Beware Of Debt Consolidation Companies
Posted April 6, 2010 – 9:57 am in: LoansEducating yourself on the debt consolidation process is one of the best ways to keep from being scammed by dishonest debt consolidation companies. There are warning signs that can help keep you from falling prey to one of these companies.
Quote Unusually Low Monthly Payments: A debt consolidation company works with the creditors with the intention of lowering your rate of interests. The creditors would have already predetermined how much could be reduced from the rate of interest. It means that all consolidation programs would get you the same rate of interest. But from 2004 the creditors have declined to accept the reduced minimum monthly payments. Companies who promise you less monthly payments may give you low figure. But eventually they will increase the amount once you are pulled in to the program. Therefore instead of comparing the monthly payments, you are advised to request the company for fees on their service.
Demand All Debts Be Included: Companies may demand that all your debts be included in the debt consolidation. But they may not have your interest in their mind. For, some loans such as credit union loans are not eligible for lower interest rates. Loans like, student loans, may have a lower rate of interest. If you include all your bills in the monthly payment, the company will charge you a higher fee in the name of more accounts as handling charges. Therefore, before committing yourself for a program, think twice on the accounts that could be consolidated for lower rate of interest.
Require A Large Upfront Payment - A commonly used scam in debt consolidation is charge a large fee in advance of hundreds, even thousands of dollars. A few offer to refund such a fee after their customers finish, but in reality people rarely compete these programs. Be aware of this tactic and make sure you don’t end up spending any more then absolutely necessary to put yourself in the best possible financial standing.
Flat monthly rates are charged by non profit debt consolidation companies, as these companies are often subsidized by financing companies. Companies taking a profit from debt consolidation services will usually charge a competitive fee along with their flat monthly charge.
Beware Of Debt Settlement Plus Other Services. If a company offers not only debt consolidation, but also credit settlement, credit repair, plus multiple other services it is very likely that company is a scam. Look through your options to see what the best financial decision is for your. Sometimes bankruptcy is the best option while in other cases, you can handle the debt settlement yourself for free.
Request Account Numbers First: You must be highly suspicious of any company that asks for your account numbers, social security number, or other personal information before providing a quote. If you give all these details just like that it will lead to identity theft and you will be the looser. Simply providing name of the creditor, balances and rate of interest will be enough to get an accurate quote.
Layla Vanderbilt is the webmaster for a leading website that offers for debt consolidation advice and guidance.
categories: Debt,Bad Debt,Finance,Loans,Credit Cards,Personal Finance,Money,Money Management
