Primerica and the end of the SMART loan

October 25, 2009 — 22 Comments

I’ve been meaning to post an update about my experience with the Primerica SMART loan for some time now. Many people have come here seeking information about the SMART loan, and since I had had a positive experience with it, I wrote and posted that experience here.

As a blogger, I’ve been riding the Primerica horse, on and off for a while now because it is stimulating such good discussion. A quick search around the web will prove that this isn’t the only blog that gets a traffic boost via the Primerica topic. But people have said (and I pride myself on this) that this blog has been the most even handed. There is a lot to talk about. The mortgage, the insurance, the mutual funds, the career opportunity.

There’s a lot of passion and emotion around this topic too. Money is a big deal for people. But so are career choices. So I think for people who currently are, or have been vested in all things Primerica, it seems easy to get your hackles up.

As I said, I’ve had experience with the SMART loan and wrote about that, but I’ve also been fortunate enough to get a few guest posts, so you’ll also find a few of those here painting Primerica and their products in both a positive and a negative light. The following is a list:

The SMART loan (positive), by me

The SMART loan (negative), by Ken

The Primerica Opportunity (positive), by CCleader

The Primerica Opportunity (negative), by Ken

And now, finally, this follow up post on my experience with the SMART loan, almost 5 years since I began with it.

It started (again) last January. Mortgage rates were going down (again), and so I called Rob to see what we could do. At first, he told me a refinance with Primerica would be at a rate of 6.44. Then after I dug around a bit, he remembered something about the equity builder program and the actual rate I’d get would be 6.19.

Well. At that point in time, I knew we were past the prepayment penalty phase (3 years) with Primerica, so I thought it would be wise to shop around a bit. Keep in mind–unlike last time, I didn’t want to consolidate any debt this time. I just wanted a straight up refinance to see if I could save some money on my payments.

As it turns out, this was a good thing. With the mortgage meltdowns and the resulting drop in home prices, our equity in the house was just at the loan to value threshold that a bank would accept. Bottom line, at that time, nobody was about to give me any money if I’d wanted it.

Good thing I didn’t want it. So right away, our situation was different than when we went with the SMART loan those years back.

Anyway, I started doing my research. And without boring you, our local bank (that used to have our loan before Primerica) had 20 yr loans at around 5%.

The problem here is that I didn’t want a 20 year loan. My loan with Primerica only had about 16 years left. I want to pay it off sooner than 20 years. That was one of my main reasons for going with the SMART loan in the first place. And I know that we don’t have the discipline to prepay if we don’t have to–that is, if it isn’t built into the payment structure.

So I looked over a line. The Riverbank (my local bank) was offering a 15 year mortgage at 4.5%. My heart skipped a beat and I started crunching some numbers.

Keep in mind that there are a couple of things I felt very strongly about.

1. Biweekly payments–regardless of the loan, I wanted to continue with biweekly payments, taken right about the same time I got paid every other week. Simple interest, or regular interest, doing this is the fastest way to pay off a loan. We began doing this with the SMART loan. And it’s a very good habit. This is a sort of discipline and expectation thing.

2. I wanted these payments to be taken out of our account automatically. Again, this seems silly, but I don’t want a choice. If I have a choice, I might not do it–again regardless of the loan.

3. Total cost. Money is tight around here. Sure I could make things easier for us by pushing our mortgage out to 30 years again. But I figure, the sooner I can pay off this bugger, the lower the total cost of the loan, the more money I’ll have in the long run . . .right? So we drive beaters and it takes us forever to get new siding and we wear hand-me-downs and shop at garage sales. Still. Life’s good . . .right?

Anyway, that’s where I’m coming from, and that’s the path I hope to continue down. Our biggest challenge will continue to be to NOT take on more debt. When you’re fixed expenses are high. Sometimes that has to happen. It’s a balancing act.

For us, it’s tight. Still, I think I’m making the right choice. I hope I am, anyway–time will tell.

So after I crunched them, here were the numbers. Keep in mind that these results include the biweekly simple interest calculation that SMART loan boasts:

primerica-table

It’s pretty clear that if I could get the 4.5%, this was the way to go.

I could save $87 every two weeks. $174 a month over what we were currently paying. Compared to the Primerica offer, I’d save $31 every two weeks or $62 a month. But the real kicker was the total interest I’d save by going with Riverbank. $25,754!!!

That’s like a new car!! A nice one! Or a good chunk of tuition. Or something.

This was in February though. I wasn’t sure the rates would hold. We still had to go through the application process, get another appraisal, all that.

So I ran the numbers for a 15 year at 5%, just to see. In that case, the biweekly payments would have been $565, and the total interest would have been $52,804.

Still less!!

The bottom line, is that we went with Riverbank, and hopefully this will be the last time we need to refinance this loan. We totally lucked out and got the 4.5% rate. I’m not sure rates will ever drop lower. I’ve been watching and I’ve never seen them lower around here. So like I said, I think we lucked out.

At this point, I think a lot of people will draw the conclusion that a local bank is always going to be better. I don’t think so. I still stand by my decision to go with the SMART loan the first time. Maybe I was wrong. But I don’t think so. We were consolidating a lot of debt at that time. Rates were different at that time.

Regardless, I know for a fact that life got better after the SMART loan. Could it have been even better if we had gone to the Riverbank then? Like I said. I don’t think so. I’ll be honest, maybe it’s my pride speaking, but I honestly don’t think so.

The bottom line for us is that we are better off now with a traditional loan. Much better.

Still . . .I’m not about to bash Primerica. I truly believe they helped us. We still have our life insurance with them. And yes, I’ve crunched those numbers (and will continue to do so) just like I did with the mortgage. I haven’t been able to find cheaper life insurance.

And our Primerica rep came to our house and helped us figure things out.

Still, I never gave up the idea that this is my responsibility. And I never stopped looking for a better deal.

And I never will.

Chris Wondra

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22 responses to Primerica and the end of the SMART loan

  1. Good point! The Smart Loan is the best option when consolidating large amounts of revolving debt, because rate becomes a non-issue due to ridiculous revolving interested rates from unsecured debt. Altough Smart Loan, as I’m sure you know, offers options which no bank could ever possibly offer such as daily interest and free biweekly payments. Try adding $87 to your biweekly payments and run your numbers again. I’m sure you will save a lot more than $25,000.

    • Mike,
      Thanks for the comment. Just thought I should clarify, that despite the “options which no bank could ever possibly offer . . .” I’m still much better off with the traditional 15 year mortgage. This was a pure apples to apples comparison.
      Thanks again,
      Chris

  2. Well we all know that everyone has different circumstances and perspectives. I say that to respect all the effort in crunching numbers and you trying to be non biased. Kudos!!!!
    I used to work for Primerica and I have worked for Dave Ramsey (Money Guy). The most important thing to remember is that if most people did a straight up refinance and then worked extra, drive beaters, garage sells, then the revolving debt or rates dont mean near as much. I say that because most people who have credit cards say, “My rate is so high, ahhhhh!” What isnt spoken is that if you are focused like Chris is, then if you pay the card down with intensity then the rate becomes not much of a factor. (Thats for the majority of people). YOU gotta change you, then the numbers follow. There are a few circumstances that you could surf a card to another and save a little bit. I.E. 10,000 credit card at 23% = 2300.00 per year of interest. divide by 12 = 191.66 per month. Surf to say 7%=700.00 per year of interest or 58 bucks a month. Does that save you money!!!!! Only if you work hard and with focus to pay it off. So moving your debt isnt horrible, but you can do it cheaper than consolidating your debt on your mortgage. There are alternatives and cheaper ones. Again, Smart isnt evil, its just an expensive way to get debt free, when obviously there are other ways to do it. My 2 Cents.

  3. The SMART loan is good for people in a certain financial situation. Just like payday lenders are good for certain people in a certain financial situation. The key to getting out of your certain financial situation is: discipline, focus, patience as noted by Chris and Jory above. Take notes America.

  4. Dale,
    Your loan is still too expensive. Not evil, just expensive!! It doesnt matter if there is a double back flip done, the numbers still don’t lie. I used to sell this stuff. If primerica dropped the emotional hype in training, you can look at the numbers. It really is up to the client to decide. I just couldnt lie to myself anymore in trying to sell an overpriced product. The reason it’s overpriced is that the Smart loan is actually marketed by Citifinancial. Citicorp Trust Bank is the mortgage arm of Citifinancial. (Consumer Finance Company) they naturally charge higher because most people wouldnt qualify for a regular mortgage. I will get off the soapbox here, but truth is truth.

  5. Dale,
    Citicorp is a unit of Citimortgage, not CitiFinancial. If you’re gonna post get your facts straight.

  6. Larry,

    The Smart loan is now serviced by citimortgage, but was originated with Citicorp Trust Bank. Now Citimortgage has the same terms with smartloan clients that were with Citifinancial. Dude, chill. I used to work for Primerica dude. Why don’t you ask or just show me so IF i am wrong then you can enlighten me. Its ok though you are correct. I just didnt want to waste my time trying to explaining all the details out bro. I do know what I am talking about.

  7. I have a friend who can’t qualify for a conventional loan because they have no equity in their home. Their current mortgage is fixed for the next five years (@6.1%), then will become adjustable. Their home has depreciated by $20,000. They have been approved for a Smart loan at a 6.1% rate.

    1) How were they able to qualify for a Smart loan with no equity?

    2) Is the Smart loan the best option for them when they can’t qualify for a conventional loan?

  8. With no equity, your friend has not been “approved” for a SMART loan.

  9. The S.M.A.R.T. loan can be made up to 95% of the home’s value, with no PMI.

  10. Chris, this is by far the most unbiased summary of Primerica. I’m a seasoned corporate instructor/trainer who is currently a part-time member/agent of Primerica. I was sold on the concept during my interview with Primerica, but being a responsible presenter, I had to learn more before becoming a serious participant.

    I didn’t want to associate my name with a company that may destroy my personal reputation and integrity. I joined NOT so much for the opportunity to earn money and financial freedom; but for a more noble cause: to honestly help people, who are struggling with money management, by educating them on how money, insurance companies, mortgages, and securities really work so that they understand what they are doing wrong and be knowledgeable enough to change their plan. (Whew! That was the longest compound sentence I’ve ever written, but it gets my point across!)

    As a corporate instructor, my credibility relies on the sources I use in my presentations. I noticed that at every meeting I have attended at Primerica, they had credible resources cited on the slides. (Resources like CNN, Wall Street, Money Magazine, etc.) I never believe in what others say without asking them for a credible source. Since you are the source of your own article, I had to determine if you were a credible writer.

    I noticed that the way you write and explain your experiences is believable and therefore credible to me. After “screening” Primerica for over 10 months, I can attest that every comment you made, related to Primerica, is very accurate and true. I’ve seen it myself and I just like to thank you for being responsible enough to give a real-world perspective of your experience, and also for being intelligent enough to communicate it in a way that was elegantly easy to understand and follow.

    I look forward to reading more of what you have to say on other topics. Best wishes and warm regards.

  11. The SMART loan program has changed to conventional lending. This means that the rates are now more competitive “street rates.” SMART was always intended to be a debt-freedom program, working best for homeowners who also have revolving debt. It’s also worth noting that we never got caught up in the trend of exotic, sub-prime loans when it was the popular thing to do.

    Chris, you did your due diligence and it looks as though originally the SMART loan was an improvement over your old mortgage. And now you’ve found an even better improvement.

    For people who are current SMART loan holders, check with your rep about lowering your rate through a modification or a new loan (no new closing fees). Our loans are still written by Citicorp Trust Bank. Be aware that Citibank (different from CTB) may contact you and try to take over your loan, now that Primerica is independent from Citigroup.

  12. “It’s also worth noting that we never got caught up in the trend of exotic, sub-prime loans when it was the popular thing to do.”

    LOL…what do you call the old SMART loan if not “exotic” or “sub-prime”?

  13. The Smart loan was a good idea for people with loads of debt, it could also free up more money if other products were needed all at once.They would also underwrite down to a Fico score of 530.It did not mean you would be approved,or the loan would be funded, but at the time it truely was a good resource financially.Also who ever heard of this? If you had to take on a very high rate with smart,if you took the loan,signed,in 2 yrs. they would guarentee adjusting your rate 1 to 1.5 points lower.Wow. But enlighten me folks. By the way, very good job on the posts.

  14. On the post above I did not state that if you were a medical hardship or some other grave circumstance you could have it renegoitiated. thank you

  15. Price is only an issue in the absence of value! I help many families with the smart program that had no idea what the future had for them. Most traditional financial companies dont educate just sell.

  16. Please note that the rate for his Primerica loan was not the rate now offered but the rate when he got the loan. Rates have fallen and if you wanted to do a apples to apples you should of got the new rates from Primerica. As an fyi I just closed one for 4.2% and I work for Primerica. Please don’t compare an old a few years ago before the meltdown with one that is after the meltdown. Please be honest in comparing. Thanks

  17. Chris, thanks for giving an informative view of your experience with Primerica. It’s nice to see that there is good news about Primerica online. I’m glad that Rob gave you good information about what we can do and what we won’t do. Most of us don’t sell on the first meeting. We won’t sell you on things that won’t work better for you in the long run. This company is about doing what is right for the client as much as what you would do for your own family. If everyone who came in this business would do the same thing, there wouldn’t be any bad reviews out there, but there are people who are only interested in money and not what’s best for the client. Those people don’t last in this company. This business is about what you do from the heart, which is our crusade, than what you do for your pocket.

  18. Christopher,

    I’m pleased that your not a Primerica basher… and are very astute in the areana of finances, morgage, interest rates, etc… I’m a Primerica trainee… sheduled to take the state exam for becoming a Life insurance agent… So, What’s your opinion now of Primerica, and their debt consolodation program??… now that they are free from Citibank… and were the TOP IPO for 2011… as stated by Jim Cramer on his show… Has your attitude changed with them at all?

    sincerely,
    Bryan

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