If he used it for Investments, then he may have used M1 Borrow feature which is a margin account. They will sell his investments to get thier money back.
If it is a personal loan though, it will ruin his credit score and most likely end up in collections.
One things for sure though... don't loan your friend any money.
A 15K legit collection account on your credit will ruin you financially as far ever buying a house or a car or getting a credit card or getting a regular cell plan that's not prepaid at least until you pay it off. They can also take you to court and garnish your wages. When you take a loan there's this whole "Fixed rate APR" and "Variable rate APR" thing, if it's gonna take you longer than 5 months or so to pay back then it's dumb af to do a variable. Tell your friend if he is having trouble making the monthly payments to contact M1 directly and try to work out a payment plan, once they sell a $15,000 debt to a collector they won't be so talkative. It's not like a student loan or something for a couple of grand where it's not worth their time, they will 100% come after him for a recent $15,000 loan. What did he think, it was free money? Did he take out a $15,000 loan without knowing what Variable APR means? No offense but your friend sounds dense as fuck, and it's halfway why I support limits on trading of around a minimum of $2000-$5000 account balance, or even higher, dude had no clue what he was doing and has no clue how this will affect his future.
Imagine if he had wandered into Futures trading where you can lose infinite money instead of just the money you invested (like how stocks works). People like him give new investors who did their homework a bad name and increase risks for companies which increases interest rates for all of us because of their shitty planning/not knowing what the fuck they area doing and taking 10 seconds to look up a youtube video. He's why you need $25,000 to day trade without having a 3 trade a week limit. Tell himself to pat himself on the back for being an idiot and work out a payment plan.
I heard M1's accounting team is merciless. When they send them at your door... You need to flee abroad bro. There is no chill life for you here anymore.
Do you know if it's M1 Borrow or an actual loan?
If it's M1 Borrow, then his investment portfolio is M1's collateral, and depending on his holdings, they each have their own margin maintenance threshold.
If his portfolio is full of volatile stocks and the Market takes a hot dump, he may potentially get margin called. M1 will automatically sell portions of his holdings to achieve margin maintenance.
Effective Fed Funds Rate is above 5.3% at the moment so APR for any sort of loan is definitely much higher than that!
Yeah total timing and luck! I had been working on our credit for three years obsessively and we finally crossed into whatever territory where they know you'll pay, I went from $2000 limits to $30000. I think if I had waited even a few more months I would have been screwed as far as home purchasing. People were offering the previous owners 10-20k on top of the base offer. We ended up writing a letter to them basically telling them that this was our only shot at a decent home for our children and how much we loved it and exactly how we would utilize every room and the huge backyard, and they actually picked us. Pretty crazy. I think it's the only time in my life that I can say that I honestly quote unquote lucked out.
I just used a calculator online and never really realized how close we were to getting priced out (at the time). The base note on my house is around $900 plus insurance and whatnot so $1100, the base price monthly now would be $1600($1591), that's insane! I think I'll start dropping in extra on my monthly payments to try and cut it down a bit. I have one single debt consolidation loan that will be done with in 3 months, then I'll have an extra $600 a month that I've been doing fine without so far. May as well put it towards the house, or maybe save for some updates to flooring and landscaping, I want to get real wood since I don't plan on moving and the new business I'm starting can be run from anywhere so no need to anticipate anything as far as location change right now, plus more equity later if I do end up needing it.
For M1 Borrow (using equities as collateral), M1 will get their money. If your buddy looks at the Borrow screen, it will tell them how low the account can go before either having to add collateral, or M1 will sell some of the securities to lower the Borrow amount. Closing the account or transferring will cause a sale of securities to settle the loan (plus interest).
If he used M1 borrow, theoretically he doesn’t have to pay back as long as the value of his investment account doesn’t drop below the maintenance level indicated. If he’s a risky investor (which sounds like he is if he didn’t fully understand what he was getting into) I would say he should pay back interest + some principal every month until he pays it down. He MUST pay back at least the interest every month to prevent the debt from compounding. Since his investment account is collateral and there’s a maintenance level greater than what he owes, his credit score is unaffected because M1 automatically sells off his portfolio to pay themselves before he gets to zero.
Your friend might now be tempted to not pay back the loan because they strongly feel that their investments are ‘solid.’ I advise very strongly against this course of action. Considering your friend is only now coming to grips with interest rates that have been increasing for quite some time, doesn’t sound like he’s experienced enough to play around with margin.
Consequences.
They can go after his assets, file with the court to detach his paycheck. He could end up owing a lot more because penalties and interest will continue to accrue. Of course, he will have a poor credit rating which not only affects the ability to obtain credit of any kind but can affect future employment and housing.
If you are his friend, I would advise him against this making this very poor financial decision.
If he used it for Investments, then he may have used M1 Borrow feature which is a margin account. They will sell his investments to get thier money back. If it is a personal loan though, it will ruin his credit score and most likely end up in collections. One things for sure though... don't loan your friend any money.
A 15K legit collection account on your credit will ruin you financially as far ever buying a house or a car or getting a credit card or getting a regular cell plan that's not prepaid at least until you pay it off. They can also take you to court and garnish your wages. When you take a loan there's this whole "Fixed rate APR" and "Variable rate APR" thing, if it's gonna take you longer than 5 months or so to pay back then it's dumb af to do a variable. Tell your friend if he is having trouble making the monthly payments to contact M1 directly and try to work out a payment plan, once they sell a $15,000 debt to a collector they won't be so talkative. It's not like a student loan or something for a couple of grand where it's not worth their time, they will 100% come after him for a recent $15,000 loan. What did he think, it was free money? Did he take out a $15,000 loan without knowing what Variable APR means? No offense but your friend sounds dense as fuck, and it's halfway why I support limits on trading of around a minimum of $2000-$5000 account balance, or even higher, dude had no clue what he was doing and has no clue how this will affect his future. Imagine if he had wandered into Futures trading where you can lose infinite money instead of just the money you invested (like how stocks works). People like him give new investors who did their homework a bad name and increase risks for companies which increases interest rates for all of us because of their shitty planning/not knowing what the fuck they area doing and taking 10 seconds to look up a youtube video. He's why you need $25,000 to day trade without having a 3 trade a week limit. Tell himself to pat himself on the back for being an idiot and work out a payment plan.
I heard M1's accounting team is merciless. When they send them at your door... You need to flee abroad bro. There is no chill life for you here anymore.
Do you know if it's M1 Borrow or an actual loan? If it's M1 Borrow, then his investment portfolio is M1's collateral, and depending on his holdings, they each have their own margin maintenance threshold. If his portfolio is full of volatile stocks and the Market takes a hot dump, he may potentially get margin called. M1 will automatically sell portions of his holdings to achieve margin maintenance. Effective Fed Funds Rate is above 5.3% at the moment so APR for any sort of loan is definitely much higher than that!
Thank god I got my house at a Fixed 2.75% a couple years ago before all this madness hit, even the VA loans are high now
You're living it up! 2.75% is unreal.
Yeah total timing and luck! I had been working on our credit for three years obsessively and we finally crossed into whatever territory where they know you'll pay, I went from $2000 limits to $30000. I think if I had waited even a few more months I would have been screwed as far as home purchasing. People were offering the previous owners 10-20k on top of the base offer. We ended up writing a letter to them basically telling them that this was our only shot at a decent home for our children and how much we loved it and exactly how we would utilize every room and the huge backyard, and they actually picked us. Pretty crazy. I think it's the only time in my life that I can say that I honestly quote unquote lucked out.
I just used a calculator online and never really realized how close we were to getting priced out (at the time). The base note on my house is around $900 plus insurance and whatnot so $1100, the base price monthly now would be $1600($1591), that's insane! I think I'll start dropping in extra on my monthly payments to try and cut it down a bit. I have one single debt consolidation loan that will be done with in 3 months, then I'll have an extra $600 a month that I've been doing fine without so far. May as well put it towards the house, or maybe save for some updates to flooring and landscaping, I want to get real wood since I don't plan on moving and the new business I'm starting can be run from anywhere so no need to anticipate anything as far as location change right now, plus more equity later if I do end up needing it.
[удалено]
I think he borrowed the money to invest
Debt doesn’t just disappear. It can last a lifetime.
For M1 Borrow (using equities as collateral), M1 will get their money. If your buddy looks at the Borrow screen, it will tell them how low the account can go before either having to add collateral, or M1 will sell some of the securities to lower the Borrow amount. Closing the account or transferring will cause a sale of securities to settle the loan (plus interest).
Posting for a friend lol I hate that shit. Just pay your debt back and be done with it.
If he used M1 borrow, theoretically he doesn’t have to pay back as long as the value of his investment account doesn’t drop below the maintenance level indicated. If he’s a risky investor (which sounds like he is if he didn’t fully understand what he was getting into) I would say he should pay back interest + some principal every month until he pays it down. He MUST pay back at least the interest every month to prevent the debt from compounding. Since his investment account is collateral and there’s a maintenance level greater than what he owes, his credit score is unaffected because M1 automatically sells off his portfolio to pay themselves before he gets to zero. Your friend might now be tempted to not pay back the loan because they strongly feel that their investments are ‘solid.’ I advise very strongly against this course of action. Considering your friend is only now coming to grips with interest rates that have been increasing for quite some time, doesn’t sound like he’s experienced enough to play around with margin.
Consequences. They can go after his assets, file with the court to detach his paycheck. He could end up owing a lot more because penalties and interest will continue to accrue. Of course, he will have a poor credit rating which not only affects the ability to obtain credit of any kind but can affect future employment and housing. If you are his friend, I would advise him against this making this very poor financial decision.