Getting your finances ready (LOC)

[Guest sn0w0wl]

I was wondering if, for those starting med school in the fall, there is any reason to wait until school starts (ie. orientation) to get the Line of Credit set up. I realize that government loans need to be applied for earlier in the summer--should we think about applying for the LOC early as well, while interest rates are good?

 

I'm going to have to move cities to attend med school, so I was also wondering how important it is to sign up for an LOC at the branch you'd be using during school (vs. one of the bank's branches in a different city, which also happens to have a med school).

 

Thanks all,

 

sn0

[Guest Kirsteen]

Hi there,

 

No harm will come to you if you secure your LOC as soon as you have your acceptance letter in hand. As to interest rates, many banks will not freeze the interest rate on a LOC--they'll leave it as variable. Thus, as long as you don't carry a balance on your LOC, you won't rack up interest charges.

 

As to branches, I doubt it will make a difference to the branch or you if you move with your LOC. Banks are more than happy to move your assets and liabilities as long as you keep your all of your banking products with them. One tiny advantage that you may have at the branch where you ultimately sign up for your LOC is that you can potentially develop a (platonic) relationship with your bank manager. Bank managers will pull all sorts of strings for you once they get to know that you're not ready to leg it to Cuba and leave them in the red-ink lurch.

 

By the way, on all of the above notes, when I receive my Calgary package (hopefully shortly) I aim to head to the Royal Bank and chat more about an LOC.

 

Cheers,

Kirsteen

[Guest aneliz]

I would get the LOC set up ASAP...unless you have a pile o'cash...you are going to have to pay tuition (and lots of it) prior to starting in Sept. Government loans won't cover it.

 

Apply for the LOC as soon as you can...

 

Interest rates don't matter...because the interest rates on most are prime...meaning that the interest on your LOC changes with prime...so getting it now or later really doesn't matter...because if interest rates change, the interest rate on your LOC will change with them regardless of when you get it.

[Guest sn0w0wl]

Thanks for the quick info, guys! Pile-o-cash definitely does not describe my financial situation right now... (or ever!) so the LOC will have to be another thing for my summer to-do list.

 

sn0

[Guest Ian Wong]

As mentioned in previous threads, contact the med school to see which branches most med students use in that city (hopefully they will provide this information in your package). There will often be a contact individual (some bank representative), who does the majority of the medical/dental student LOC's for that bank, whether it be CIBC, Royal Bank, BMO, etc. Often, the bank that is physically closest to the medical school is the one with the most experience in doing up LOC's, and is the one you should go to, as other banks may have no clue that a Medical Student LOC exists (and will therefore give you poor interest rates like prime + 1 or something).

 

As a medical student, you should be getting prime rate (so your interest rate will unfortunately be variable; as far as I know, no bank offers a fixed rate on this LOC, otherwise everyone would be locking it in right now), at least $25,000 per year, and you should try to set it up so that you don't have to pay back interest + principle until sometime during or after your residency.

 

Ian

[Guest TimmyMax]

Hey,

 

Yeah, you won't be able to get an LOC until you have your acceptance letter in hand- which magically transforms you to some random shmoe off the street who a bank would never in a million years approve a loan to into a preferred customer.

As Ian said, be sure that you deal with bank branches and representatives that are experienced in dealing with professional students, unless you like being taunted and laughed at.

As for interest rates, don't settle for anything above prime. If a given bank won't give you prime, go somewhere else! This is one of the rare opportunities in life where banks will be clamboring for your business, so milk it for all it's worth! I'd recommend playing the banks off of each other- you never know what concessions and service fees banks are suddenly magically willing to waive once they find out that another bank has made you a better offer than theirs. This way, you are guaranteed to get the best deal possible.

Also, keep up to date. If one bank is offering something new to their customers that yours is not, go to your bank and demand the same thing- often times banks will get wind of what another bank is doing and change their policies, but somehow forget to alert their existing customers. If you keep on top of things, you can be sure that you are getting the best deal.

And finally, if you feel that your bank is lacking in their products and services provided, or you get sick of the mystery service fees they seem to be so good at charging you with, or are just an all-around pain in the a$$ to deal with, don't be afraid to switch! Even the slightest hint that you are unsatisfied is enough to send most banks scrambling to right the situation and if the bank is worth their salt, then they'll actually do something about it. If not, then they obviously don't care and aren't worth your business. I switched from RBC to BMO earlier this year and it has been without a doubt the best thing I've done all year! I am infinitely more content with my financial picture now than I was during the first half of the year and all it took was a quick appointment with a very nice, friendly personal banking consultant or whatever their title is to get it done.

So yeah, those are my tips to financial bliss, if you can somehow find bliss in racking up a 5 or 6 figure debt during your time in medical school. Happy borrowing!

 

Best of luck!

Timmy

[Guest Ian Wong]

Yeah, that acceptance letter in hand gives you all kinds of street credibility with the banks. You too can enjoy the thrill of borrowing $125,000 over four years, and the even bigger thrill of trying to figure out how you're going to pay it all back.

 

Anyway, UBC recently started up a new position in their faculty, which is a financial advisor who works with med students to plan their borrowing strategy (it's a bit of a sad commentary on the state of med school tuitions that we actually NEED financial advisors this early on in our careers, but that's another issue...). There's a lot of good advice on the UBC website that would be pertinant to you even if you are not going to be attending UBC.

 

This includes information on all kinds of government student loans, sample budgets, and of course, information on lines of credit. Attached is a table showing the current offerings by local Vancouver banks for medical students (I assume the same is true for the dental students); your city should be offering approximately the same Medical Student Line of Credit, if not the exact same LOC.

 

www.med.ubc.ca/md/financialAssistance/index.htm

www.med.ubc.ca/md/financialAssistance/LOC.htm

 

Ian

[Guest dddd]

I just wanted to let people know about the MD Management/National Bank option too, because that's the one I just signed up with. Basically, once you get an acceptance letter, you can contact a nearby MD Management branch. They'll help you sign up (for 5$) with CMA, so that everything you do with MD Management is free. I got a personal financial advisor, who spent about an hour with me immediately. MD Management has a special arrangement with National Bank for lots of things, like the LOC.

 

The LOC is basically 30, 000 per year of med school, and 15 000 per year for the first two years of residency, for a maximum LOC of 150, 000. The interest rate is prime. No payments are required until the first year after the end of residency. They do not care if you have government student loans either, while some of the other banks do. Another thing I liked (at least the way it was explained to me), is that you do not need to make interest payments while in med school. The interest is tacked on automatically, and supposedly it is above and beyond the 30 000 per year, although that was told to me by MD Management and not the National Bank. Also, the money is available early, about a month or so after you apply, even if you haven't registered for med school yet.

 

The only problem I see with this LOC is that they don't give you any more money if you're in a three year program, they still only give 30,000 per year. The max LOC is still 150 000 though, but to get that they give 15 000 per year of residency for four years, instead of the two years.

 

Definately worth checking out yourself.

[Guest Kirsteen]

Hi there,

 

Thanks very much for the update, dddd. Based on your experience, I'll definitely be contacting MD Management to compare their LOC program with that of the Royal Bank.

 

Cheers for your efforts,

Kirsteen

[Guest physiology]

DDDD,

 

What do you mean by "Another thing I liked (at least the way it was explained to me), is that you do not need to make interest payments while in med school." How is it tacked on automatically? I need to get into this bank jargon. I'm terrible wtih finances.

 

By the way, if you get a professional student loan from one of these institutions, do they give you upgraded bank accounts?

 

For instance, I pay $3.45 every month to TD Canadatrust (who by the way, like every other Canadian bank, makes billions in profit it seems every financial quarter) for my "student bank account." To avoid this charge, I need a minimum balance of $1500. I mean, especially with what UBC charges now for tuition, not many students have > $1500 handy.

 

Gone were the days where I had a youth account - no minimum balance, unlimited Interac use (beats the hell outta of a credit card), and no service charges.

 

I thought about using my sister's bank account (who's under 18) but I don't trust her with my money..haha

[Guest kosmo14]

I learned this year that MD Management is actually not completely informed on the supposed no interest payments in med school thing. The truth is that the interest is automatically tacked on your line of credit each month, but it is NOT over and above your $30000 a year.

[Guest Ian Wong]

For those interested in the MD Management/National Bank LOC, here's the information as listed on the MD Management website:

 

mdm.ca/md/solutions/banking/index.asp?url=/content/md/solutions/banking/medical-students.asp&language=E

 

mdm.ca/content/md/solutions/banking/pdf/Student-Resident.pdf

 

The second link is particularly useful as it provides a description of the MD Management/National Bank line of credit itself, including maximum borrowing amounts for those in either a three-year or a four-year Canadian MD program, as well as all related fees and transaction costs. Better yet, you too can be eligible for an extremely nerdy CMA/MD Platinum Mastercard (with a minimum credit limit of $5000; hope you don't ever lose it!).

 

Ian

[Guest Kels2004]

Hi there physiology,

 

Just a note - President's Choice financial has a no-fee bank account... I switched from TD a few years back, as the monthly bank fees were being increased again. I have found it to be a fantastic bank - there are no "branches" but the majority of banking can be done online or through the atm. FOr more complicated things like money orders etc, you just call in and they arrange it over the phone.

 

There is more info online www.pcfinancial.ca or there is usually a kiosk in the Great Canadian Superstores or Loblaws etc.

 

That said, I do not know if you need to have both your LOC and general banking accounts at the same institution. Also not sure if PC financial does LOC for med students.

[Guest geckoUBC]

Just curious.. is it possible to get a line of credit without someone acting as a cosigner? My parents are terrified I'll drop out, move to Bolivia, and leave them with a giant debt.

[Guest Ian Wong]

You can try, but there's a definite likelihood that you'll need a cosigner if your previous credit history has problems or simply isn't good enough. I think classmates of mine have gone with cosigners, and others have managed to go without one. I'm not sure what the difference in their LOC application was (sharper credit history, a little more negotiating/wheeling and dealing with the bank rep, etc). Call the local bank branches and see what they can offer you. Good luck!

 

Ian

[Guest TimmyMax]

Hey,

 

In general, professional lines of credit should not require a cosignor- I did not need one for RBC, nor did I need one for BMO. There is a bank, maybe two that does require a cosignor, but RBC and BMO do not for sure!

In this case, your collateral is your earning potential as a physician-to-be, so it's all on you! :smokin

 

Best of luck!

Timmy

[Guest irimi]

Is it possible to get a professional student LOC at more than one bank? I don't see why not since you can have multiple "normal" LOCs at different banks.

[Guest aneliz]

I suppose you could try it...but they will do a check on you to find out how much you owe to who...so if they find that you have a massive line of credit with another bank, they may be unwilling to approve your LOC with them....

[Guest Edwarder]

I am just curious- what exactly do the banks check out about you when you apply for an LOC. I mean, are they allowed to ask your other banks to give out info on your personal accounts? Is a bank allowed to give out personal info about how much money you have etc. to another bank? I don't have anything to hide, but it just doesn't really seem ethical to me. Does this happen with student loans too (ex. OSAP)...can the government lenders really ask your banks how much money (assets) you have. If not, how do they conduct their "audits"

 

Thanks,

 

Ed

[Guest Ian Wong]

The banks will run a credit check on you, and this will turn up whether or not you have multiple LOC's. You have to look at it from the bank's point of view; if you have a previous history of declaring bankruptcies, or otherwise being delinquent on monthly payments, you are obviously going to be a higher risk for lending out $150,000.

 

Similarly, if you are pulling multiple lines of credit, that also makes banks nervous (you have $300,000+ of potential debt, which would obviously be harder to repay than if you only had $150,000 of debt).

 

Similarly, your finances can be probed when you are applying for student loans, to determine if you are truly needy for these loans, or whether there is another more deserving candidate for them. Your finances are certainly not all your own, and your credit history is something that can be accessed by many institutions.

 

Ian

[Guest Lorae]

I ran a credit check on myself once, it was really interesting to see what information they had on me!! (it was through Equifax website and cost about $30).

 

They had a list of every credit card or loan I've ever had, the limits, the balance, the most recent payment, the dates opened or closed, etc.

 

very humbling... I must say I cancelled *6* (count em') unused credit cards (brick, bay, zellers, enroute......)

 

fun times

[Guest wassabi101]

CIBC can cause you problems if you don't have a credit history- I was asked for co-signers because I had never owned a credit card before! But my parents wouldn't co-sign, so I ended up with 20,000$ per year, and I'll need to get it re-approved again in the summer for next year.

 

It's such a pain in the ass that when I met with MD management and they were so nice and resourceful, told me I should have no problem getting the 30,000$ from their program with National Bank, despite no credit history and no-co-signing, and that they would transfer everything over for me, I was really relieved. I also just received a letter from the quebec government saying that CIBC will no longer take care of student loans, so I have even more of a reason to switch with MD management.

 

As Timmy said, you really want to deal with a bank that makes things simple!

 

Cheers,

wassabi

[Guest 2l2l]

Has anyone been able to negotiate a lending rate below prime? I'm just wondering if it's possible.

[Guest Steve U of T]

I have no experience with med student lines of credit specifically, but I know of people (not students) who do have below-prime rates on a line of credit. I think you'd need a really good credit rating and you'd probably need to put up a house or something as collateral.

[Guest quebecboy]

Hey 2I2I,

 

I don't know if there's a Desjardins institution in your province (they are in Qc, On, etc...), but with their puissance D programme (for students in meds, pharm, dents and opto) they loan at the basic rate for a personnal loan (prime rate?) MINUS 0.5% which sounds pretty good .

 

Quebecboy