The Important Facts Concerning Bad Debt Consolidation
5:15 AM
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.
They will graciously assure you that you don't have to worry about a thing, because they will take care of everything for you. That's not a lie either. They will take a 10 percent fee out of every monthly payment to pay for their help. That means you'll pay an extra $45 a month if you pay $450 a month on your repayment plan. Only $405 will actually go to your creditor, meaning you end up repaying even 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.
Be careful, because these consolidation companies have a bag full of trick tactics. They will promise you that you can rebuild your credit quickly when you only have to make one monthly payment, and you make it on time. The problem comes when they pay your creditors late. Your credit will bottom out.
What can you do? Instead of turning to bad debt consolidation, turn to your creditors first. Tell them your situation, and see if you can work out a solution. You will still have the many monthly payments, but you'll save yourself a lot of money in the long run.
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.
They will graciously assure you that you don't have to worry about a thing, because they will take care of everything for you. That's not a lie either. They will take a 10 percent fee out of every monthly payment to pay for their help. That means you'll pay an extra $45 a month if you pay $450 a month on your repayment plan. Only $405 will actually go to your creditor, meaning you end up repaying even 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.
Be careful, because these consolidation companies have a bag full of trick tactics. They will promise you that you can rebuild your credit quickly when you only have to make one monthly payment, and you make it on time. The problem comes when they pay your creditors late. Your credit will bottom out.
What can you do? Instead of turning to bad debt consolidation, turn to your creditors first. Tell them your situation, and see if you can work out a solution. You will still have the many monthly payments, but you'll save yourself a lot of money in the long run.
About the Author:
Will Debt Consolidation be the choice for you money problems? Learn ways that you can use Bad Debt Consolidation to help with those problems. Get out from under the pressure of all those payments today!
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