# Unsecured LOC rates



## Sherlock (Apr 18, 2010)

Hey guys,

What are your unsecured LOC rates and with which bank? I'm not interested in HELOCs, or other situations that don't apply to me such as professional engineers, or high net worth individuals who get preferred banking services.

I have a 20k unsecured LOC with CIBC with a rate of 6.5%.

After finding out that others (not professionals and not high net worth) have rates of 4.5 and 5% on their unsecured LOC I called CIBC to ask to get my rate lowered. They basically told me that 6.5% is the best rate they can give me. They said the only way I MIGHT be able to get a lower rate is if I increased the credit limit significantly, but doing that would require me to justify why I needed a credit limit increase, ie I couldn't just ask for one for no reason. And I have no reason since even my current 20k limit is mostly unused. When I asked how others are able to have rates of under 5%, they said those must be HELOCs and refused to believe anyone could have a rate that low on an unsecured LOC. Also I have an RRSP with them and it has a balance of more than twice my LOC credit limit but they didn't seem to care. Why can't I use my RRSP to secure the LOC, how is that any different than somebody using real estate to secure it?

Anyone know how I can get a lower rate? Are there any tricks to negotiating a good rate? Should I just look into a different bank? I prefer keeping all my accounts with one bank but may consider a different one if the rates are a lot better.


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## Mall Guy (Sep 14, 2011)

You can't use registered funds as security as (1) there are complicated to get at and (2) they can be creditor proofed in some circumstances. My unsecured LOC is 5.25% vs my secure HELOC at 3.5%


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## Sherlock (Apr 18, 2010)

How'd you get 5.25? I would be very happy with that.


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## james4beach (Nov 15, 2012)

Sherlock, I'm interested in peoples answers to this too. Hopefully people will share which bank they're with.

Do you have any non-registered stock investments? ETFs? Bonds? GICs? Having these in a margin account will let you use the margin account like a LOC (securities as collateral) at interest rates of 4.5% down to as little as 2%


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## Sherlock (Apr 18, 2010)

No non-registered accounts yet, but I intend to open one soon as my tfsa is maxed out. Can you elaborate on how a margin account is used as a LOC? I mean with a LOC you can write checks, get bank drafts against it, pay your bills with it, etc, I don't think you can do any of that stuff with a trading account?


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## jcgd (Oct 30, 2011)

Mine is prime plus 2.5%. So 5.5% right now. That's the lowest I've seen advertised and they won't budge any lower. The manager said to try again in a few months when my credit is up a little. I had just doubled my LOC limit at the time.


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## liquidfinance (Jan 28, 2011)

Sherlock said:


> No non-registered accounts yet, but I intend to open one soon as my tfsa is maxed out. Can you elaborate on how a margin account is used as a LOC? I mean with a LOC you can write checks, get bank drafts against it, pay your bills with it, etc, I don't think you can do any of that stuff with a trading account?


From what I gather it's a case of withdrawing cash from your margin account to your chequing account to then use as you please. I think James started a thread on this a week or so back. A dangerous strategy as compared to a traditional LOC as you could be liable to a margin call.


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## Synergy (Mar 18, 2013)

I use an unsecured LOC at TD as my chequing account - acts as overdraft protection without any of the fees. I've never dipped into the line of credit itself and after checking my online account today, it appears that my current rate is 3.99% *as of Aug 16, 2013. Seems on the low side for an unsecured LOC and I recall just 1 yr ago it being somewhere around 5% (prime plus 2). I won't complain...


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## james4beach (Nov 15, 2012)

Sherlock said:


> Can you elaborate on how a margin account is used as a LOC? I mean with a LOC you can write checks, get bank drafts against it, pay your bills with it, etc, I don't think you can do any of that stuff with a trading account?


It's not a real LOC, you can't write cheques on it. The only thing you can do is transfer cash out of the margin account (e.g. transfer to chequing account). The negative cash balance in your margin account is a margin loan at 2% to 4.5% ish interest.

Key difference from your request (unsecured) is that the margin loan is secured by investments. Ability to borrow is directly tied to asset values.

For example my non-registered account has a mix of ETFs with value $10,000 and zero cash [normalized to illustrate]. I could transfer up to $7,000 out of this account at 4.25%. Again that's secured and subject to margin calls if the stocks decline, potentially quite dangerous. More details and pitfalls in this thread


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## JA2285 (Jan 25, 2011)

Unsecured LOC @ 3.5%. 35,000 limit with TD. Seems pretty low compared to alot of people now for some reason..


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## birdman (Feb 12, 2013)

$50,000. at P+ 0%. Unsecured.


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## pwm (Jan 19, 2012)

Unsecured at TD: 4.00%, with limit of $46,000.


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## Sherlock (Apr 18, 2010)

So how are you guys getting such good rates?


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## Beaver101 (Nov 14, 2011)

Sherlock said:


> Hey guys,
> 
> What are your unsecured LOC rates and with which bank? I'm not interested in HELOCs, or other situations that don't apply to me such as professional engineers, or high net worth individuals who get preferred banking services.
> 
> ...


 ... same here with CIBC @ 6.5% (prime +3.5%) but only $10K LOC (solicited by the bank) ... what a joke. When they magically increased the loan rate from 2.5% to 3.5%, I called to complain and was subsequently told by the bank's financial adviso "don't use it if you don't want to pay that rate". And so be it, I can shop elsewhere with no more business for this bank. :rolleyes2:

PS: If the bank is so concerned about your credit risk on the "unsecured" LOC to unable to justify a lower rate, they can simply look at your credit card payment history (with them) to guage your risk.


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## birdman (Feb 12, 2013)

I had a substantial amount of business with my BC Credit Union and mentioned to my account manager that I would like a 50,000 LOC and that they could hypothecate some deposits as security if they wished. However, they were comfortable without it and still provided me with the same rate. The only reason it is so much is in case I purchase securities, a car, or something and need a bit of time to come up with the cash. Its seldom used to any extent and has been in place for about 12 years. Unfortunately I have had a bit of a falling out with them over deposit rates and have moved about 70% of my business to another credit union. I have told the new institution that once all my business has been moved I will eventually need an LOC at prime and they didn't flinch. We'll see. Mind you, I did work for the credit union in question in a senior capacity before retiring 12 yrs ago.


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## Synergy (Mar 18, 2013)

Sherlock said:


> So how are you guys getting such good rates?


When I originally set-up my LOC (20K) about 3.5 yrs ago I don't recall negotiating a specific rate, I really had no plans on using it other than as a chequing account with overdraft. I'm going to make it a point over the next few weeks to schedule an appointment with my branch to see if there's anyway to bring my current rate down to prime and bump up the limit to 40 or 50K - no harm in trying.


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## alingva (Aug 17, 2013)

Synergy said:


> no harm in trying.


 There is, they will check your credit history and your score will be affected (not a big deal if you apply for credit only occasionally)


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## Karen (Jul 24, 2010)

I have an unsecured LOC with a maximum of $50,000 at Scotiabank @ 5%. It's my account in name only - my daughter had about $18.000 worth of business debt on a credit card at 19 1/2% and I opened this LOC because I could get a much better interest rate than she could have done. So she paid off her credit card balance, and she makes the payment every month without fail.


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## pwm (Jan 19, 2012)

I had a house built in 2003. I needed interim financing at TD and my unsecured LOC is left over from that. I didn't realize that 4.00% was that great, but it looks good compared to others. I have used it from time to time to buy investments, so it's good to see the rate is favorable.


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## Sherlock (Apr 18, 2010)

So everyone who has a good rate on an unsecured LOC opened their LOC at least a years ago when rates were lower?


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## birdman (Feb 12, 2013)

No. I opened mine 12 years ago when rates were higher and it floats with prime at Prime +0%.


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## Koala (Jan 27, 2012)

We just opened one at 5% (P+2%). I called around a few places and that appeared to be the lowest, but a few places offered it. It was opened at TD and we were told for an unsecured LOC that was the best rate.


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## alingva (Aug 17, 2013)

Rates are based on your credit history, relationship with your bank and assets, if you have unsec LOC P+2% - it is a very good deal. Usually it is much higher. Usually RBC offers P+4%, CIBC/TD P+2% or P+3% for their very good clients


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## Mall Guy (Sep 14, 2011)

frase said:


> $50,000. at P+ 0%. Unsecured.


I had a small ($15K) P + 0% at RBC, until one day I got a letter saying they were no longer offer that product and it was just gone . . .


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## marina628 (Dec 14, 2010)

My unsecured at TD was 4% but few months ago we got 2.99% and the bank manager was trying to get us to lock some of my Company cash in GIC .Really think it depends on how often you visit your branch and get to know people there .Go to CIBC and tell them you will move everything from TD they will probably give you a good deal


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## alingva (Aug 17, 2013)

marina628 said:


> Go to CIBC and tell them you will move everything from TD they will probably give you a good deal


 They do not care. Record profits cannot be from low interest rates they could charge


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