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.
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.
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.
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.
This could not be farther from the truth. They make your payment to the creditor and the creditor gives them anywhere from 10 to 15 percent of your payment. Think about that. You are paying a fee every month if you think about it.
You can negotiate for lower interest rates and stretching out your payments on your own. Do you really want to pay someone else to do it for you?
Creditors are known for threatening debtors. Knowing this, you probably do not want to deal with them but, think about it this way. If you talk to several consolidation companies, you will find they all offer the same thing. Here is the kicker though. They tell you that it can take 32 years for you to pay off your debt on your own. They offer to cut that time down to 4 and 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 making late payments or missing them all together. What is purpose in using their service?
When you initially transfer balances from one credit card to another with lower rates you may believe that you are doing the right thing. Unfortunately, the lower rates are for a limited time only. In order to keep a low rate, you will have to apply for another card again and again. This type of activity makes you look like a credit risk and definitely hurts your credit score.
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. - 29866
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.
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.
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.
This could not be farther from the truth. They make your payment to the creditor and the creditor gives them anywhere from 10 to 15 percent of your payment. Think about that. You are paying a fee every month if you think about it.
You can negotiate for lower interest rates and stretching out your payments on your own. Do you really want to pay someone else to do it for you?
Creditors are known for threatening debtors. Knowing this, you probably do not want to deal with them but, think about it this way. If you talk to several consolidation companies, you will find they all offer the same thing. Here is the kicker though. They tell you that it can take 32 years for you to pay off your debt on your own. They offer to cut that time down to 4 and 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 making late payments or missing them all together. What is purpose in using their service?
When you initially transfer balances from one credit card to another with lower rates you may believe that you are doing the right thing. Unfortunately, the lower rates are for a limited time only. In order to keep a low rate, you will have to apply for another card again and again. This type of activity makes you look like a credit risk and definitely hurts your credit score.
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. - 29866
About the Author:
Layla Vanderbilt is the content coordinator for a leading website that offers for instant bad debt consolidation advice and guidance.
