Consolidating Debt - Debt Consolidation Swindles
Repay Loans Faster. Low Interest Rates - that is the publicity.
The fact is that only the debt consolidation company profits from this one. They buy - yes buy - a lower rate of interest from the company you owe money to by negotiating pay back of thousands of dollars of debt. You are charged a rate for this facility and a monthly fee after that.
The debt consolidation provider pays off your loan quicker, you don't. You keep paying them in its place.
If you thought making regular payments by your due date was expensive, try making ONE LOW Payment every month.
These companies only buy bad debt to reduce the interest. They will buy collections of debt - thousands of dollars of debt from an organization to get the lower interest rate - as well as they get a percentage kickback from your loan company to reward themselves for payment of that loan.
Debt consolidation scam fees are included in your monthly payment - So literally you pay as much as you would have if you had sent that extra payment to your loan company and paid off your higher interest rate credit card quicker by adding that increased fee to your payment each month. Actually, you pay extra.
They don't re-negotiate your payment date. That means that they pay everyone's installment at the same time, once a month.
If they pay out on the 15th of the month and your payment was payable on the first, then your credit will take a 30-day late payment monthly - every month-on all three of your credit information. Late payments stick on your credit history for 7 years (or more time). Feeling good now, I'll bet!
That's only a few. You could also be one of those individuals whose payments get omitted once in a while - Yes it occurs all the time with Debt Consolidation procedures.
Negotiation is something you can do on your own. If you just hate discussing to these people you can even approve someone you know and trust to make a deal for a lower interest rate for you on your advantage. If you can't get anywhere negotiating with the very first person you talk to, ask to talk to a manager. If you can't get anywhere by the third supervisor, you're trapped.
- Negotiate your own reduced Interest rate
- Stretch your repayment schedule
- Pay off the highest interest debts First and add more money
- Write 2 checks: One for the least payment and One for any additional money with a word in the memo that reads: "Principal Only Payment." This one simple action can save you tons of money. If you don't state this, your money is automatically taken to the interest and you'll pay more interest for an extended period. Yeah, that really sucks, certainly not for them. For you.
- Figure out - there are free debt calculators all over the web - what it would take to pay your highest interest cards first. I connected my own and got up to the fact that if I add $60 a month to my minimum credit card bill, I can have a $1300 debt cleared in 12 months with $66 interest.
- If I carry on with the minimum payment, It can take more than 6 years and cost me over $2500. Actually that one action on my part put over $1134 back in my purse - in one year. And I did it personally. Without debt consolidation costs!
I don't recommend any debt consolidation firm. They prey on your despair and the doom and gloom of the length of paying out your credit cards at minimum payments.
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