LTV information)

unsecured LOC aren't great as the bank has little recourse if you don't pay back (as in, they can't encumber an asset, of course they will actually have legal recourse) - they are loaning to you based on your income to pay back the LOC = higher risk = higher rate, as we're seeing in this thread.

A couple of reasons why secured LOC's are great:
- Cheap immediate money
- No need to actually hold a 6 month emergency fund if you're an investor (you can invest almost all your excess cash), as any short term emergencies can be covered by a cheap LOC
- You can use funds to invest and deduct the interest against the investment income (there's a thing called a smith maneuver which is basically paying off your mortgage then immediately taking out money on your LOC (as your mortgage gets paid down, the amount of available LOC increases) to invest in, say, equities... for some reason people think this is a god send... it's not, it's a nice tax tool, it's not the secret fountain of financial freedom - hard work, saving/investing your money every month and living within your means is the real secret... and very few actually know about this one)

ok, i've digressed.

Mine is with Vancity, secured at P +1% for 150k, when i renew my mortgage the person I spoke with talked about lowering my LoC rate. It's a lot cheaper to use the LoC to pay off credit cards immediately if you don't have the funds available.