There’s a right and wrong way to run a reputable debt consolidation loan business. For instance, a good company will never ask you to stop making monthly payments to your lenders, and instead request that you make payments into a separate account to be used to pay off your debts. Here’s more about things good debt consolidation loan companies don’t do.
One solution to significant debt is consolidating it into one loan. For the most part, a company or bank offering debt consolidation requires that borrowers be current on payments and have a decent credit score.
The process isn’t always fast and easy, though. And, good debt consolidation loan companies shouldn’t describe it as such. It’s vital that you find an honest and upstanding company with which to do business before beginning the process of debt consolidation.
What’s Debt Consolidation?
It’s the process of taking out a loan to pay off existing debts such as credit cards and personal loans. Ideally, debt consolidation loans offer a lower interest rate than you’re currently paying on credit cards or other unsecured debt. You need only make one payment monthly of the same amount, versus multiple payments to lenders of varying amounts.
Finding A Reputable Debt Consolidation Company
When it comes to tracking down the right company for you, homework is a must. The process may seem laborious, but it will pay dividends in the end. The BBB has a topnotch website where consumers can see whether the company they’re considering is accredited. If it is, it will have a rating. You can also see whether there have been any complaints against the company, or any legal actions filed.
Traits for Which to Look
Agency Affiliations –Reputable debt consolidation companies are affiliated with industry associations like the Financial Counseling Association of America or the National Foundation of Credit Counseling. Be sure to check.
Nonprofit Status – If a firm is nonprofit, it’ll be able to show you a certificate. Good debt consolidation companies won’t hesitate to show you proof. If they do, there’s cause for suspicion. Legit nonprofit organizations should be willing and able to show credentials.
Pitfalls To Avoid
A reputable debt consolidation company should never pressure you. You should be able to ask all the questions you need to and withhold a final decision until those questions are answered.
Bait And Switch – Some companies will lure prospective customers by advertising a debt consolidation product but once they’ve made contact will try to move them to another product. A good debt consolidation company will never do this. If a lender is proposing something other than combining debts into one loan with one single payment, be wary.
The Quick Close – There are no quick and simple solutions to a consumer’s debt issues. Reputable firms don’t try to get a consumer to sign up right away. Prospective customers should speak with multiple different companies before deciding and should never feel rushed.
Promises, Promises – A good debt relief consolidation company won’t oversell. They will be honest, realistic, and up front about what they can do for you, and when.
Advice To Stop Talking To Your Creditors – Along with asking you to stop making payments to creditors, this is a red flag. It’s always best to leave communication lines open.
Now that you have a good snapshot of what good consolidation companies don’t do, you can choose a prospective business with confidence and be on the road to financial solvency.