Bad Debt Consolidation Is Quite Like The Fairytale.
You are going to be able to save money and lower your rates and payments at the same time with bad debt consolidation. A company will do it all for you.
People that are in a bad financial situation dream of this being a reality. Look at all the businesses that offer this service. Mailings and advertisements are everywhere for consolidating debt.
They tell you that debt relief is a simply click away, or cut your payments or interest rates in half.
No one wants to be in debt and these companies know that. So, they offer to help you get out of debt which is very tempting but there are several facts that you need to know before you take this route.
There are three bad consolidation moves that you might take
If you want to consolidate your debt, you probably are already behind on loans. You can get a consolidation loan but the interest rate is going to be extremely high. In reality, you have lowered your payments but you are spending more on the interest. So, you end up paying longer which means paying more.
Consolidation companies claim to take the hassle out of dealing with creditors. As stated before, they claim to decrease interest rates and your payments. There is one catch. You have to pay a small fee upfront and they claim it is a one time fee.
For the most part, your monthly payment includes a fee that you will pay to them. It is about 10 percent of your payment. They make your payments and receive 10 to 15 percent back from your creditor.
You can negotiate with your creditors at no cost so why pay someone to do it.
To those in this situation, it probably sounds like a good idea, especially considering the scare tactics that these companies like to use. Talk to a couple of companies and see what they tell you. They all offer similar programs. If they tell you that it is going to take 32 years for you to pay off your debt and they can cut that down to 4 and a half years, look for a financial calculator on the internet.
When you find one, put the numbers in. There is a good chance that you are going to find out that you can pay it off faster not using these companies.
Debt consolidation companies also have a reputation for missing payments. Isn't that what you are trying to stop?
The final bad move is the balance transfer. They pull you in by offering low interest rates. The problem is that these interest rates are only for a set amount of time. So, in order to keep a low rate, you have to switch again. All this activity looks bad on your credit.
If you decide to transfer the balance, contact the credit card companies, tell them to close your account. Make sure they know to put closed at customer's request.
There are some good moves you can make to help with your bad debt situation.
For a tax deduction and low rates, you might apply for a home equity loan. Use this money to take care of your debt.
You can also refinance your home if you have equity built up. Pay off your debt with the money you receive.
Several other option are refinancing your car, getting a personal loan and negotiating for better interest rates. - 23159
People that are in a bad financial situation dream of this being a reality. Look at all the businesses that offer this service. Mailings and advertisements are everywhere for consolidating debt.
They tell you that debt relief is a simply click away, or cut your payments or interest rates in half.
No one wants to be in debt and these companies know that. So, they offer to help you get out of debt which is very tempting but there are several facts that you need to know before you take this route.
There are three bad consolidation moves that you might take
If you want to consolidate your debt, you probably are already behind on loans. You can get a consolidation loan but the interest rate is going to be extremely high. In reality, you have lowered your payments but you are spending more on the interest. So, you end up paying longer which means paying more.
Consolidation companies claim to take the hassle out of dealing with creditors. As stated before, they claim to decrease interest rates and your payments. There is one catch. You have to pay a small fee upfront and they claim it is a one time fee.
For the most part, your monthly payment includes a fee that you will pay to them. It is about 10 percent of your payment. They make your payments and receive 10 to 15 percent back from your creditor.
You can negotiate with your creditors at no cost so why pay someone to do it.
To those in this situation, it probably sounds like a good idea, especially considering the scare tactics that these companies like to use. Talk to a couple of companies and see what they tell you. They all offer similar programs. If they tell you that it is going to take 32 years for you to pay off your debt and they can cut that down to 4 and a half years, look for a financial calculator on the internet.
When you find one, put the numbers in. There is a good chance that you are going to find out that you can pay it off faster not using these companies.
Debt consolidation companies also have a reputation for missing payments. Isn't that what you are trying to stop?
The final bad move is the balance transfer. They pull you in by offering low interest rates. The problem is that these interest rates are only for a set amount of time. So, in order to keep a low rate, you have to switch again. All this activity looks bad on your credit.
If you decide to transfer the balance, contact the credit card companies, tell them to close your account. Make sure they know to put closed at customer's request.
There are some good moves you can make to help with your bad debt situation.
For a tax deduction and low rates, you might apply for a home equity loan. Use this money to take care of your debt.
You can also refinance your home if you have equity built up. Pay off your debt with the money you receive.
Several other option are refinancing your car, getting a personal loan and negotiating for better interest rates. - 23159
About the Author:
Layla Vanderbilt is the content coordinator for a leading website that offers for debt consolidation advice and guidance.
posted by X - Men @ 5:11 AM
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