Lines of Credit for Medical Students (Scotia is the best option)

[Persephone]

19 hours ago, TheLegendKiller said:

From reading the thread, it seems the benefit of Scotia is just that you get better credit cards? Am I missing something else as well?

 

Which of the credit cards should I go for?

Scotia just automatically gives you the Passport Infinite Visa and the Gold Amex. The Gold Amex is really good points per dollar. The Passport Infinite Visa is not as good for points but still good and useful for places that don't accept Amex.

[Gazoo4242]

On 6/17/2021 at 2:29 PM, TheLegendKiller said:

Ah!

 

And it is payable all at once?

I'm not exactly sure what you mean, but no you wouldn't get a bill for all of the interest at once at some point if that's what you mean. Interest accumulates on top of whatever you've borrowed from the LOC. Once you need to start making payments based on the terms of your LOC, you can make minimum payments or more depending on how much you can afford to throw at the loan/what your financial strategy is. Sometimes physicians choose to pay it off over a longer period to keep more money in their corporation. This strategy makes sense if you're able to organize it such that your investments are growing faster than the LOC interest is accumulating and/or you can keep enough cash in the corporation to be taxed at a corporate tax rate to keep your personal income tax lower so that you save more than the cost of the interest. 

[WizardKelly]

On 6/14/2021 at 10:15 PM, LostLamb said:

You will always pay interest...the bank needs to benefit somehow. 
the thing is that they use the LOC to pay its own interest off and it happens automatically. 
believe me, it’s a nice perk. I like not having to think.

 

Hold on....just thinking about this. If the interest is being charged to your LOC, and interest is being charged on top of that, does that not mean that the interest is compounding??????

If so, this sounds like a straight scam from Scotiabank. You would end up with a payment at the end that would be much higher than if you paid the interest not using your LOC. 

Could someone clarify? I have a finance background so this sounds fishy to me. 

 

[AB27]

6 minutes ago, WizardKelly said:

 

Hold on....just thinking about this. If the interest is being charged to your LOC, and interest is being charged on top of that, does that not mean that the interest is compounding??????

If so, this sounds like a straight scam from Scotiabank. You would end up with a payment at the end that would be much higher than if you paid the interest not using your LOC. 

Could someone clarify? I have a finance background so this sounds fishy to me. 

 

I think a lot of people would use the LOC to pay off the interest anyway. It is fishy that their website states "no payments required until you graduate" even if its technically true.

[bearded frog]

1 hour ago, WizardKelly said:

the interest is compounding??????

Thats... how interest works? If I put 100$ in an investment account that earns 5% a year, I earn 5$ the first year and then 5.25$ the next because the earned interest is included with the initial principal.

[heydere]

When the LOC interest is Prime-0.25% of the amount loaned, is that annually or monthly?

[capoo]

11 hours ago, heydere said:

When the LOC interest is Prime-0.25% of the amount loaned, is that annually or monthly?

The rate is annual, but the actual term at which they calculate your interests depends on the bank.

[Gazoo4242]

16 hours ago, WizardKelly said:

 

Hold on....just thinking about this. If the interest is being charged to your LOC, and interest is being charged on top of that, does that not mean that the interest is compounding??????

If so, this sounds like a straight scam from Scotiabank. You would end up with a payment at the end that would be much higher than if you paid the interest not using your LOC. 

Could someone clarify? I have a finance background so this sounds fishy to me. 

 

Yup, the interest compounds if it's being charged to the LOC. That's pretty typical of most kinds of loans, but I agree they could be more clear about this upfront. It's the same at all of the big banks. The only real difference is that Scotiabank "pays" the interest automatically, but other banks effectively work the same way, you just have to pay the interest yourself. In most cases, you'll make that payment using LOC funds, because if you have cash outside the LOC to pay the interest you're better off using that cash up front for tuition/living expenses before dipping into the LOC at all.

[rinzler]

58 minutes ago, Gazoo4242 said:

Yup, the interest compounds if it's being charged to the LOC. That's pretty typical of most kinds of loans, but I agree they could be more clear about this upfront. It's the same at all of the big banks. The only real difference is that Scotiabank "pays" the interest automatically, but other banks effectively work the same way, you just have to pay the interest yourself. In most cases, you'll make that payment using LOC funds, because if you have cash outside the LOC to pay the interest you're better off using that cash up front for tuition/living expenses before dipping into the LOC at all.

I agree with your perspective on the loans. However, when it comes to paying off the interest I think it depends on an individual's situation and personal comfort level.

With a previous background and career in finance, I think it's perfectly reasonable to use your LOC for all your medical school expenses. I don't want to debate what to invest in or the volatility of the current market, but I hope we can agree that the from a purely finance perspective, the best practice for excess cash on hand (not talking about emergency/comfort level funds) is to invest it, as the returns should/would/could outpace prime-0.25%. Most direct entry students don't have the cash on hand to pay the interest off to prevent compounding. The non-trads, I assume, have some sort of experience with investing now and understand the rate of returns aspect too.

Painting scotia in a negative light for their automated compounding is an overreaction. Most loanees will not be in a position to, or have the desire to pay off the interest. You always have the option of directing scotia to deduct from another account instead adding it to the LOC automatically...

[Gazoo4242]

3 minutes ago, rinzler said:

I agree with your perspective on the loans. However, when it comes to paying off the interest I think it depends on an individual's situation and personal comfort level.

With a previous background and career in finance, I think it's perfectly reasonable to use your LOC for all your medical school expenses. I don't want to debate what to invest in or the volatility of the current market, but I hope we can agree that the from a personal finance perspective, the best practice for cash on hand is to invest it, as the returns should/would/could outpace prime-0.25%. Most direct entry students don't have the cash on hand to pay the interest off to prevent compounding. The non-trads, I assume, have some sort of experience with investing now and understand the rate of returns aspect too.

Painting scotia in a negative light for their automated compounding is a hysterical overreaction. Most loanees will not be in a position to, or have the desire to pay off the interest. You also have the option of just telling scotia to deduct from your account instead of the LOC directly...

Yep, I think we're saying pretty much the same thing actually, although I don't know that we can make that assumption about non-trads and their investment knowledge/experience. Lots of folks from all walks of life here. Very cool that you have a background/previous career in finance, though. I think a lot of this stuff can be really overwhelming for people who are unfamiliar so it's great that this forum has people who can help "decode"! Certainly if investing is something people are interested in doing with their cash it could be a smart move!

In any case, my main point was not to paint Scotia in a negative light or tell people what to do with their cash. It was that yes, interest compounds, and it's effectively the same at every bank regardless of whether Scotia makes the payment for you or you make it yourself (if you don't have some other source of income from which to pay the interest).

(An aside - I totally understand you mean "gross overreaction", and probably meant nothing by it, but I'd like to respectfully point out that the word "hysterical" has really sexist, pejorative roots. Just so you know for the future if you didn't already  )

[rinzler]

16 hours ago, WizardKelly said:

 

Hold on....just thinking about this. If the interest is being charged to your LOC, and interest is being charged on top of that, does that not mean that the interest is compounding??????

If so, this sounds like a straight scam from Scotiabank. You would end up with a payment at the end that would be much higher than if you paid the interest not using your LOC. 

Could someone clarify? I have a finance background so this sounds fishy to me. 

 

Section F. Calculation of Interest

We calculate interest on your debt daily but we only add it to your debt once a month on each statement. We calculate the amount of daily interest by adding any new advances and subtracting any payments then multiplying the unpaid balance of the debt which interest is payable by the annual interest rate then dividing by 365/366 in a leap year. Interest is charged on a leap day in a leap year. Interest is charged at the rate applicable to the account both before and after the final payment date, maturity, default and judgment, until the account has been paid off in full.

These are the terms and conditions of my LOC. The daily calculation of interest is pretty typical for banking as my company's construction loans and commercial revolving lines of credits were also calculated using a daily balance method. The debt is only added once a month, not daily.

[rinzler]

10 minutes ago, Gazoo4242 said:

Yep, I think we're saying pretty much the same thing actually, although I don't know that we can make that assumption about non-trads and their investment knowledge/experience. Lots of folks from all walks of life here. Very cool that you have a background/previous career in finance, though. I think a lot of this stuff can be really overwhelming for people who are unfamiliar so it's great that this forum has people who can help "decode"! Certainly if investing is something people are interested in doing with their cash it could be a smart move!

In any case, my main point was not to paint Scotia in a negative light or tell people what to do with their cash. It was that yes, interest compounds, and it's effectively the same at every bank regardless of whether Scotia makes the payment for you or you make it yourself (if you don't have some other source of income from which to pay the interest).

(An aside - I totally understand you mean "gross overreaction", and probably meant nothing by it, but I'd like to respectfully point out that the word "hysterical" has really sexist, pejorative roots. Just so you know for the future if you didn't already  )

My apologies, I was not trying to imply that you were painting anything in a negative light or what to do. It was more of a run on from the earlier posts.

Also had no idea about that word, thanks for informing me, good to know and I will adjust my post.

[Gazoo4242]

9 minutes ago, rinzler said:

My apologies, I was not trying to imply that you were painting anything in a negative light or what to do. It was more of a run on from the earlier posts.

Also had no idea about that word, thanks for informing me, good to know and I will adjust my post.

No worries! I actually think awareness around the benefits of investing is a hugely important topic, so I'm glad you brought it up!

[akrobatik]

Hey all. Incoming MS1 here. I am looking for advice on who to speak to with regards to financial planning. I've spoken to both RBC and Scotiabank with regards to an LOC but haven't decided on who to go with yet (they both have very similar plans minus the credit cards they offer for which Scotiabank's sounds better to me but that's not really the point here).

I am anxious about the debt I will accumulate and would love to speak to a financial planner to walk through some projections of how long it would take to pay off the debt I borrow, based on different scenarios of interest rates, income levels etc etc. 

Would truly appreciate any advice on who to speak to for this kind of planning. I know banks will do it but I've also heard good things about advising with MD Financial. Are they more or less the same (banks vs MD financial)? or are MD financial better given that MDs are their bread and butter? 

[who_knows]

1 hour ago, akrobatik said:

Are they more or less the same (banks vs MD financial)? or are MD financial better given that MDs are their bread and butter? 

MD Financial is owned by Scotiabank, so they are not totally impartial. I think you'll get the same advice in a bank and MD Financial in terms of investment. The only difference is MDM will tailor your investments according to your plans for residency, specialty and prospective income. 

[offmychestplease]

2 hours ago, akrobatik said:

Hey all. Incoming MS1 here. I am looking for advice on who to speak to with regards to financial planning. I've spoken to both RBC and Scotiabank with regards to an LOC but haven't decided on who to go with yet (they both have very similar plans minus the credit cards they offer for which Scotiabank's sounds better to me but that's not really the point here).

I am anxious about the debt I will accumulate and would love to speak to a financial planner to walk through some projections of how long it would take to pay off the debt I borrow, based on different scenarios of interest rates, income levels etc etc. 

Would truly appreciate any advice on who to speak to for this kind of planning. I know banks will do it but I've also heard good things about advising with MD Financial. Are they more or less the same (banks vs MD financial)? or are MD financial better given that MDs are their bread and butter? 

I'll give you free quick advice here: you will be easily able to pay of any debt (even two to three hundreds of thousands worth if you get there) very easily as a doctor in Canada. 

[abcd1288]

Any recommendations for either an RBC or Scotia rep? 

[WizardKelly]

Did anyone ever take advantage of the TD Amazon gift card offer? If so, how long did it take for your gift card to arrive after LOC approval?

[Jacky Wang]

On 7/19/2021 at 11:59 AM, abcd1288 said:

Any recommendations for either an RBC or Scotia rep? 

Hey, I went with Scotia with the following rep: Taoufik Kamouni (514-739-5076 Ex 4300; Taoufik.kamouni@scotiabank.com). He's in Montreal tho (close to Côte-des-neiges metro), so idk if it will be convenient for you.

Nonetheless, here's what I got: 

You can say that you were referred by Jacky if he doesn't give you the same deal

[abcd1288]

5 minutes ago, Jacky Wang said:

Hey, I went with Scotia with the following rep: Taoufik Kamouni (514-739-5076 Ex 4300; Taoufik.kamouni@scotiabank.com). He's in Montreal tho (close to Côte-des-neiges metro), so idk if it will be convenient for you.

Nonetheless, here's what I got: 

You can say that you were referred by Jacky if he doesn't give you the same deal

 

Thanks a lot!

[capoo]

On 7/14/2021 at 5:24 PM, offmychestplease said:

I'll give you free quick advice here: you will be easily able to pay of any debt (even two to three hundreds of thousands worth if you get there) very easily as a doctor in Canada. 

“Very easily” is a stretch imo, but you could definitely do it without having to make lots of compromises.

[elcrew]

Incoming MS1 here. If I have about 20k in savings, does it make more sense to use that money to pay tuition first year, or should I put it aside to invest? If I invest I plan to dump into an etf like XEQT. 

[CaRMS2021]

33 minutes ago, elcrew said:

Incoming MS1 here. If I have about 20k in savings, does it make more sense to use that money to pay tuition first year, or should I put it aside to invest? If I invest I plan to dump into an etf like XEQT. 

Spend $20K on tuition v.s. investing in XEQT (and using your LOC presumably for tuition) is all a matter of your risk tolerance. Do you think your investment can beat 2.2% (LOC interest rate)? If you think so, the financially sound thing would be to put it in a TFSA and invest. If you don't think so, save the space in your LOC and pay tuition w cash. 

[rmorelan]

On 7/25/2021 at 9:58 PM, elcrew said:

Incoming MS1 here. If I have about 20k in savings, does it make more sense to use that money to pay tuition first year, or should I put it aside to invest? If I invest I plan to dump into an etf like XEQT. 

which province are you in, and what gov student loans do you have access to? Those sometimes consider your assets 

[askingquestions]

On 7/22/2021 at 5:53 PM, WizardKelly said:

Did anyone ever take advantage of the TD Amazon gift card offer? If so, how long did it take for your gift card to arrive after LOC approval?

Any update on this?