Out of all the techniques to make your money go further, I think one that seems to be getting the most attention is debt consolidation, but is it the best way to go about it, and if so, how does it work?
Debt Consolidation is a simple concept; you find a company that will help you combine some of your credit card debt into one bigger loan. This allows you only to have one payment, and the interest rate is usually lower. If it’s not a lower interest rate, you are only paying the interest on one loan instead of several smaller credit cards or debts.
Here are some things to consider when approaching Debt consolidation:
1. As with all types of financial arrangements make sure you carefully read all the fine
Want to add a caption to this image? Click the Settings icon and
Print of any contract you are signing. Never, ever sign based on what you were told. Make sure that the actual written agreement spells out the exact terms of your new payment, interest rate, due date, and the loan term. If you aren’t sure of something, ask for clarification, and if the contract is overly long and complicated, don’t hesitate to run it by an attorney first. Legalshield is a great provider for these services. I know this may sound like overkill, but you don’t want to make things worse by signing a contract with a company that isn’t honest and ethical.
2. Always check with the Better Business Bureau to see if any complaints have been filed with the company you are considering for your loan consolidation. This is a valuable resource if you are not competing for the consolidation with your local bank. Although, online testimonials and referrals from friends are great too, checking with the BBB can give you an even broader idea of how well the company has been doing and how honest they are in their dealings with their customers.
Overall you want to make sure that you know exactly what, if any, impact that this consolidation will have on your financial picture. In my experience, most consolidations average at a five-year term. They do not prevent you from running up your debt again. Yes, this method will help with paying off debts, but it will create another more massive bill. And it may not provide the big credit boost you may seek. It is a balancing act that you need to carefully consider before you make this decision.
Debt consolidating to save money is an excellent option for many people, and it may be the best course of action for your specific goals. Just remember that if you have excessive late pays or are delinquent, you may have a higher rate and could be denied.
Until Next Time