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pugsanddoctors

Scotia Loc - 200K Not 275K?

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So I read somewhere else on this site that Scotia is offering LOCs of 275K at the prime interest rate, but when I went in for an appointment today, they told me I should apply for the Scotia Personal Student Plan (SPSP), which only gives 200K with a max of 50K per year. I'll be attending mac so tuition is quite high and I'm worried that this won't be enough - is the 275K a different plan with different requirements? I've had some trouble with all the other banks as I have no one to co-sign and I don't have a previous credit history or any income. 

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Hi,

 

I believe Canadian students pursuing MD in Canada can apply for a professional line of credit without a co-borrower (somebody please confirm this).

 

Just because I bank with CIBC and I know their website, I am attaching their link that shows that you can apply for "up to" $275k:

 

https://www.cibc.com/ca/loans/prof-edg-st-pers-ln-credit.html

 

The good thing is that the banks would love to give you a LoC because you are a medical student, and they hope you will give them more business in the future (like investments or mortgages). 

 

The only reason - I assume - that Scotia might not give you the full $275k is due to the absence of past credit history. You may read the following for my reasoning, but I could be wrong. Your income portion wouldn't be a big issue because the banks know that you will be attending school full time and they don't expect you to work right now.

 

-------------------------------------(below is just my personal opinion from my experience)---------------------------------------------------

 

When banks are considering a LoC application (or a loan/mortgage, for that matter), they consider the 5C's of lending - Character, Capacity, Capital, Collateral, and Credit. Banks assess these 5C's to determine how much risk is involved with lending you the money. While everyone has different 5C's, some pattern can be found in medical students.

 

Character - determined by your reputation and your status (ie. a medical student vs. a confused student going into his/her 6th college diploma), which life cycle you are in (young and stupid vs. mature and experienced), etc. It speaks to the volume of how trustworthy you are and how likely you will pay the bank back.

 

Capacity - ability to repay your loan, and determined by your monthly income vs. your monthly obligations. Banks wouldn't care too much about capacity for medical students because they know that the students aren't going to be working full time yet.

 

Capital - how much you have personally invested towards your school and education, or how much of your skin is in the game.

 

Collateral - a security against the line of credit (generally a property). This reduces the risk for the bank because if you default on your line of credit, the bank can take possession of the collateral. Collateral is generally used more for mortgages, not LoC.

 

Credit - your past credit history and behaviour as assessed by a credit score from a credit bureau (ie. Equifax). If you have made at least the minimum payments on your liabilities on time in the past, your credit score should be good. If you are consistently late on payments, or if your phone/internet/hydro bills have gone to collections, your score would be bad. If you have absolutely no credit history, your credit score is usually zero, which is just as bad as having a bad credit score. Banks don't like to lend to people who have bad credit scores. For a line of credit, they probably look at a credit score (aka Beacon score) of 680 or more.

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So I read somewhere else on this site that Scotia is offering LOCs of 275K at the prime interest rate, but when I went in for an appointment today, they told me I should apply for the Scotia Personal Student Plan (SPSP), which only gives 200K with a max of 50K per year. I'll be attending mac so tuition is quite high and I'm worried that this won't be enough - is the 275K a different plan with different requirements? I've had some trouble with all the other banks as I have no one to co-sign and I don't have a previous credit history or any income.

 

The way Scotia does it is it's $200k for med school and $75k for residency if you need to request it, I was told.

 

Because you'll be at Mac, the $200k is divided by 3, not 4, so you get to use up to ~$66k/yr. Keep in mind you will also likely have student loans and possibly bursaries as well so you won't have to put the entire $27k on your LOC and it's unlikely you'll end up spending almost $40k a year on living expenses (my family does, but we're four people) so you should be fine.

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The way Scotia does it is it's $200k for med school and $75k for residency if you need to request it, I was told.

 

Because you'll be at Mac, the $200k is divided by 3, not 4, so you get to use up to ~$66k/yr. Keep in mind you will also likely have student loans and possibly bursaries as well so you won't have to put the entire $27k on your LOC and it's unlikely you'll end up spending almost $40k a year on living expenses (my family does, but we're four people) so you should be fine.

 

exactly - in fact you it would be very inadvisable to spend more than the limit each year as your expense will tend to rise as your degree progresses - tuition goes up, CARMS is in the final year with all those extra expenses, there is a expensive end of med school licence exam, and of course the amount you pay in interest rises each year as well. Plus I mean at SOME point in the future the interest rates probably will rise (I remain stunned they are as low as they are for this long).

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exactly - in fact you it would be very inadvisable to spend more than the limit each year as your expense will tend to rise as your degree progresses - tuition goes up, CARMS is in the final year with all those extra expenses, there is a expensive end of med school licence exam, and of course the amount you pay in interest rises each year as well. Plus I mean at SOME point in the future the interest rates probably will rise (I remain stunned they are as low as they are for this long).

 

I am equally stunned, but quite happy we're keeping the low low interest rates. At least until I am out of debt.

 

200k is more than enough for 3 years of med school. Way more than enough. You won't run out, provided you restrict your caviar and Moet to 3 times a week. Oh and buy the cheaper Porsche.

 

Seriously though, you'll be fine with 200k.

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Thanks everyone - I'll ask the person who advised me on that. The only problem is I don't have any bursaries or student loans due to a complicated situation, so I'd pay tuition + rent + car insurance (expensive for a new driver) and all that, and it amounts to just a little over 50k a year. But hopefully I'll be able to manage! 

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Thanks everyone - I'll ask the person who advised me on that. The only problem is I don't have any bursaries or student loans due to a complicated situation, so I'd pay tuition + rent + car insurance (expensive for a new driver) and all that, and it amounts to just a little over 50k a year. But hopefully I'll be able to manage! 

At Mac we won't find out until bursaries until November, so you never know. You can still apply for some. 

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Thanks everyone - I'll ask the person who advised me on that. The only problem is I don't have any bursaries or student loans due to a complicated situation, so I'd pay tuition + rent + car insurance (expensive for a new driver) and all that, and it amounts to just a little over 50k a year. But hopefully I'll be able to manage! 

 

do your best :)

 

seriously you do not want to start residency with 200K+ in debit if you can avoid it - people think all that money is just for medical school, but I have to stay looking back and knowing what I know now with all the residents it is hugely important in residency as well. People often (well statistically speaking usually) have 5 year residencies + possible fellowships, and stuff happens during that time that may require flexibility. That time is can actually be TWICE the length of medical school (say 5-7 years vs 3.5).

 

Not unusual for people to have their family start in that time or need a house (med school plus resident and fellowships is 10 years of time often. A LOT can happen in 10 years), plus there a lot of expenses (like roughly 10K in total just for all the silly licence exams you have to take) and costs of setting things up. Yes you are earning a salary, but 600 a month in interest alone at the current rate is a big bit out of things. If interest rises a few percentage points that amount will double. Bottom line is a lot of residents are living pay check to pay check or using their loans on top to stay a float until they hit staff.

 

You leave with 200K in debit, and then you will have 5-7 years say 6K a year+ in interest plus the exams at 100 and that extra 75K is already down to 30K reserve. and again if/when the rate rises......

 

Now of course roughly 35-40% go into family - that is a bit of a different story, although you won't know that for sure likely going in. Still don't want to waste money.

 

Ha, not doom and gloom, there is more than enough as long as you are not stupid with it :)

Edited by rmorelan

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