MD Financial - >$50,000 in first year?

[webshy]

Has anyone managed to get greater than $50,000 from MD Financial in first year? I need more than a $50,000 LOC this year (due to debts from prior to medical school), and have been told that I won't be able to get more than $50,000 until Sept of 2nd year. (I won't need greater than $100,000 by the end of 2nd year. It's just this year that I'm struggling with the cap.)

 

I like MD Financial in that the LOC serves as a chequing account, which avoids transferring money between accounts. Also, when I'm working in the summer, my pay cheques can be directly deposited onto my LOC, minimizing my interest as much as possible. However, I'm struggling with the first year cap.

 

Are there any other banks where the LOC serves as a chequing account?

 

Thanks for your help!

Elaine

[Dr.Cave]

So you need access to an extra $20K-$30K right now. On one hand you can stick with MD management and not get the money you need and have to make soup from ketchup packets you steal from McDonalds because you can't afford groceries and you sleep in the lecture halls every night because you can;t afford rent, but you can write checks directly from your LOC. On the other hand you could switch to RBC and access all the $$$ you need for rent and groceries but you would have to transfer some funds into your checking account when you wrote a check and that would waste 45 seconds of your life everytime you wrote a check. Tough decision.

[tearless]

i'm with BMO and they say although usually i only have access to 30k/yr, they will consider upping that if you need it for a good reason. dunno if that is good enough a reason.

 

i can write cheques from my bmo loc but i never thought to ask whether i can direct deposit to it. i suspect you can but don't know for sure.

[A-Stark]

Yeah, I'm not sure whether I can write cheques from my BMO LOC (which I have yet to use), but I have a MasterCard which will draw on it directly. Transferring money isn't terribly time-consuming, though, as I can do it in about 30 seconds online.

[BMO guy]

To answer your questions, yes you can write cheques from your BMO LOC. You should have recieved cheques in the mail when you set it up. The cheques are free and unlimited, so if you didn`t get any make sure you order some more. If they don`t know how to order them, just tell them to email or call me (howe.gu@bmo.com or 604-668-1567; or they can just look me up on the system).

 

As for direct deposits, unfortunatley, you can not do that straight into your line of credit. However if you want to reduce the hassle of transfering money every month you can set up a standing order, which means if there is insufficient funds in your account to pay a pre-authorized payment, it will take it straight from your line of credit. Thus when your line of credit payment is due, it will go to your account for that payment, if there isn`t funds there, it will transfer funds from the line of credit so that it can force the payment through (hope that made sense).

 

Also, for any new clients applying for Med LOCs (even at RBC), I don`t think you will have access to the full amount now. I believe all the banks have stipulated annual limits now that the economy has gone down the tubes.

 

 

Please email me if you have any further questions or concerns (howe.gu@bmo.com).

 

Cheers,

 

Howe Gu

Professional Program Specialist, BC District

[Jixe]

Are student LOCs typically given at the prime rate or at the bank's base rate?

[BMO guy]

Are student LOCs typically given at the prime rate or at the bank's base rate?

 

I believe only BMO (i could be wrong) uses base rates. Our normal student line of credit base rate is prime+1%. Medical students get a minus 1% variance on that rate. The bank reserves the rate to change the base rate at any time. Thus one percent increase in base rate will result in one percent change in the effective rates of all other professional line of credits as well.

[The_B]

Are student LOCs typically given at the prime rate or at the bank's base rate?

 

NEVER get a student line of credit for medicine that is above prime.

NEVER EVER EVER.

 

EVER.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EVER.

[BMO guy]

NEVER get a student line of credit for medicine that is above prime.

NEVER EVER EVER.

 

EVER.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EVER.

 

...a reality that may possibly be a passing trend...i have a student line of credit as well, and the last thing I would want is rates to increase, but pricing is dictated by market conditions, and we all know how that is right now...

[webshy]

To follow up on my initial question, MD Financial will not give you >$50,000 in your first year. I spoke with a manager at National Bank in Montreal, who told me that the "flexible" increments that are spoken of on the MD website refer to the possiblity of opting for less than $50,000 per year.

 

In the end, I decided to go with TD. I got approved for $70K in 1st year, $30K in each of 2nd and 3rd years and $20K in 4th year, all at prime interest rate. The account functions as a chequing account, and allows for direct deposits. The only disadvantage is that my interest payments cannot compound or come out of the LOC account. As such, I have to transfer money into a separate chequing account each month to cover my monthly interest. While that may not be quite as convenient as having the interest compound directly, the service I received from TD was absolutely excellent, and makes up for the monthly inconvenience. I appreciated that I had access to the money within 2 days of my initial meeting with the rep from the bank, and that they were willing to be flexible in how much money I needed to cover 1st year expenses including pre-existing debt load.

 

Elaine

[leviathan]

...a reality that may possibly be a passing trend...i have a student line of credit as well, and the last thing I would want is rates to increase, but pricing is dictated by market conditions, and we all know how that is right now...

How should pricing be affected for physicians? They still have the same job prospects and economic outlook. I could understand the rates going up for general people in the public wanting loans, as they are a higher risk with the current economy.

[BMO guy]

How should pricing be affected for physicians? They still have the same job prospects and economic outlook. I could understand the rates going up for general people in the public wanting loans, as they are a higher risk with the current economy.

 

Excellent question, and I`m glad you asked.

 

Although to some extent, pricing is based on risk (which is why dental and medical student line of credits are priced so low), another big factor is also the cost of borrowing. Although some of the money banks lend out is from deposits, majority is from lending from other banks or the government. With the increased volatility in the markets, the banks a) need to set aside more money for loan loss provisions (which means set aside more money to cover bad debts) and borrow at a higher cost since inter-bank lending costs have risen significantly. c) increase lending revenues to cover for loss of revenues on the wealth management/investment side

 

I know some people tend to think that the government's overnight lending rate has decreased so much, so shouldnt`the banks borrow at lower rates as well? Although in principle thats logical, there are many other more complex factors that play into lending from the government and other banks. Before the banks could lend cheap because they made more money from wealth management and investments, however as everyone knows that side has gone down significnatly, the banks now need to make the money from the lending side. I think its great that the banks havn`t touched the student line of credit rates yet...but if thinks continue to get worse, it is a very likely possibility.

 

Also, (I might get some hate for saying this), physicians are part of the general public too. I know that employment and income stability is generally much higher for phsycians and dentists, but there are many jobs out there that can be quite defensive in bad times as well.Although job stability could be high for physicians, it does not mean they are immune from bad debts, poor financial decisions or careless wealth management.

[XiL]

How are you able to get prime interest rates? I am only able to find prime + 1%...

[THX]

How are you able to get prime interest rates? I am only able to find prime + 1%...

 

I know RBC offers at prime:

"A $150,000 Student Line of Credit1 at prime, with no restrictions on how much you can borrow annually."

[XiL]

I've seen a lot of the ug ones offer prime+1% only so it is kind of a change to see just prime! I wonder if ug's can get prime?

 

I know RBC offers at prime:

"A $150,000 Student Line of Credit1 at prime, with no restrictions on how much you can borrow annually."

[Mourning Cloak]

Scotiabank is currently at prime, and as of a month ago so was BMO. If you're a Canadian citizen at a Canadian school not getting prime, switch to another bank. That 1% will add up over the next seven to ten years!

[dan0105]

TD Canada Trust offered $150000 at prime also. With the addition that you do not need to start paying it back until 12 months after your residency ends.

[SpanishFly]

I know very little about this stuff, but out of curiosity (and hopefully it will help educate me on this matter) is there a benefit to having all your LOC's in one year vs. spread out over 4 apart from the obvious that you can use however much you want when you want? And how exactly does the interest work? Does it get applied automatically when you have access to it or only when you actually use it up?

[webshy]

I know very little about this stuff, but out of curiosity (and hopefully it will help educate me on this matter) is there a benefit to having all your LOC's in one year vs. spread out over 4 apart from the obvious that you can use however much you want when you want? And how exactly does the interest work? Does it get applied automatically when you have access to it or only when you actually use it up?

 

If you have pre-existing debt that you wish to consolidate when you start medical school, you may need more than $50,000 in the first year. That was my reasoning for going with a bank that would allow me access to more than $50K (in addition to far better customer service).

 

You only pay interest on the balance of your LOC.

 

Elaine