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:
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.
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.