A lot of people want to improve their financial situation. If you’re like most people, you do as well. That’s why it’s a good idea for you to think about debt consolidation. Debt consolidation can be the perfect way for you to take care of your bills for once and for all. Here are just a few debt consolidation tips to get you started.
Get professional help with debt consolidation when solicitors are constantly calling to get you to pay. In most cases do-it-yourself style rarely works in your favor. You will rarely receive low rates for loans because your credit score has more than likely suffered due to your financial hardships. Find a company that provides free debt consolidation consultations to get started.
Understand the difference between debt consolidation and a home equity loan. Many companies will guise a home equity loan (where you put your home on the line for the debt) as true debt consolidation. That’s not always the wisest move to make, especially if you have a family involved. Know the differences and the risks before making that decision.
Investigate any debt consolidation company you are considering. That means calling the Better Business Bureau, but it also means you need to do some online research. Most companies will have reviews written by people who used them. Watch for any company that does not seem to have positive reviews, that could be a problem.
Many people can see lower monthly payments if they just call their creditors. Many creditors are happy to help debtors who are trying to pay off their debt. Note that some creditors, such as credit card companies, may lower minimum payments but will also prevent you from incurring more debt till your account is paid off.
Find out whether a debt consolidation company is a “home equity loan” provider in disguise. Some debt consolidation companies really just want you to take out a home equity loan. Don’t let this be you. After all, your home is the most important thing you have. If you find out a company wants you to take out a loan on your home, move on.
Find out how the debt consolidation company is funded, and do not do business with them if they refuse to disclose this information. If they say they are a non-profit organization, make sure to check with the state to see if that is true. Also, if they say they are tax-exempt, check that out too.
Don’t sign anything until you know what you’re agreeing to. Make sure you have a written copy of the terms and fees you will be responsible for, before you make a decision. It’s important for you to make sure there are no special surprises, and that at the end of the arrangement you’ll be in a better position financially.
It is best to work with a debt consolidation professional who is a member of debt consolidation organization. Ask if they are a member of the National Foundation for Credit Counseling or of the AICCCA. A professional who is not a member of any recognized organization is not a good choice.
There are three types of debt consolidation available to most debtors. The first is a second mortgage or home equity line of credit. The second is a credit card or line of credit which pays off the debts and then has to be reimbursed. The last is a loan from a loved one.
Rather than using debt consolidation, think about paying off outstanding credit card debt by using the snowball method. Pick the creditor who charges the highest interest, and pay that debt down quickly. Go from there, and tackle another debt next. This option is better than most.
Don’t assume a credit transfer offer will save you money when consolidating debt. Look at the fine print. Often there’s an initial fee that you need to pay (it can be multiple hundreds of dollars), and there’s usually a 12-month or 18-month limit to the offer. At that point the interest rate may increase to higher than it was before. Do the math before you say yes to make sure that the deal works in your favor.
Pay attention to both privacy and security practices when choosing a debt consolidation company. Read over the terms and conditions as well. If there is something you’re not comfortable with, ask questions, and move on if need be to find a better company for your needs. There is no reason to settle.
As mentioned in the introduction, everyone wants their financial situation to get better. If you are serious about having more money in your life, start thinking about debt consolidation. With all the information in this article, you should be able to start as soon as today. When you have your debts consolidated you’ll feel much better.
