Bad Debt Consolidation Is Thelmost Like The Fairytale.
Lower your interest rates. Cut your payments in half. We will save you money. You have heard all of this from bad debt consolidation companies.
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.
These are tempting promises that appeal to anyone who is drowning in debt. These people are willing to do whatever it takes to get out of it. Here is a list of things to consider before you contact one of these companies.
Three bad moves you can make.
First is the hard money loan. These companies lead you to believe that any can consolidate their debt. This is not true. If you are looking for a loan, you are probably already having trouble with a current loan, which has affected your credit score. What happens is that the consolidator offers you an easy loan but charges you an outrageous interest rate like 22 percent. So, your monthly payment is lower but less money is going towards your debt and more towards interest. In the end, you are paying more than you were initially.
Second, is the consolidators who claim to handle everything. They promise to make your life easier by getting you lower interest rates and lower the monthly payment. All you have to do is give them a onetime setup 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.
Creditors are infamous for intimidating debtors. Because of this, many debtors avoid any contact with their creditors. You decide to deal with a debt consolidation company instead. They all offer the same services but think about this. They estimate that you will spend 32 years paying off your debt by yourself. They say they can do it in 4 and half years. Sounds good until, you do the math.
Get a calculator or find one on the internet and put in the numbers. You are going to find that you can pay off your debt faster on your own.
Debt consolidation companies also have a reputation for making late payments or missing them all together. What is purpose in using their service?
Finally, do not transfer balances from one credit card to another. In the beginning you may have a lower interest rate but it is only an introductory offer. To keep a low rate, you would have to constantly switch cards. This has a negative impact 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.
Alternative options are negotiating, personal loans or refinancing your car. - 23218
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.
These are tempting promises that appeal to anyone who is drowning in debt. These people are willing to do whatever it takes to get out of it. Here is a list of things to consider before you contact one of these companies.
Three bad moves you can make.
First is the hard money loan. These companies lead you to believe that any can consolidate their debt. This is not true. If you are looking for a loan, you are probably already having trouble with a current loan, which has affected your credit score. What happens is that the consolidator offers you an easy loan but charges you an outrageous interest rate like 22 percent. So, your monthly payment is lower but less money is going towards your debt and more towards interest. In the end, you are paying more than you were initially.
Second, is the consolidators who claim to handle everything. They promise to make your life easier by getting you lower interest rates and lower the monthly payment. All you have to do is give them a onetime setup 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.
Creditors are infamous for intimidating debtors. Because of this, many debtors avoid any contact with their creditors. You decide to deal with a debt consolidation company instead. They all offer the same services but think about this. They estimate that you will spend 32 years paying off your debt by yourself. They say they can do it in 4 and half years. Sounds good until, you do the math.
Get a calculator or find one on the internet and put in the numbers. You are going to find that you can pay off your debt faster on your own.
Debt consolidation companies also have a reputation for making late payments or missing them all together. What is purpose in using their service?
Finally, do not transfer balances from one credit card to another. In the beginning you may have a lower interest rate but it is only an introductory offer. To keep a low rate, you would have to constantly switch cards. This has a negative impact 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.
Alternative options are negotiating, personal loans or refinancing your car. - 23218
About the Author:
Layla Vanderbilt is the webmaster for a leading website that offers for debt consolidation advice and guidance.
posted by X - Men @ 2:08 AM
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