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— Slide 9: Using Your BLOC as a Banker —
Let's Demonstrate How You Can Become a Bank

Say your child just graduated from college and landed a great job downtown. H/she wants to finance a car purchase for $15,000; but it will require you to co-sign for the note. The loan terms are as follows:

Loan Amount: $15,000
Bank Rate: 7.45%
Repayment Term: 48 months
Monthly Payment: $362.33

You have two options:

  1. Co-Sign for the Note:
    you can co-sign for the auto loan and let your child make the monthly payments as scheduled. The bank will earn all of the interest paid on the loan.

    If your child misses a payment or two, your credit record will reflect that (since you are the co-borrower).

    If your child fails to make scheduled payments, the bank will require you to make the payments.

  2. You can use your BLOC to Finance the Auto:
    you can use your BLOC to finance the auto. Your child will be responsible to you for the monthly payments. All of the interest on the loan will be coming to you.

    In the event your child misses a payment or two, your credit record is protected since your income deposits are constantly paying your BLOC account.

    If your child fails on the loan, you are in a better position since you will be paying your BLOC instead of the bank.

    Example:
BLOC Account
Starting Credit Line Balance: $60,000

Month		 BLOC Activity
Advances from BLOC
Payments to BLOC
Balance Owned
Aug Beginning Balance     $500
Aug BLOC Advance on Auto $15,000   $15,500
Aug BLOC Living Expenses $4,000   $19,500
Aug Pay Paycheck   $5000 $14,500
Aug Pay Auto Payment   $362 $14,138
Total Month Activity $19,000 $5,362 $14,138
Sep Total Activity $4000 $5362 $12,776
Oct Total Activity $4000 $5362 $11,414
Nov Total Activity $4000 $5362 $10,052
Dec Total Activity $4000 $5362 $8,690
Jan Total Activity $4000 $5362 $7,328
Feb Total Activity $4000 $5362 $5,966
Mar Total Activity $4000 $5362 $4,604
Apr Total Activity $4000 $5362 $3,242
May Total Activity $4000 $5362 $1,880
Jun Total Activity $4000 $5362 $518
Jul Beginning Balance     $518
Jul BLOC Living Expenses $4000   $4,518
Jul Pay Paycheck   $5362 $(844)
Total Year Activity $63,000 $64,344 $(844)

 

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