Red Flags to look out for in Debt Consolidating Companies

Are you behind on bills? Is the financial position of your business getting out of control? Have you done everything possible to keep up with your debts but they somehow keep on multiplying? If yes, then the underlying question is, how do you fix your problem (or problems)? For a great majority of borrowers, debt consolidation loan companies’ consolidation for your debts is the best solution ever.

A debt consolidation is a simple procedure that involves taking a new loan to offset your other debts (or loans). A debt consolidation loan gives business owners or other individuals the option of making one single monthly payment instead of having to deal with multiple payments on a monthly basis. Typically, it is the easiest and cheapest way to settle bills because it comes at a lower interest rate compared to other loans.

However, for the process to be a successful one, the borrower must get in touch with the crème de la crème of companies in the consolidation business. According to findings in the US market, there are several companies that are more focused on debt schemes and fraud stratagems, and because you cannot be sure whether a company is 100% legit, it is important that you keep your ears and eyes open.

Let’s say that you have a few debt consolidating companies in Las Vegas on your list but need to narrow down to one. Here are the red flags that you should look out for.

  • If the company is loud-mouthed and aggressive

Getting into a loan with someone or a company is a big decision. Therefore, take our time and shop around until you find that one company that is good for you. Sometimes, you might find companies that are pushy and aggressive, especially by trying to prove how good they are; stay away from such companies. Most of the time, such companies will not have your best interests at heart.

  • If the company is more focused on other things other than debt consolidation

Don’t be surprised to find that several companies that claim to deal with debt consolidation actually don’t offer consolidation services. Debt consolidation is not about lowering the amount owed but transferring the debts due to a new and manageable loan.

So, if you come across a company that is more concerned about lowering your debt, walk out of the door; that is not debt consolidation.

  • If the company says that your debt issues are a quick fix

Getting out of debt is never an easy or quick fix. Any company that insists that consolidating your debts will be as easy as pie is not worth your time. Don’t get me wrong though; you may still be able to get out of debt but according to different reviews, it will take time depending on the borrower’s diligence.

  • If you are uncomfortable in any way

Did you know that once you enter into a debt consolidation agreement, you cannot get out of it? Well, that is the truth. Therefore, before you take that leap of faith, check all your nerves and listen to your instincts. If you are all in agreement and have confidence in a specific company, go for it. And if not, back out.

 

Debt Consolidation and Its Impact on Credit Score

If you are like most Americans, you would perhaps not be a stranger to credit card debt. If you are having trouble in keeping track of multiple debts and making the payments on time, then you have several options for managing the situation. One popular way is consolidating your debt; however, simple as the process may be to understand and implement, it should be appreciated that it can have an impact on your credit score.

Consolidation Explained

In simple terms, consolidation of debt entails taking out a new loan of a value equivalent to your existing multiple debts so that you can pay them back. After you do so, you are left with just a single debt requiring a single monthly payment to pay it off. The reason why it is so popular is because you can invariably switch to a loan that carries a significantly lower rate of interest compared to the really steep rates charged by the typical credit card issuer. Getting a consolidation loan is also a perfect opportunity to structure your debt in such a way that the monthly payment to be made is now within your budget. This is done by stretching the loan longer but you should be careful not stretch the tenor beyond what you really require as you will end up paying a lot more interest over the loan period.

How Can You Consolidate Your Debt

Consolidation can be achieved using a number of routes. Firstly, you could consider sweeping all your credit card outstanding to a card that carries a lower rate of interest so that you not only achieve the mission of having only one debt but also lower your interest expense.

Another route is by taking a loan that is secured by your home; such loans carry a low rate of interest but you really need to be careful in paying back the loan as per schedule, else you could end up losing your home, so usually this is not recommended unless you are absolutely certain that there will be no hiccups in the loan repayment. The most-favored route is the personal loan taken from a private financier, a bank, or a credit union.

Impact of Debt Consolidation on Your Credit

The extent of the impact of debt consolidation on your credit depends on the option being chosen. Remember that when you apply for a loan or even a new credit card, your score will take a hit due to the inquiry. However, since the credit score also depends on the credit utilization that is basically the ratio of debt taken by the allowable limit, by taking on a new card, you can actually reduce your utilization and improve your credit score. However, it is also important to keep in mind that if any card has a very high outstanding, it will depress the credit score, so your score could actually take a hit even though you have paid off all other cards fully.

On the other hand, if you take a consolidation loan to pay off your credit card debt, your utilization ratio will dip and as a result, the credit score will be boosted. However, for this to take place, you should ensure that you keep your credit cards open even after the balances have been paid off.

Conclusion

Consolidation of debt can be a very useful strategy to restructure your debt so that you can pay it off without stressing yourself. Selection of the route is important as there could be a negative impact on your credit score. The least harmful way is to take on a personal loan, pay off your credit cards, and hope that with time, your credit score will improve. It is also very important not to start using your credit cards recklessly now that they have been paid off.

 

 

Debt Consolidation for Effective Debt Reduction

stop living paycheck to paycheckAre you neck-deep in debts? Is your ever-mounting debt getting out of hand? If yes, you must look for an effective solution before things get worse and you are in a deeper financial mess. Do not allow your debts to overpower you and become bad debts because before you realize it, they would make your life real hell.

The best possible way to get rid of them is to pay them off as quickly as possible. You must opt for consolidating your debts. Try consolidating all your loans and opt for an effective consolidated debt loan. Prior to opting for a consolidated debt loan, you need to make a proper and comprehensive list of all your debts. You may be wondering as to how to get going with the list. Preparing the list is not a big deal at all. Here are some effective ways of handling the situation.

Prepare a Comprehensive List of Debts

You need to have a list comprising all credit card statements you are having. If you are having multiple credit cards, then you need to get all the statements in order for each one of them. Once you have all of the statements together, you must calculate the total debt amount you are currently using. You need to examine your statements and find out how much you are paying in terms of interest. Once you know that, all you need to do is to make a list of all your credit card debts from highest to lowest interest rates. This would be a great way to make a start.

Consult an Expert for a Consolidated Debt Loan

Once you have prepared the list, you should be able to determine your next course of action. You should take appropriate measures on your own but if you are unsure about what to do next and how to go about it, it is a good idea to get in touch with a financial consultant who could assist you with  some expert tips and guide you every step of the way. Though you may end up spending some money, it could be a fruitful idea to consult a financial expert. He would be giving you some professional advice on how to go about debt consolidation. He would help you in getting the most-suited consolidated debt loan. For identifying the most suitable loan, you must do ample research. You must have sound knowledge about all the terms and conditions involved and precise interest rates that are applicable to your consolidated debt loan.

Loan Application Process

Once your research is done, it is time for the loan application. If you have done the research and are ready with the papers and relevant documents, your loan application should be approved but in case it is not, you could consider something else such as credit counseling agencies. However, if your loan has been approved, you must pay off all your debts at the earliest possible. Once your debts are paid off, make a stern resolution not to get into debts ever again in future.

Loan Payment Details

You must be very careful and alert regarding the actual interest rate charged on your consolidated debt loan. Read through the loan agreement or contract meticulously and see if there are any hidden fees. Go through the fine print carefully. You must stick to paying an amount each and every month to ensure hassle-free debt payment within a short period of time. If you fix and divert a relatively high amount towards monthly EMI or repayments, it would be effectively slashing down the time period required for paying off the debt. Develop new healthy habits. Do not use your credit cards unnecessarily on frivolous expenses.

Conclusion

If you are opting for debt consolidation, you should be paying off the debt fully. Many people who have opted for consolidated loans often think that they now have access to debt relief so they could enjoy shopping and go overboard with their so-called new money. This is a big mistake. The loan money is strictly for paying off all your debts so that you could start afresh without any debt burden. However, you must remember that people who have opted for consolidated loans necessarily, need to assess their lifestyle and alter spending habits by making slight adjustments to ensure a debt-free existence in future.

Debt Consolidation FAQs to Help You Decide If Is Right for You

For people who are deeply mired in debt, debt consolidation is often suggested as a practical and viable way of sorting out their financial mess. However, there are a number of aspects that you need to consider to establish if debt consolidation is the right route for you. Some common questions:

How Does Debt Consolidation Help?

Debt consolidation can have a number of benefits for you; you can manage your finances better as due to the debt restructuring possible, the monthly payment can go down to an affordable level, you no longer have to monitor multiple debts, and you can get a longer tenor to pay off your debt. As a result, your stress levels can go down and you can enjoy a good night’s sleep.

What Are the Advantages of Debt Consolidation?

There are innumerable ways by which you can accumulate debt; credit card bills, medical expenses, cash advances, and payday loans represent some of the most common ways you can run up debt that can prove to be very difficult to manage. By opting for a debt consolidation plan that you can afford comfortably, you can ensure that your debts are serviced properly and you are able to save something by the end of every month. To ensure that you are not wasting your precious money, you should identify a debt consolidation company that does not charge any signup or registration fees. Referring to online debt consolidation reviews is a good way of doing that. Opting for an ethical debt consolidation company can get you access to expert and unbiased advice on how to best manage your finances and save you from filing for bankruptcy that can end up ruining your credit score for a very long time.

How Much Can Be Saved By Consolidating Credit Card Debt

Credit card issuers are infamous for charging extremely steep interest rates on credit card outstanding. It is quite possible to save a few thousand dollars on interest expense if you can consolidate $25,000 in credit card debt and pay it off with a personal loan in about 24-48 months’ time. This is possible because usually there is a huge difference in the interest rates between credit cards and personal loans.

Is a Debt Consolidation Loan a Better Option?

While you may be tempted to move credit card debt from one credit card to another to take advantage of a lower rate of interest, you will find out that when compared to a debt consolidation loan, the interest rates charged are still very high. Also, credit card companies have the habit of keeping on changing the APR periodically, so you may find the advantage of the low-interest rate disappearing just after a few months. However, to qualify for a debt consolidation at a good rate of interest, you need to have a good credit score, which may not be possible if you have let things slide and missed a payment or two on your credit cards. Also, having swept all your credit card debt into a debt consolidation loan, there is always the temptation to go wild with your credit cards and rack up huge dues again.

How Does Debt Consolidation Affect My Credit Score?

Maintaining a good credit score is extremely important because the ability to take on future debt depends on how high it is. However, often it can become very difficult for you to service credit card dues when they are attracting interest that is as high as 30% and it is natural for you to miss a payment to two, and this is bound to negatively impact your credit score. If you have maxed out your credit cards and take on a debt consolidation loan to settle all the outstanding, it can only positively affect your credit score. However, you should be careful that if the company you approach settles your credit card dues with the card companies for less than the full balance, there will be a negative impact on your credit score for some time.

Conclusion

Debt consolidation can be a very effective way of getting out of a debt trap because of its inherent advantages of being able to take on a loan at a lesser rate of interest as well as the opportunity of being able to restructure the loan tenor to suit affordability and budget.

Author bio: Graham Sheldon is an experienced personal finance consultant working for a leading debt relief company. Graham has also compiled a number of debt consolidation reviews that are a valuable resource for individuals looking for reliable agencies.

Debt Consolidation Loans – All You Need to Know About Student Loan Consolidation

Are your federal education loans bogging you down? Are you looking for a manageable way to repay these debts? Have you tried debt consolidation? You should! Student loan consolidation provides a means for you to cut down your education debts and lead a manageable life.

Even though it extends the loan’s lending time, a debt consolidation loan reduces your monthly payments creating an easier means of student loan repayment. In essence, consolidating student loans is a means of refinancing the loan. Since you may not have enough money to pay for your living expenses and to repay other debts, student loan consolidation will make it possible for you to repay the loans even when you have little disposable income.

Who qualifies for student consolidation loans?

As you know, there are private and federal education loans. Holders of these types of loans are eligible for debt consolidation though the cases are handled differently.

The difference between these two loans is that the federal education loans offer the easiest and the most beneficial consolidation processes. They often have increased payback terms lowering monthly repayment costs. If you have more than one of this, then you may consider getting the loans consolidated.

On the other hand, private education loans are granted and therefore managed by your regular lending financial institutions like banks, state agencies, and college foundations. As a result, they attract higher interest rates which can be variable or fixed. These loans are credit based. This means that your credit score is factored in. Good credit scores equal lower interest rates and vice versa. Low credit score holders are considered a high credit risk.

In line with these differences, you should never consolidate private and federal education loans together.

How to consolidate federal education loans

  1. Get a professional evaluation

The first and most important thing to do is to get your finances evaluated by a professional. Have a sit down with a trusted financial professional and give them details of your whole financial situation.

Your consolidation options and the amount of money you will qualify for is determined by the amount owed and your overall difficulty in fulfilling your current monthly obligations.

This is an important step even when you don’t feel the financial pressure from the student loan. A consolidation plan is a sure path to freeing up more cash through a structured payback system.

  1. Weigh your options

Your options depend on the payment plan you wish to take up. The payment plan can be contingent on your income. In other cases, you have the option of choosing a payment plan that stretches a long time but has the lowest and most affordable repayment costs. These options will be laid out for you by your chosen counsellor or debt consolidation consultant and you’ll have to pick the one that suits you best.

For this process to be fully implemented, you should have your student loan details. These include the login information and the account’s PIN. With this, your consultant will have a clear view of your current situation and how to move forward.

  1. Submit the application

If you agree with debt consolidation after consulting with your financial consultant, you may submit your application for a student debt consolidation loan. The federal debt consolidation application is detailed and once you put in all the details, your application will be processed.

Note that the application will be rejected if you enter incorrect account details or if you omit any information. Thanks to information technology efficiencies, you can send your application online and you’ll receive feedback within a short time.

  1. Loan payment

Once your loan application is approved, your current federal loans will be paid off within 90 days. This is made possible by the fact that the debt consolidation company will have contacted the federal loans department. Approval of your application means that both parties have agreed that debt consolidation is a good solution for you.

  1. Make repayments

Approval of the debt consolidation plan means that your chance to pay the loan at lower and forgiving rates lies with you. If the previous federal education loan repayment plan put pressure on your bank account, consolidation will have lifted off some of the pressure. Monthly repayments should be easy and affordable. Your life should also get better since you can save a little more.

Paying off your consolidated federal education loan in time provides a means of strengthening your credit score. In case you aren’t aware, your credit score is determined by how you repay your loans and other forms of debt. Repaying your federal loan in time at all times means that you have the chance to strengthen your credit score if it is on the brink of putting you in the ‘high-credit risk’ region.

  1. Spend wisely

Once you have lower monthly repayment for your consolidated student loans, you may find yourself with a little extra to spend. Even though debt consolidation loans get the pressure off your back, you should use this as an opportunity to save more and make better investment plans.

Create a reasonable budget and stick to it. Ask for a raise, find a new job, or get a second job, and cut down on credit card debt. Shop with cash always and save a percentage of every income earned.

Consolidating private education loans

You cannot get direct consolidation for your private student loans. To consolidate these loans, you should find a private lender to work with. They have variable eligibility criteria and requirements and you must shop around before making a decision.

A challenge with private loans is the borrowing restrictions that require minimum loan borrowing. Your credit worthiness will be evaluated and this can limit the amount of loan extended to you immensely. Some lenders are also known to charge origination fees and this fee isn’t available for individuals with federal student loans as they qualify for direct consolidation loans.

In conclusion, student loan consolidation reduces your financial burden resulting from debt. Whether you have private or federal student loans, ensure that the payment plan is affordable. Shop around to get the best student debt consolidation plans.

Why Is Debt Consolidation Loan The Most Favored Option Of Those Looking To Turn Their Finances Around?

A majority of us see our credit cards as conduits of a better lifestyle. We treat them as keys of spending habits beyond our current financial means. While our credit cards are swapped we forget that we are the ones who will have to pay the bills and at the end of the year we are stuck with debilitating loans that eat their way into our family finances and credit scores.

In most of the cases we have seen, the burden of multiple credit card debts and other utility bills becomes too overwhelming for families to bear. In such a befuddling financial turmoil most families end up opting for payday loans and 0% balance transfer credit cards. While they do seem helpful, they do nothing but add to the financial burden.

So what is the more financially friendly option?

A friendlier option is debt reconciliation. This merges all your current debts, including your credit card debts and outstanding loan payments, into one. Debt consolidation makes your existing financial situation much more manageable. And in all probability (if you are borrowing the money from the right source), you will end up paying an interest rate that is much lower than the rates you were paying on your multiple credit cards.

We especially recommend debt consolidation loan for those who are standing at the lower end of a good credit score. An existing credit card debt visibly dents your current credit score. When you go for debt consolidation you will automatically be transferring your credit card debts to an installment column that will not interfere with your credit score.

What are the currently existing debt reconciliation options?

Ringing up a debt consolidation company is one of the best things you can do when you find yourself in a sticky financial situation. Although many of these companies are out there to make profit out of the existing finance system, most of their policies are really helpful when it comes to helping people out of a bottomless pit of debts.

Here are the few kinds of debt relief companies that you will come across while looking for debt reconciliation online–

  1. Debt Reconciliation/Consolidation Companies – these are the true helpers during high financial stress. They will lend you money irrespective of the status of your credit score. In most cases the money is loaned out as unsecured personal loans that can be used to pay off all debts, outstanding bills and individual money lenders. After taking out a reconciliation loan you will have to manage just one debt with a fairly low interest rate. We have seen people pay off consolidation debts within terms of 2 to 5 years, with as low as 8% interest.
  2. Debt Management Companies – these are not true debt reconciliation companies. In fact, while looking for debt consolidation, this is one kind of company you need to steer clear of. They work with the lenders you owe money to and they try to negotiate lower interest rates. Although they are authorized and require legal fees, they are hardly ever successful in bringing down the rates and the payments without affecting your credit score.
  • Debt Settlement Companies – they are quite similar to the debt management companies. They work with the lenders as well to help negotiate a lower interest rate and lesser principal payment. Since they deal with the credit card companies and your bank directly, they run a high risk of permanently damaging your credit record in exchange of getting marginally lower interest rates. And did we mention? They charge a handsome fee irrespective of the final outcome of the negotiations.

As you can understand not everything is hunky-dory once you start looking at debt reconciliation options. As a matter of fact, the last two kinds of companies mentioned in the previous section barely make it to the category of straight debt consolidation companies.

While looking for debt reconciliation options and consolidation loans you should conduct a thorough background check on each and every potential option you have. Since testimonies and client feedback are not an option for most debt consolidation companies, you will need to rely on a number of registered website reviews. Do not forget to check official websites, government registered websites and Better Business Bureau before signing any contract with the companies.

What are the mistakes that can further ruin your finances after you get a debt consolidation loan?

Debt consolidation loan is not your key out to financial freedom. You cannot hope to get out of all your debts for good with debt consolidation loans, since you are just transitioning from one kind of loan to another. You may have to pay a lower interest rate on consolidation loans, but you will still have to pay the principal amount.

In case you are hoping to fall back on your credit cards after you are done paying the previous credit card debts, it won’t be long till you find yourself under a mountain of unpaid bills and defaulter’s notices once again. You will be plagued by terrible credit scores that will disqualify you from getting any further loans from registered banks and credit unions. Getting out of a financial fiasco takes a certain level of commitment where you should keep yourself from using your credit cards at every excuse.

So unless you are ready to cut up your credit cards, device a practical budget and are ready to live within your means you should not be applying for a debt consolidation loan right now.

Conclusion –

Debt consolidation is not the best option always, but it is also the only option for most with bad credit records and a cornucopia of unpaid debts. At the end of the day, it is definitely a relief to know that all your credit card bills and other minor loans are paid off and you are paying a much lower interest rate. If you follow a structured spending plan and enforce restraint on your spending habits, debt consolidation can definitely become the fastest vehicle to lead you to a debt-free life.

9 Factors to Consider Before Taking A Debt Consolidation Loan

The current state of the economy has affected many individuals. Even though debt feels like a norm, it is a real pain when you walk around knowing that you owe money to many creditors. When trying to manage your finances, it is easy to accumulate debt especially when you use high interest credit cards. At the end of it all, you will find that you are unable to manage your finances and with a high number of bills payable monthly, it is easy to fall behind on some payments or to forget other payments.

With time, you will have a bad credit and managing that is more difficult. Fortunately, debt consolidation is there to help you manage your debts and finances as well. Debt consolidation involves consolidating all your loans into one loan, paying off the creditors and then you are left with one loan to service. Often, debt consolidation loans have lower interest rates and they are manageable.

However, even with the reduced monthly repayment rates, you should reconsider your decision and re-evaluate the packages offered by different service providers. As you do this, keep the following considerations in mind especially when you have bad credit. These considerations include:

  1. Loan repayment term

You have to look at the time it will take you to repay your new loan. If the duration offered is long, you will find that your monthly repayment rates will be lower. However, there is a catch, the low monthly repayment rates spread over a long duration increases the total amount payable later due to the high interest rates. Ensure that the monthly payment rates are manageable for you but affordable in the end.

  1. Interest rates

There are fixed and variable interest rates for debt consolidation loans. The variable interest rates for the loan are definitely flexible but the fluctuation in rates may affect your ability to repay in some months when the rates are too high. Variable interest rates are affected by the market and you cannot predict how much you will pay.

A fixed interest rate on the other hand is effective when you are looking for a system that will make it possible for you to reorganize your finances, plan well, and stick to the created budget. Your intentions should be clear when taking the loan so as to determine your best way to better finance management.

  1. Type of loan

There are two types of debt consolidation loans that will be introduced to you as you look for a debt consolidation plan. These are the secured and the unsecured loans. The unsecured loan is the best when you do not have a home or you do but you aren’t willing to put your home at risk. However, if you are looking for debt consolidation for bad credit, then the only option and the loan availed to you will be a secured loan especially if you own a home. This however puts your home at risk especially when you have to repay the loan for a long time.

  1. Use of credit cards to transfer credit

Is the highest percentage of your debt made of accrued credit card debts? Talk to your financial consultant or the institution you transact with for transfer of your credit card debt balances into one credit card. This will give you one loan to repay monthly.

In other cases, you can get a 0% interest rate for the credit cards balance transfers. Though this is limited for a few months, it is appropriate if you know that you can repay the debt within that time. Unfortunately, most institutions decline this arrangement for persons with bad credit.

  1. Amount to borrow

The amount that you will borrow for debt consolidation will affect the type of loan available for you and the interest rates charged and the available packages are limited if your credit is in bad shape.

Note that you will pay a higher interest if you make the mistake of borrowing more than you need or more than the cost of your debt. To be safe, calculate the exact amount needed for the debts to be covered fully. You may talk to a credit counsellor or a personal banker if you are unable to compute the values as it should be done.

  1. Fees

You should be aware of arrangement and transaction fees. How will the fees affect the total repayable amount? Ask for information on the cost of the arrangement, setting up the loan, phone call costs, and any other charged fees. Include these costs to the total amount that you will be repaying monthly.

Some of your banks may charge you for repaying your loan before term. Will you afford the charges and will the total repayable amount for the debt consolidation loan be too high.

  1. What is out there?

If you have bad credit, your loan choices will be limited. The interest rates advertised by debt consolidation companies aren’t applicable to your bad credit case and the rates put are the Annual Percentage Rates. Call the companies to know the loans available for you and compare the interest rates available. Go for your best case rate after considering the repayment rates.

  1. Your eligibility

You aren’t guaranteed a debt consolidation loan just because you have too many creditors to repay monthly or because you keep forgetting some repayments. You have to keep in mind your age, your income, the frequency or regularity of your income, and your residence.

If you have poor credit, then the search will be longer. Not all debt consolidation loan companies extend the service to individuals with low or poor credit. These details are important because they show if you will be able to repay the new loan or not.

  1. The debts

Education loans from private institutions may not be approved for debt consolidation. Personal loans, government student loans, credit card debts, rates, outstanding bills, and tax debt will be consolidated.

In conclusion, the debt consolidation platform is there to ensure that you manage your funds and get rid of unnecessary debt. You should ensure that you only take a debt consolidation loan when you are ready to change your lifestyle and manage your finances.

How to Spot and Avoid a Student Loan Scam in Debt Consolidation

The increase in student loan debt has been precipitated by two things; easy availability of loan products and an increasing demand for university education among all age groups. According to the U.S Bureau of Statistics (BLS) the average class of 2016 student has a loan debt of $ 37,172. The total student loan debt is around $1.26 trillion.

Over 44 million Americans have student loans and it is no wonder there are so many companies out there promising to reduce your loan amount or wipe it off completely. Whether you are applying for your first loan or trying to repay your loan it is important to understand the industry is fraught with risks. With the advent of online loans things are even more complicated.

You need to learn everything about student loan scams in order to avoid them. Millions of students have filed complaints but these always come too late. Most of the scam companies will close shop once they have scammed several students and mutate as a new company offering similar services.

The only way to avoid a scam is to understand the risks and learn how to identify a scam from a mile away. Here are some pertinent points to guide you.

Types of Student Loan Scams

There are many variations of student loan scams some which seem very genuine. The most common include:

  • Loan consolidation scams: This is one of the most common student loan scams and a company will advertise an offer that looks so good to resist. Once you have communicated about the number of loans you want to consolidate the company will offer the best interest rate in the market to consolidate your loans. But there is a catch; you have to pay an upfront fee which is disguised as an administration or processing fee. Once you pay this fee the company does nothing and you lose your money. The best company offers easy methods of consolidation without charging any fees.
  • Debt elimination: There is no way you can eliminate your student loan because you singed a legally valid contract. If a company offers student loan elimination ideas keep running and don’t look back. This is an easy scam to fall for and it comes with initial fees. Once the company collects such fees from thousands of students it disappears.
  • Advance fee scam: This is the most common scam in the industry. A company will approach you with the promise to get you the best loan rates in the market but you will have to pay an advance fee too enjoy the lower rates. The Consumer Finance Protection Bureau is now prosecuting these companies because they make a promise they can’t deliver. Legitimate student loans from any quarter don’t require any fees and you should never fall for such a scam.
  • Debt relief and forgiveness: This scam involves a promise to get most of your loans forgiven or getting you a lower rate. What actually happens is that the firm goes for the option of consolidating loans and you will never realize until you contact them later. In most cases you will have to pay for these services.
  • Law firm scam: While loan negotiation might sound like a good idea you might end up losing your money. A law firm will convince you that they have the expertise to negotiate with lenders and while this might be true they don’t repay the money during these negotiations. Your credit score will take a hit and eventually the law firm might even abandon the negotiation meaning you will start from scratch.

There are also companies which offer legal but unnecessary student loan services at a fee. For instance filling out your online government loan is free but such companies make it sound too complicated. At the end of the day you will be losing money while the priority should be saving every dollar.

Warning Signs for Student Loan Scams

Here are some ways to spot if you are about to fall for a student loan scam:

  • Need for payments: Online scams are after a quick buck and all their services come with upfront fees. Applying for a student loan from the U.S. Department of Education is free and anyone charging you to consolidate your loan is out to make a profit from you. Debt consolidation from studentloans.gov is free and this should be your first stop.
  • Persistent calling: If you contact an online company asking for loan assistance they should provide what you need and that should be the end of it all. However, if they start bombarding you with calls and texts it is highly likely the company is a scam. A loan company should be professional and must not harass you into taking a loan.
  • Who initiated contact? If a loan service calls you that by itself should be a red flag. You are the one in need of a loan service and you should initiate contact. You don’t know about the company and you should immediately terminate any contacts.
  • Claim of official connections: If a company approaches you with official sounding titles or claiming to have a connection with the U.S. Department of Education or official loan consolidation platforms run and don’t look back.
  • Paying on your behalf: This is the easiest scam which the Consumer Finance Protection Bureau warns all graduates about. There is no logic in someone holding your money as they negotiate on your behalf with creditors. Such companies will claim they are still negotiating as you continue depositing monthly payment to their account. They then go under carrying thousands of dollars from unsuspecting clients.

If you are to avoid a student loan scam you need to take time and research.  You need to understand what loan consolidation is about and the best providers of such services. Carry out background research for any company you intend to contact. More importantly check the company’s BBB rating, reviews and any mention on online scam platforms.

Loan consolidation companies should offer advisory assistance for you to get the best services but are not a magic wand to eliminate your debt.

Get Your Finances Back on Track with a Debt Consolidation Bad Credit Loan

Most households are still reeling for the effects of the last global recession. This is evident in the increasing consumer debt. According to a report by New York Federal Reserve, the average household debt in the U.S as of 2015 is $132,158. Of this, $15,675 is on credit cards. Other loans include mortgages, auto loans, and student loans among others. In total, debt balance as of Q2 2016 is still rising.

thinking about debt consolidationOne of the most frustrating aspects of falling deeply into debt is dealing with multiple creditors. This is a nightmare especially when you start receiving multiple reminders and your finances are still in the red.  Due to these overwhelming debts, most household owners also have to contend with poor credit rating which only makes things worse. If you are struggling to handle multiple loans from different creditors, it is time to think about consolidating your debt.

Demystifying Debt Consolidation

When you are paying multiple creditors, it is easy to lose track of your payments. Worse still, you might end up paying more than what was in the contract due to late penalties. Debt consolidation involves taking a new personal loan from a lender to repay all your multiple debts. In essence, you now have one loan with the new lender and you don’t have to worry about multiple payments every month.

The loan may be taken through a debt relief company, home equity loan, a credit union or through your bank. However, if you have a bad credit profile, your bank and credit union will turn you down. A debt relief company on the other hand offers a third party service where a loan is negotiated with a financial institution at a lower rate and then all the other loans are repaid. This leaves you with one loan to worry about.

Debt consolidation bad credit loans help you to repay all types of loans including credit cards, rates, tax debt, outstanding bills and store cards among others. While there are many debt consolidation options around, it is important to understand that any package you choose should fit your unique needs.

Why Consider Debt Consolidation?

Before going for debt consolidation, you need to understand how it can actually help you. Debt consolidation is not for everyone and your financial advisor helps you evaluate the real benefits of going for the program. Here are just a few of the advantages you can get by consolidating your debt:

  1. Peace of Mind

Paying multiple debts is stressful and it is no wonder many homeowners are suffering stress-related ailments. You will have to deal with constant reminders and calls from debt collection services if your loan is due. If you are constantly worried about debt, you will not focus on the more important areas of your life and this will impact your career and even your social life. By consolidating debt, you will get a breather to focus on other areas of your life.

  1. Lower Interest rates

By consolidating your debt, you will enjoy lower monthly payment. Remember when you are paying multiple creditors, there are interest rates and other fees to consider but with one lender these do not apply. If you have multiple credit cards for instance, they come with astronomical interest rates that can ruin your finances. You will save a lot of money, which can help you start rebuilding your finances gradually.

  1. Repairing Credit Score

One reason you have poor credit rating is because you have been making late repayments. When faced with multiple loans, it is obvious that some deadlines will slip through your mind and this leads to deterioration of your credit score. When you consolidate your debt, the issue of late payments becomes a thing of the past. You will start repairing your credit score with time.

  1. Single Payment

A single loan repayment per month is a great way to start getting your finances back on track. You will be able to budget easily without the pressure of collection calls coming through your phone. It is easier to budget when you just have one debt item on the list as opposed to multiple, which drain every coin you have. It is even possible to start saving because you are saving on interest rates.

Different Debt Consolidation options

When reading debt consolidation reviews, you will realize there are different options for you to consolidate your debt. The most common include:

  • Debt management programs: These are financial advisors who will help you consolidate your loan based on your budget. A credit counsellor is involved in finding you the best rates and they will then coordinate the repayment of the smaller loans. You will then continue repaying the loan through the company and your accounts will be frozen to help get your finances back into shape.
  • Debt consolidation companies: These offer an unsecured loan to pay off your debts. They cater for people with bad credit profile but you should be cautious when choosing one. There are many online scams and you should seek recommendations from your financial advisor or friends before using a particular company.
  • Home Equity Line of Credit (HELOC): This option allows you to borrow money against your property in order to repay other debts. This option is only viable if you are sure you can repay the loan without any difficulties. You will be putting up your home as collateral when you use this line of credit.

When looking for the best debt consolidation option, first compare them on top debt consolidation reviews. Debt consolidation is a good idea because it helps you get on top of your finances and also repair your credit score. By consolidation, your debt you can easily budget your money and improve your household’s finances. A debt consolidation loan reduces the interest rates you could have been paying. With the tougher credit reporting regime, it is now easier to repair your credit score and isn’t this what everyone with bad credit wants?

The Best Guide for Getting Effective Debt Consolidation

So much information is shared with the public regarding debt consolidation programs – both true and untrue, which confuses many. This is why you should be careful with where and who shares such information with you to avoid getting into pitfalls of financial crisis. Consult and call the number 1 debt consolidation company to get the correct information.

Debt consolidation programs involve combining someone’s multiple debts to make it simpler for the borrower and in many cases, reduce the monthly payments for the borrower. If you are considering to consolidate your debt, your outcome will depend on your financial discipline and the decisions you will make from the financial knowledge you have. It is therefore highly recommended for you to seek the services of a financial counselor to get guidance and financial resources on how you can become debt free soon.

When can you use debt consolidation programs?

As mentioned above, a priority reason for considering this program would be to simplify your life. This is important since stress can lead you to make poor decisions that can make you fall deeper into debt. It is therefore a brilliant decision to seek help for your own well-being and be in the right state of mind and emotions.

When your debts are consolidated into one, you will stop forgetting about paying crucial bills as you used to. Moreover, chances are you have been settling your debt with high monthly payments than you can barely afford. This is caused by handling different debts that have different interest rates and other costs. When you add the interest rates and other additional costs of the debts, you will find that your debt payments are very expensive. You can combine all of them through consolidation and lower the interest rates, which will in turn lower your annual percentage rate. You can also choose a lower monthly payment that will not cause too much strain to you.

What about consolidating debt with a finance company?

Getting a consolidated loan from a finance company can be viable for you if you have been turned down by a bank or your local credit union. However, collaborating with a finance company can be limiting as you will see below:

-Additional fees

You will be charged for other processes like the origination fee. Get to find out all the fees that you will be required to pay to avoid surprises. Read their fine print very carefully!

-Higher interest rates

The range of interest rates by financial companies is usually higher than what banks offer. This is especially so to cover for the borrower’s poor credit history. Although their monthly payments are usually more favorable than banks, there is a cost to this. The longer you take to pay off your debt, the higher your debt will increase in interest.

-Lowers your eligibility

If you have a good credit history, you should refrain from getting a loan from financial companies. This is because having a financial company in your list of lenders is not good for your record. It will seem like you turned to a financial company since you did not qualify with a bank. Banks know that people run to these companies in desperation, which is not a good message.

How can you go about debt consolidation?

All organizations that offer debt consolidation have different plans. You should get information from top debt consolidation reviews on all the plans that different organizations offer and what each plan entails so that you make a solid decision. The three major plans that cut across all organizations are:

  • Debt settlement

Many people confuse ‘debt settlement’ with ‘debt consolidation’. Although these terms have different meanings, those in the industry use them very interchangeably, which causes a lot of confusion. Debt settlement is agreeing with the creditor to lower the rates at which the borrower was paying initially. This service is commonly offered by counseling agencies for consumers that would like to consolidate their debt.

  • Debt management

With debt management, you will be able to get assistance to pay your debts faster than you would have on your own. You will be offered a repayment plan that usually offers lowered costs and interest rates. Debt management services are a great way to improve your credit score, since you will get assistance to pay off your debt a bit more easily. This will need you to be more committed as the terms will be more manageable to you.

  • Debt relief

You can get debt relief, including national debt relief for your unsecured loan. The debt relief organization can negotiate lower costs for your debt repayment. It is worthwhile to collaborate with such expertise since they understand what kind of negotiations can make your case win. Your negotiation may not be successful if you do it yourself.

Negotiations between debt relief companies and creditors are usually successful because of their system of payment. When you enter into an agreement with the organization, the relief company first ensures that substantial money has accumulated into the creditor’s account before they start the negotiations. In case the consumer is unable to accumulate funds into the creditor’s account over a period of time, the company can offer a payment plan. This gives the debt relief company a better stand since the creditor realizes that there is progress.

You can get an arrangement with a debt relief organization whereby you will not need to pay any origination fees, nor any other payment until the organization settles your debt. Depending on the size of the debt, most customers are usually able to clear the debt through relief programs between 2-4years. The debts that can be cleared through this program include medical bills, business debts, credit card debts and other unsecured debts.

Conclusion

Get counsel from the very beginning to avoid mistakes that will cost you later on. For instance, avoid getting a secure loan since it can greatly limit you from getting assistance later for another loan or a debt consolidation plan. Research well on all the financial options available, then choose a plan that is suitable for you and be committed to make it work.