| The Truth Regarding Bad Debt Consolidation |
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| Written by Graham McKenzie |
| Thursday, 10 December 2009 18:26 |
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It is bad enough to be head over heels in debt, but it is even worse when you fall behind on your payments, and your debts begin to destroy your credit score. When this happens, what should you do or where should you turn for help? Be careful! Bad debt consolidation isn't everything it is advertised to be.
It is bad enough to be head over heels in debt, but it is even worse when you fall behind on your payments, and your debts begin to destroy your credit score. When this happens, what should you do or where should you turn for help? Be careful! Bad debt consolidation isn't everything it is advertised to be. There is always the lie that you can't get a consolidation loan with bad credit. There are companies just lying in wait to offer you that enticing solution of having just one monthly payment that you can easily afford. It sounds great to be able to get rid of that multitude of monthly payments you have now, and lump them into one lower monthly payment. Be sure to read the fine print, because they won. 't tell you about the 20 to 22 percent interest rate you'll be charged for being high risk. All of this is true: lower monthly payments, all of your bills lumped together into one monthly payment and extra time to pay it off. You. 'll have at least 10 years to repay your loan, and they will extend it even longer if you ask them to. Have you considered what the results will be of that extremely high interest rate? You. 'll pay a whole lot more in the long run. You, also, need to know that when they promise to take care of everything for you, they really will. They will add a fee for their services for approximately ten percent of your monthly payment. For example, if you pay $400 a month, it will include a $40 fee that will be taken out for them negotiating your consolidation loan with the creditor. This is another reason you will end up paying more. You need to ask yourself if it is really worth paying someone else that much money, ($40 a month over 10 years, the minimum time you can pay it back, is $400) to do something that you can do yourself? You can talk with your creditors and negotiate a lower interest rate, stretch out your repayment plan and pay off the highest interest debt first. Although, you will be assured that by making your one monthly loan payment on time, your credit will begin to rise, beware! The consolidation companies don. 't report your payments to the credit companies, and they have been known to pay your creditors late, making your credit score fall even more. What is the answer to all of this? Talk to your creditors first, and work out a solution with them. It will still mean a lot of monthly payments, but learn how to pay off high interest debt first, and you will begin to see those payments disappear, one at a time. DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. Will Debt Consolidation be the answer for you money problems? Find ways that you can use Bad Debt Consolidation to help you out. Get out from under the pressure of all those payments today! |