Getting a loan these days...

Unless you've been hiding under a rock, you're probably familiar with the current 'crisis' int he credit and banking systems, and I think we’ve all heard about how banks are failing and going bankrupt and how we're all going to suffer right? Hearing the presidential debates I was convinced I was never going to get another loan again.

Is it just me or does this remind anyone else of when the airlines were going under and the Government bailed them out? When that happened, it seemed like someone flipped a switch and a large percentage of airline employees became extraordinarily grumpy overnight. I assumed at the time it was because they were fearful or angry they were going to lose their jobs. It might be just me, but I’m certain I’m seeing something similar now with the banking industry.

Several weeks ago my 17-year old Suzuki motorcycle looked like it was gone – broken beyond [reasonable] repair. I, being the person I am, quickly ran through the five stages of grief and then bought a brand new 2009 Harley Davidson Sportster XL1200L. Yeah, it’s sweet.

In order not to drain my savings or the kid’s college money, I decided to shop around for a loan. My thinking was that looking for a measly $15,000 loan ought to be a piece of cake – heck I should have banks flocking to me right? Yeah, not so much.

I went to five places:

USAA - My trusted bank of most of my adult life. They offered me 6.74% interest, but they were dodgy about the paperwork requirements. Two weeks later I called to find out where the draft check was (supposed to be mailed) and the man on the other end snapped "It's just been sitting here waiting for you to call us back". Something about his tone turned me off - so I declined the loan and moved on.

Next I tried Capital One for a loan. I applied over the phone and the guy on the other end sounded nice enough, but seemed like he was annoyed to answer my questions and I had lots of questions. When I asked why I was offered 5.87% interest rate over the 5.47% rate listed on the web site, he point blank told me that rate was for people with better credit. Well excuse me! Turns out Capital One dosen't consider a motorcycle a vehicle - so that ended that search, but they would not have gotten my business either.

Next up was Navy Federal Credit Union. They approved my motorcycle loan for 6.5% APY, but right before I agreed to the deal, they dropped a bombshell - They would only approve my loan if I took my wife's name off the title. Apparently they had a problem that my wife did not have an income - even though her credit score is like 30 points higher than mine. I told them to pound sand and cancelled my Navy Federal membership n the spot.

Next up was Pentagon Federal Credit union and their offer was fair and the rate was 6.49%. Getting a loan was fairly straightforward and they mailed me a draft check within days. Overall they were fine, but the whole process was quite sterile. I don't think I ever talked to a real live person.

Then I went to the ‘Dark Side’ and checked out the State Department Federal Credit Union. Overall they were a good deal. The final interest rate was 5% (should have been 4% - I’ll go on a rant next week about my experience with SDFCU). Their customer service leaves a lot to be desired, which I'll go into on a later post, but in simple terms of who offered the cheapest loan - they won by a landslide.

Now I haven’t opened up any new credit cards since the credit crisis set in, and obviously I haven’t bought any houses – but to me it seems that if you’re a good credit risk and you shop around, then there are still decent loans to be given. I mean, SDFCU gave a loan to a guy buying a motorcycle over the phone from a quasi-dealer in New York, having it delivered to Houston and then shipped directly overseas without even registering the bike! If they’ll give me a loan, then they’ll give anyone a loan – right?