Can you get a loan and then either reinvest it or put it into a savings account?

Question

I'd like to take out a loan to add something other than revolving credit to my credit history, but I don't really want to spend the money I would take out. Would it be possible to either add it to my money in the stock market or put it in a savings account.... Kind of like backwards saving, instead of putting a little away each month I put all the loan money away and pay a little of the loan off each month.

Answer 1

sure it is great idea thank you and loans you can get from here
http://sratim.freegov2.hop.clickbank (add .net in the end)

Answer 2

First, it depends on the type of loan. If it is an unsecured loan,i.e., credit card, you can spend the monies however you want. If it is a secured loan that requires you to spend the money on a certain item, i.e., refinancing a house with the requirement that you spend the monies on fixing up the house, the answer would be no.
I would be very cautious about borrowing monies without first checking the interest rates. Usually, credit card borrowing is at a higher rate than then the stock market pays overall.The history of credit card companies has been bad for the borrower and good for the companies. Try to read one of their agreements. Anyway, backwards savings does not work when you borrow to pay off other debts. Savings should come from income, not credit.

Answer 3

It's a very risky idea....many people have gotten into trouble for doing just what you are thinking about.

If the whole purpose of doing it is to improve your credit score....there are other ways. Get a very small loan and use it for something like a TV or appliance. Get another credit card and use it only for things you normally pay cash on (monthly bills, utilities...) and pay it off!!!

Want a history lesson? During the 1990's stock boom many people did exactly what you want to do...borrow money and invest in stock. They market crashed and they lost all their money! The loans don't go away, so they had a difficult time recovering their finances. This sort of investing is intended for professionals, or those with the nerve to handle the pressures. It's not for the average investor.

Answer 4

You could, I suppose. If you can find a bank that is willing to lend to you for that purpose. I wouldn't put it in a savings account though - you're not going to earn enough in interest to cover your loan rate, not to mention fees on the loan, so you're going to be losing money. You can borrow to invest in the market, but that's risky too, unless you know what you're doing and can be quite sure you're going to have the liquidity to pay back the note when it's due.

If you're really interested in getting something other than revolving credit, why not look into buying property? If you don't want a full house, consider a townhouse or condo. You could even rent it out and use the rent payments to cover the mortgage note.

Answer 5

I think banks need some collateral, like a house or car before they will give you any money in significant amounts.

In principle, it would make sense if you could get a higher return on the money than the interest, and this is only possible with long-term investments in stocks, via mutual funds (NOT INDIVIDUAL STOCKS), or real estate, but I don't think you're looking at real estate. This will only work with discipline, good investment selections, and lots of luck, otherwise everyone would be doing it. Since you'd have to tie up this money for possibly a long time to get returns, you'd have to repay your loan with personal money, or by selling shares, which triggers tax liability.

Answer 6

You will lose money since the interest rate you pay on the loan will be higher than the rate of gain on your savings, but you said you just want to do it to help your credit rating, so then it isn't a bad idea. I would make sure it's just a small loan though, several small loans help your credit rating as much as one large one. Credit ratings do have some basis on the type of credit as well as how well you pay your bills.

Answer 7

Not a good idea. It will cost you money. If you take out a loan, you will have to pay it back plus interest. The interest rate will be higher than your savings rate on the same amount of money. If you invest it, you could lose some or all of it.
If you pay all of your bills on time and pay a little extra on outstanding loans, your credit will be excellent.

Answer 8

If you take an unsecured loan the only thing you need to be concerned with is can you afford the payment every month if you know that it will not be a problem then take the loan and build your credit history from there.

Answer 9

that is silly, the interest is a killer here. but a personal loan is for any use, even a silly one.

there are other ways, maybe a vehicle loan with a 2 year term,

credit cards do build a credit history and show a pattern of credit use and payment they also show how responsible you are with credit, (your total credit verses the debt load) this shows a lender a lot about you

Answer 10

does not the pastime fee for the non-public loan be larger than the 5% savings account. is this a shaggy dog tale question? Why would someone get a $430,000 personal loan for a savings account? you need to lend the money to a organization(s) at a larger fee than your man or woman of the $1299. change right into a Mortage Banker.

Answer 11

I don't know if you've heard of Prosper, it's a new peer-to-peer lending site. The lenders are average people like you and me who have at least $50 to lend to someone else. I think this would be a great opportunity for you. You can borrow money on Prosper to re-lend to others at a higher interest rate, or put it in a high-interest bank account to save.