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

[rmorelan]

4 hours ago, Peaka said:

Does anyone know if having a mortgage will affect your ability to get a line of credit?

Usually no, many of us (myself included) have both. This is only because the LOC doesn't obey the normal rules for credit (I mean lets face it - when else would a bank extend a huge 300K loan to someone they absolutely know has no job, no income or no significant assets, no real credit history and well also at the best interest rate available - oh and we aren't expecting that to be paid off for at least 8-12 years give or take - from a usual banking situation that is nuts ). 

 

 

Edited August 7, 2019 by rmorelan

[xyzz]

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[futureMD95]

Trying to decide between TD and Scotia. Honestly, they seem similar, but I’m drawn to TD because of the amazon gift card since the other (important) components seem similar. Any thoughts of TD vs Scotia?

[Thistimenextyear]

hey everyone, 

i spoke with a scotiabank rep who said I do NOT have to make interest payment during duration of med school which would be excellent (no need to borrow money to pay interest). Can anyone verify this is true? 

For RBC, the rep I spoke with who works with med students said the $350K LOC is a regular LOC so there is no grace period anymore. You discuss with the rep on a repayment schedule. 

 

[frenchpress]

27 minutes ago, Thistimenextyear said:

 

 

 

For RBC, the rep I spoke with who works with med students said the $350K LOC is a regular LOC so there is no grace period anymore. You discuss with the rep on a repayment schedule. 

 

This is because you can have the LOC indefinitely as long as you’re in the medical field. You can carry a balance and just make interest payments, and how and when you pay it down is entirely up to you. You don’t need a repayment schedule at all.

 

[mountainsorbust]

30 minutes ago, Thistimenextyear said:

 

i spoke with a scotiabank rep who said I do NOT have to make interest payment during duration of med school which would be excellent (no need to borrow money to pay interest). Can anyone verify this is true? 

 

Not quite! They will just automatically take your interest payments out of your LOC (dangerous...) whereas with RBC you’d have to take the money out yourself, put it in Chequings, then pay it as interest. Either way you’re still paying interest! Scotia just does the work for you. 

[rmorelan]

14 minutes ago, frenchpress said:

This is because you can have the LOC indefinitely as long as you’re in the medical field. You can carry a balance and just make interest payments, and how and when you pay it down is entirely up to you. You don’t need a repayment schedule at all.

 

I would again be very careful with any "terms" that come into play 10 years from now (literally ha). I can tell you these LOCs have changed so much in the past 10 years that even talking that far into the future seems odd to me.

As they can change things at any time - indeed are quite often - don't count on any particular repayment structure etc. It will be interesting to see how they will operate going though whenever we have another recession for instance and cash flow tightens. 

[rmorelan]

15 minutes ago, Whistlrkid said:

Not quite! They will just automatically take your interest payments out of your LOC (dangerous...) whereas with RBC you’d have to take the money out yourself, put it in Chequings, then pay it as interest. Either way you’re still paying interest! Scotia just does the work for you. 

Yeah exactly - otherwise the banks would literally be giving you money for free (otherwise every single one of us would take out immediately the full amount of the LOC and worst case simply buy the very same banks GIC or some other 100% bond just to get the interest). Right now if you owe around 200K you would be paying about 700 a month in interest etc. 

Scotia does make it easier by doing it automatically ha - it is almost funny you can get an overdraft penalty for forgetting to move over the money at RBC (even though of course you using the LOC which is already a loan to cover the interest in the short term). 

[Human Being]

I'm leaning towards RBC but still not sure.

Scotia:

• LOC limit up to 350K
• Prime -0.25%= 3.7%
• Full limit available first year
• Get 2 credit cards with $5K limit each and annual fees waived: Gold AmEx and Passport Infinite ; if you spend certain amount in first few months then get points
• ScotiaOne Chequing account: unlimited transactions, 2 free e-transfers a month, overdraft protection, free cheques
• Interest on funds borrowed form LOC is charged to your LOC so don't have to worry about transferring money to checking account
• Once you have graduated and the 2 year grace period is over you can either: 1. Convert LOC to Loan w/ payments amortized over 10 years 2. Convert LOC and to Personal LOC 3. Convert to Business LOC. 

RBC:

• LOC limit up to 350K
• Prime -0.25%= 3.7%
• Full limit available first year
• Get 1 credit card with $10K limit and annual fees waived indefinitely: Avion Visa Infinite ; get 45,000 welcome RBC points.
• Get RBC VIP Banking Chequing Account: can use any banks ATM, unlimited e-transfers, overdraft protection, 12 free bank drafts, cross debit free, free cheques, free safe deposit box.
• Have to transfer funds from LOC or elsewhere to chequing account to pay for interest charged for money borrowed from LOC

Bottom Line: I think Scotia offers better credit cards, RBC offers better chequing account, RBC is more flexible with the repayment and says that you will have this LOC your whole life as long as you are practicing whereas in Scotia you have to go in and convert the LOC to whatever you want after.

What do you guys think? RBC also has the best customer satisfaction rating out of the big five banks in Canada...Scotia ranks last.

[Human Being]

Also does anyone know how often interest is charged on the funds you borrow from your LOC? Let's say for example I borrow $10,000 from my LOC will I be charged 3.7% of that ($370) every month/day/week that I do not pay it back or is it just a one time charge?

[Meridian]

5 minutes ago, Human Being said:

Also does anyone know how often interest is charged on the funds you borrow from your LOC? Let's say for example I borrow $10,000 from my LOC will I be charged 3.7% of that ($370) every month/day/week that I do not pay it back or is it just a one time charge?

You are charged at a rate of 3.7% yearly on the total balance at the end of each month.  So approx 0.3% per month.   Usually it is just tacked onto your balance.  The amount of interest charged each month will also be variable as the prime rate fluctuates

[Human Being]

14 minutes ago, Meridian said:

You are charged at a rate of 3.7% yearly on the total balance at the end of each month.  So approx 0.3% per month.   Usually it is just tacked onto your balance.  The amount of interest charged each month will also be variable as the prime rate fluctuates

Oh alright. So if I borrowed $10,000 in September and didn't pay that principal amount (10K) back for another 12 months I would be charged $370 for the whole year. But if I borrowed $10,000 in September and paid back that principal amount (10K) in October then I am only charged $30 in interest, since that balance was only there for one month? 

[PotatoPotato]

1 hour ago, Human Being said:

I'm leaning towards RBC but still not sure.

Scotia:

• LOC limit up to 350K
• Prime -0.25%= 3.7%
• Full limit available first year
• Get 2 credit cards with $5K limit each and annual fees waived: Gold AmEx and Passport Infinite ; if you spend certain amount in first few months then get points
• ScotiaOne Chequing account: unlimited transactions, 2 free e-transfers a month, overdraft protection, free cheques
• Interest on funds borrowed form LOC is charged to your LOC so don't have to worry about transferring money to checking account
• Once you have graduated and the 2 year grace period is over you can either: 1. Convert LOC to Loan w/ payments amortized over 10 years 2. Convert LOC and to Personal LOC 3. Convert to Business LOC. 

RBC:

• LOC limit up to 350K
• Prime -0.25%= 3.7%
• Full limit available first year
• Get 1 credit card with $10K limit and annual fees waived indefinitely: Avion Visa Infinite ; get 45,000 welcome RBC points.
• Get RBC VIP Banking Chequing Account: can use any banks ATM, unlimited e-transfers, overdraft protection, 12 free bank drafts, cross debit free, free cheques, free safe deposit box.
• Have to transfer funds from LOC or elsewhere to chequing account to pay for interest charged for money borrowed from LOC

Bottom Line: I think Scotia offers better credit cards, RBC offers better chequing account, RBC is more flexible with the repayment and says that you will have this LOC your whole life as long as you are practicing whereas in Scotia you have to go in and convert the LOC to whatever you want after.

What do you guys think? RBC also has the best customer satisfaction rating out of the big five banks in Canada...Scotia ranks last.

So actually starting sept scotia will be updating their accounts= unlimited e transfers if that matters to you. I can't recall what other account changes there are.

 

Also I agree regarding service- I'm just about to sign scotia (can't be bothered to with monthly interest payments) but the service I've gotten is the worst I've ever recieved... strongly considering switching in a few years.

[rmorelan]

1 hour ago, Human Being said:

Oh alright. So if I borrowed $10,000 in September and didn't pay that principal amount (10K) back for another 12 months I would be charged $370 for the whole year. But if I borrowed $10,000 in September and paid back that principal amount (10K) in October then I am only charged $30 in interest, since that balance was only there for one month? 

Yeah basically. 

 

[rmorelan]

1 hour ago, PotatoPotato said:

So actually starting sept scotia will be updating their accounts= unlimited e transfers if that matters to you. I can't recall what account changes there are.

 

Also I agree regarding service- I'm just about to sign scotia (can't be bothered to with monthly interest payments) but the service I've gotten is the worst I've ever recieved... strongly considering switching in a few years.

hmmm interesting how variable service still seems between various branches of the same bank - what was wrong at that one?

[xiphoid]

19 minutes ago, rmorelan said:

hmmm interesting how variable service still seems between various branches of the same bank - what was wrong at that one?

I would definitely agree that service really varies depending on branch and rep you deal with, regardless of which bank. My LOC is with Scotia and I've had a pretty positive experience with them. Banked with RBC for years before (and still have an account with them because my oldest credit card is with them so I don't want to lose the bulk of my credit history), and had both positive and negative experiences depending on which branch I visited. I personally wouldn't use this as a deciding factor in choosing which bank to sign with, especially since you can switch later on if you're having a really negative experience.

[PotatoPotato]

2 minutes ago, rmorelan said:

hmmm interesting how variable service still seems between various branches of the same bank - what was wrong at that one?

While I'm happy with what scotia offered, my rep:

-Claimed to manage many medical LOC's but was very fuzzy with promotional deals/deadlines and terms. 

-300$ chequing account opening bonus - I provided proof it was still valid up to the week following my initial meeting with them where they promised to make it happen but later forgot all about this, asked for proof again past the deadline, and lost the deal.

-Incredibly slow email response times (~4 days for simple questions numerous times). Very difficult to schedule a sign the paper day...

-I'm sure scotia has better reps out there as my friend signed at another branch and was ready to go in 1.5 weeks... but its nearly 3 for me and the rep is now leaving for vacation... I'd change reps but I just have to sign final papers... and I suppose past this initial meeting it likely doesn't matter anymore... ? Am I being unreasonable? Is this typical? Usually, I've found banks eager to set things like this up for students... 

[PotatoPotato]

4 minutes ago, xiphoid said:

I would definitely agree that service really varies depending on branch and rep you deal with, regardless of which bank. My LOC is with Scotia and I've had a pretty positive experience with them. Banked with RBC for years before (and still have an account with them because my oldest credit card is with them so I don't want to lose the bulk of my credit history), and had both positive and negative experiences depending on which branch I visited. I personally wouldn't use this as a deciding factor in choosing which bank to sign with, especially since you can switch later on if you're having a really negative experience.

Agreed. While not exactly happy I don't think it's a huge deal in the grand scheme 

[anonymouspls]

3 hours ago, Human Being said:

Oh alright. So if I borrowed $10,000 in September and didn't pay that principal amount (10K) back for another 12 months I would be charged $370 for the whole year. But if I borrowed $10,000 in September and paid back that principal amount (10K) in October then I am only charged $30 in interest, since that balance was only there for one month? 

For scotia interest is calculated daily. I made a spread sheet to keep track of my loan, the formula is 0.037/365 * amount you borrowed compounded daily for the interest. It doesn't matter what month you take out the loan. Interest accrues on what ever your outstanding balance is as of that day, so if you pay it down you pay less interest the following day onwards.

 

This is why its important to pay down as much of the LOC with OSAP funds once they come in on august/early September, as osap loans are interest free while in school.

[Dalhousie23]

2 hours ago, PotatoPotato said:

While I'm happy with what scotia offered, my rep:

-Claimed to manage many medical LOC's but was very fuzzy with promotional deals/deadlines and terms. 

-300$ chequing account opening bonus - I provided proof it was still valid up to the week following my initial meeting with them where they promised to make it happen but later forgot all about this, asked for proof again past the deadline, and lost the deal.

-Incredibly slow email response times (~4 days for simple questions numerous times). Very difficult to schedule a sign the paper day...

-I'm sure scotia has better reps out there as my friend signed at another branch and was ready to go in 1.5 weeks... but its nearly 3 for me and the rep is now leaving for vacation... I'd change reps but I just have to sign final papers... and I suppose past this initial meeting it likely doesn't matter anymore... ? Am I being unreasonable? Is this typical? Usually, I've found banks eager to set things like this up for students... 

Thank you... My rep is taking forever. Said to give two weeks, it’s now over 3 weeks. Like it takes 3 weeks to file some papers for the bank to make thousands off me? Just ridiculous tbh.

Like I’m pretty sure I’m waiting to sign final papers. I get a response via email after like 4-5 days of waiting. I’d like to have my finances and accounts organized ASAP. 

[PotatoPotato]

3 hours ago, Dalhousie23 said:

Thank you... My rep is taking forever. Said to give two weeks, it’s now over 3 weeks. Like it takes 3 weeks to file some papers for the bank to make thousands off me? Just ridiculous tbh.

Like I’m pretty sure I’m waiting to sign final papers. I get a response via email after like 4-5 days of waiting. I’d like to have my finances and accounts organized ASAP. 

So, typically you go in, sign general papers to request the loan amount. A few business days later you get approval for the bank and within a few more days (provided your rep has ordered these forms), you go in to sign your loan agreement/set up accounts/cards. Sometimes cards will take a few days more  (somewhere in there you send proof of enrol)

 

I hear you, wish I could buy my furniture ahahaha

[striders02]

Hey guys, 

I'm a bit unclear about how interest accrual works with lines of credit, especially about how interest accrual works over successive payment periods e.g. successive months. As an example, let's say in August I pay $20 000 for tuition using the LoC. The interest on this is 3.7%, and 3.7% of $20 000 is $740.

Q1: Is it correct that I owe $740 in interest due to this expense, and this $740 is due by the end of the August payment period (or some similar timeframe, such as within 3 weeks of withdrawing that $20 000)? 

Q2: If I pay off the interest stemming from this $20 000 expense, and then in September I withdraw a further $1000 from my LoC, would the amount of interest I owe in September be based on my expenses in September alone ($1000) or the total amount I've withdrawn to date ($21 000)? 

[DoctorArts]

51 minutes ago, striders02 said:

Hey guys, 

I'm a bit unclear about how interest accrual works with lines of credit, especially about how interest accrual works over successive payment periods e.g. successive months. As an example, let's say in August I pay $20 000 for tuition using the LoC. The interest on this is 3.7%, and 3.7% of $20 000 is $740.

Q1: Is it correct that I owe $740 in interest due to this expense, and this $740 is due by the end of the August payment period (or some similar timeframe, such as within 3 weeks of withdrawing that $20 000)? 

Q2: If I pay off the interest stemming from this $20 000 expense, and then in September I withdraw a further $1000 from my LoC, would the amount of interest I owe in September be based on my expenses in September alone ($1000) or the total amount I've withdrawn to date ($21 000)? 

3.7% is the interest rate for the year, but interest is compounded monthly. So really, your interest rate is 3.7%/12 per month. 

So you take out $20,000. End of month 1, you owe $740/12 = $61.67. You can pay this off with your line of credit (Scotiabank does this automatically), so now you just owe $20,061.67, unless you mysteriously have some income or external help.  

So now, at the end of month 2, you accrue more interest, but now $61.86. The extra amount is the interest you are paying on your first month's interest. 

[anonymouspls]

6 hours ago, DoctorArts said:

3.7% is the interest rate for the year, but interest is compounded monthly. So really, your interest rate is 3.7%/12 per month. 

So you take out $20,000. End of month 1, you owe $740/12 = $61.67. You can pay this off with your line of credit (Scotiabank does this automatically), so now you just owe $20,061.67, unless you mysteriously have some income or external help.  

So now, at the end of month 2, you accrue more interest, but now $61.86. The extra amount is the interest you are paying on your first month's interest. 

For scotia the interest is calculated daily. 0.037 / 365 * amount owed compounded daily. It comes out to a bit more interest than if it was compounded monthly.

[GTA Med Advisor]

16 minutes ago, ysera said:

For scotia the interest is calculated daily. 0.037 / 365 * amount owed compounded daily. It comes out to a bit more interest than if it was compounded monthly.

You are mistaken that it's compounded daily. It is calculated daily, and added to the balance at the end of each month. Therefore it is compounded monthly.