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Thread: Should I pay off loan early?

  1. #1
    PhillyDancer1982
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    Should I pay off loan early?

    OK I have a 3-year Bally's gym membership and it appears on my credit report the same way as an installment loan(but only for two bureaus, Experian and TransUnion; not Equifax). Even though it appears as a loan, there is no interest/APR like conventional loans or credit cards. For me having Bally's as a "loan" is a good thing, because I always pay it on time so it is helping me to further establish credit. I got the "loan" in September 2005 and if paying the standard monthly membership, it will be paid off by September 2008.

    Yesterday, I got mail from Bally's saying that if I pay off the remaining balance early, by September 22nd of this year, that I will save 40%. Basically they're willing to cut my remaining balance by 40% if I pay it off early. I'm thinking about doing this because it will get the Bally's monthly payments over with, plus I'll be saving almost $500 by doing it.

    HOWEVER I am unsure how this will affect my credit. By paying off a 3-year loan in only 1 year, I will not be developing good length of credit history for the loan, and my credit history is short/young. On the other hand, paying off a 3-year loan in 1 year will show that I'm capable of paying loans on time and even handling payments that are more than the minimum expected of me. I used Citi Monitor's credit analyzer to predict the effect that paying off the Bally's loan will have on my credit score, and the difference is negligible...after the loan is paid off, will my score improve from it over time? Or, will it be wasted energy to pay it all off at once, as opposed to little payments at a time?(yeah it'll save me $500 to pay it off early, but if it has no impact on my credit score and I have to work my butt off like crazy to make the full amount, is it worth it?)

    Does anyone have a Bally's membership and been proposed with this offer? Credit-wise, what is the best choice...pay it off early, or keep paying on-time for the full length of the loan?

  2. #2
    God/dess Emily's Avatar
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    Default Re: Should I pay off loan early?

    Creditworthiness is determined by how much debt you have, if you pay it back, and if you do it in a timely manner. You get docked for being X days late, but nowhere on there is a mark for early. It just says "account closed"

    Paying off a loan early doesn't hurt your credit. Otherwise when you traded in a car to buy a new one, it'd hurt your credit, but it doesn't. When I paid off my student loans/credit cards way early, my score actually got higher (lower debt-to-income ratio.) Plus you have other lines of credit open right now, right? So you're still building a history.

    Save the $500!

  3. #3
    Sitri
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    Default Re: Should I pay off loan early?

    Wow, the thing I would like to see is their contract. It's not really a loan, it's a contract for future services isn't it?
    Obviously what they are doing is reporting to credit agencies so that if you bail they can hit your credit. On the other hand, if you meet your obligations it may improve your credit.
    But to your question. I would pay it off early for that much discount.

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    Banned Melonie's Avatar
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    Default Re: Should I pay off loan early?

    I would pay it off early for that much discount
    total agreement here ... 'investing' $1800 or whatever to pay off Bally's future services contract early in exchange for $500 in cash 'profit' (and non-taxable profit to boot) is the best 'investment' deal you're going to find anywhere !

    I'm curious as to what such an offer might mean in regard to Bally corp's financial health, though ! If they're willing to forego $500 in future earnings over the next two years in order to accelerate current year cash flow by $1800 or whatever, that's a pretty good indication that all is not well at Bally, and that buying some Bally put options might not be a bad investment LOL !

  5. #5
    PhillyDancer1982
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    Default Re: Should I pay off loan early?

    Thanks guys for the advice. I also asked my friend M--k, and it's unanimous...I will pay off the loan early. I was just concerned because of what a credit counselor told me. A few months ago, I called up my credit union's credit counseling center to ask them if they thought it'd benefit my credit to pay an extra chunk on my Bally's loan or to get an additional personal loan to further build credit, and they said it wouldn't do anything. But yeah, the money savings does make it worth it!

    My friend M--k said that his gym offered him a similar deal, and that a lot of gyms do that for the customers who have been paying consistently on-time. Sitri, I agree with you that Bally's is reporting this "utility/service" as a loan to scare people so they won't default on payment. I remember talking to a customer about Bally's, and he said that he stopped going and stopped paying his contract. They sent the remaining balance of the contract to collections but the collections account never showed up on his credit reports, surprisingly. It's probably too many guys like that, that have caused Bally's to take more preventive measures. And Melonie, you're probably right too about Bally's going through hard times and needing the money so quick.

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    Featured Member Vamp's Avatar
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    Default Re: Should I pay off loan early?

    I would ask them directly how this would effect your credit score. If the person your talking to doesn't know have them find someone who does. I would also ask them why it is even appearing on your credit report.

    If Bally needs money it would make no sense why they would deprive themselves of $500.

    Generally if someone decides to pay off a loan for a lesser amount it is called a settlement. A settlement amount will effect your credit negatively. I would be sure that wasn't going to happen.

    Instead of guessing I would go directly to the source to be sure.

  7. #7
    PhillyDancer1982
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    Default Re: Should I pay off loan early?

    Good point about it possibly being recorded as a "settlement." Settlements are generally for people who have charge-offs, collections, or general account delinquencies, correct? I've been paying on-time for nearly a whole year now, the last thing I'd want to do is have it recorded on my credit as a "settlement" and pay income tax on the $500 I'd save, when I coulda afforded to keep up the payments for the rest of the time. I should call them. As far as the effect on my credit, my credit union's credit advisors told me that I shouldn't pay extra towards my Bally's loan, that I should "leave it alone" and just pay it off over time so it reflects a long credit history with them. Then again, that was months ago they told me this. The credit analyzer that comes with my credit score, showed that my score would go DOWN 1pt with Experian and up 1pt with TransUnion...basically seems to be no change. Maybe I should ask someone else.

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