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Is It A Good Idea To Get A Debt Consolidation Loan?

A debt consolidation loan is a single loan that is used to liquidate or pay off multiple loans or debts.

The act of using a single loan to offset other several debts is known as debt consolidation.

Such loans come with above-average interest rates that culminate into monthly bills that become uncomfortable for you to manage.

At that point, your loan or credit card becomes extremely difficult to manage.

Your debt management plan is what will determine whether you are going to come out of debt soon, or keep sinking into it further.

So, how can you solve your debt problems with the help of a consolidation loan?

The answers to the highlighted questions below will give you a clearer understanding of a debt consolidation loan.

Is debt consolidation a good idea?

Are you making any efforts to improve your spending habits and manage your debts?

What is your credit score like?

These are some of the factors that will determine if debt consolidation will be accessible by you or not. Debt consolidation might be okay if you:

Aim to pay off your whole debt with a consolidated loan.
Your earnings are good enough to cater to your debts.
You are okay with the option of paying back your loan over an extended period of time at a reduced monthly repayment amount but an increased interest rate.
There has been an increase in your credit score since cleared your initial loans.
You’ve mapped out a plan not to raise your debts.

If you don’t tick all the boxes above with a positive response, then debt consolidation may not work for you as expected.

Is it really worth it?

It is advisable to ever get a debt consolidation loan Is it something that could be detrimental to you in the long term?

How will it solve your debt challenges? You will need to look at this subject from these perspectives holistically.

Basically, debt consolidation is all about using a single loan to settle your other loans.

As such, you may just be asking yourself – So if it is another form of a loan, of what benefit will it be to you then?

A lot of people are resorting to debt consolidation loans because of its’ awesome benefits.

If you are obliged to different creditors, a loan like this will help you fix that debt sooner than you can imagine.

One of the reasons why it is recommended is because it consolidates and simplifies all your debt repayments to just one.

Do Debt Consolidation Loans Worsen Your Credit Score?

Technically and practically a debt consolidation loan is meant to improve your credit score.

Ideally, it is never intended to deteriorate your credit score. If you use the loan to settle your debts, then your credit score should start increasing as time develops.

Initially, after getting the debt consolidation loan, you might experience a decline in your credit score. That is okay. The score will improve again.

Though that is on the condition that you pay off those debts on time. Also, you are to ensure you don’t end up with more debts within this period.

This will be an additional problem. Some people get a consolidation loan and a worse credit score in the process. They didn’t pay off their debts with the loan. That’s why!

Also Related: How to get out of Debt Fast:23 Proven Ways.

What Is The Best Place To Obtain A Debt Consolidation Loan?

There are a number of places to apply for a debt consolidation loan.

It can be accessed via regular banks or even credit unions. It is also possible to get such loans via online lenders.

How Do You Get a Debt Consolidation Loan?

Before you can get a debt consolidation loan, you need to apply for a consolidation tool.

A consolidation tool is in the form of a balance transfer credit card, personal finance loan, or others.

You can obtain this via the bank or any legitimate lender. Thus, if it is a debt consolidation loan, the debts could be directly taken care of by the lender. Or the individual could be given the funds to repay their outstanding debt balance(s).

After the debt of the borrower has been refunded, he or she will only make a one-time monthly payment. With a debt consolidation loan, the borrower has the luxury of a relatively reduced monthly repayment amount.

The payable monthly amount is lesser because the repayment duration will need to be extended.

Consolidating debts equally streamline payments, as well as making it easier for finances to be managed.

What Should You Do Before You Apply for a Debt Consolidation Loan?

A debt consolidation loan will help you sort out several of your debt problems.

Do not be so high-spirited to apply for it. Instead, strive to know certain important details about such transactions.

These details are the terms and conditions. The different lenders have various terms and conditions for issuing such loans.

It is important you comprehend the terms and obligations of the lender before going ahead to apply for the loan.

For a start, seek to know their interest rates. Also, find out the duration of the loan repayment.

Regardless of whether you are getting the loan online or physically, get these sorted out first.

These are some of the things you should do before applying for a debt consolidation loan.

Benefits of debt consolidation

Simplifies your debt management plan since it integrates all your loans into a single, streamlined payment.
Could reduce a loanee’s total interest when they choose to consolidate to a 0% interest credit card balance, a secured loan, or a personal loan with a low-interest rate.
May reduce the monthly payment a loanee (borrower) needs to pay on their debt since the payment duration will be extended – although this could amount to a higher interest rate over the course of the payment. With fixed loan payments, borrowers are likely to terminate their debts much sooner. That is particularly when it has to do with huge credit card debts.
Less emotional stress – surveys have shown that people who have several debts to pay are often stressed. That is because they are mostly thinking of how those debts can be repaid.

Can I Get A Debt Consolidation Loan With Poor Credit Score?

Frankly speaking, it is difficult or almost impossible to get a debt consolidation loan with a poor credit score.

Although debt consolidation helps you improve your credit score, lenders are skeptical when you have a poor credit score.

As such, some lenders don’t like to consider people with a poor credit score as part of their scheme.

That means such lenders will not be granting your request if you have a poor credit score.

That said, there are organizations that may be willing to approve your request for a loan. But, in most cases, you may have to pay higher interest rates on the new loan.

Higher than what you had to pay on the separate debts. So while financial experts may not recommend that, the choice is yours to make.

What Type Of Loans Are Best For Debt Consolidation?

There is nothing like the best debt consolidation loan.

Just because it worked for someone else is not a guarantee that it will work for you. With that said, there is a loan type that will be best suited for your kind of person.

You need to sit down and figure out your goals to know which one will be the right fit for you. Decide whether you prefer fast funding, zero or low fees. Or you just like the idea of consolidating a huge amount of debt.

The majority of lenders give their borrowers longer time to pay back, which ultimately reduces their interest rates. For those with poor credit scores, the best thing is to go to lenders whose specialty is to offer loans to people with such credit scores.

What Credit Score Do I Need For A Debt Consolidation Loan?

Lenders don’t just give out a consolidation loan to everyone that applies. You will need to meet specific requirements before you can qualify for the loan.

One of such requirements is your credit score. There is a minimum credit score that qualifies you for this loan.

A good number of lending organizations only offer the said loan to people whose credit score is somewhere around 650. In most cases, it is around 650.

So, while that is the case, some other lenders approve debt consolidation loans for people with a lesser credit score. Some work with people whose credit score is as low as 580.

Fortunately, you can monitor your credit score with many online tools today. With such information, you can easily reshape your spending habits and every other consumer behavior you can fine-tune.

What Are The Risks Associated With Debt Consolidation Loans?

A consolidation loan does not work like when you wave a magic wand. You need to meet the requirements for you to qualify.

There is a couple of risks associated with a loan of this nature. The most significant risk is that you stand the chance of going into more debt.

Yes, the consolidation loan lets you settle your old debts. But you should understand that you have a new debt to take care of.

That is why you would need to reduce and manage optimally your expenses. If you don’t do it that way, you will only end up getting yourself involved in more debts. Then, the very purpose of getting the loan in the first place will have been defeated.

Disadvantages

Debt consolidation has its own liabilities. Some money lenders will never tell you this. Well, below are some of the cons of debt consolidation that you need to be aware of.

Lenders could demand charges for the balance transfer, closing, or loan disbursement
Sizable collateral may sometimes be needed. For instance, a home.
Should not be seen as a guarantee for reduced interest rates, particularly for those with a poor credit score.
A longer period of repayment could cost more eventually
Does not necessitate borrowers to improve how they manage money. As such, there is every tendency for more debts to resurface later for the said individual.

If you are comfortable with all the points here, then you can conveniently go ahead and apply for the loan.

Conclusion

According to this post, whether a consolidation loan is ideal for you depends on certain factors.

Your current credit score, spending habits, and debt management plan are some of those factors. With these factors, you can determine if it is for you or not.

You cannot just wake up with zero debt repayment plans, and think a consolidation loan will solve all your debt problems. As a matter of fact, you would be back to where you started with that approach.

So if you think that a debt consolidation loan is perfect for you, fine! However, before you commit to any lender, know their loan terms and conditions.

Debt consolidation Loans: Low Interest Rate

Debt Consolidation

Debt consolidation loans are the perfect solution to manage debts properly. But obviously one can think of that how it is available at the lower interest rate. In that case, this article can help them perfect.

No doubt, every borrower tries to stay away from the unnecessary debt burdens.

How debts can be managed without affecting the monthly budget is a constant endeavor of all borrowers that always insist that they look for an option.

In that case, the option can be easily found through a debt management program. And undoubtedly debt consolidation is an important tool of the debt management program.

The debt Consolidation process stresses consolidating all debts into one single debt. In this process, mainly a separate loan is provided to borrowers that cover all the current debts of them.

And later borrowers have to pay only on that single debt instead of numerous ones. Thus, by consolidating all debts into one, a borrower can easily manage all unpaid debts.

The Benefits.

A debt consolidation loan can give you:

A lower monthly payment than your current payments. This allows you to have more discretionary spending money while you continue to pay your loans.
The simplicity of one bill to track.

Keep in mind
It’s important to understand that a debt consolidation loan simply transfers the debt to a new lender, so you still have debt. Additionally, a consolidation loan with a longer repayment period may lower your monthly payment, but increase the total amount you repay. However, you can always pay off the loan faster by making more than the minimum monthly payment.

Credit card balance transfer
You can roll other higher-interest debt into a lower-interest card.

Consolidate debt with a personal loan
Consolidating debt with a Personal Loan can help you reduce interest costs and pay off debt faster.

Options for homeowners
If you own your home, you can leverage your available home equity to consolidate any kind of debt. Getting a consolidation loan in the form of a cash-out refinances of your current mortgage or a new home equity loan or line of credit can be a smart way to manage your money.

Typically have lower interest rates than other forms of credit, meaning you can save on interest payments and potentially free up some of your cash to pay down more of the principal balance.
Are tax-smart. You may be able to deduct up to 100% of the interest, unlike with other kinds of financing.

But the question is that whether these loans are available at a low-interest rate or not? If a person wants to consolidate all of his/her debts in a secured way, then automatically the lender will provide him/her the loan at the lower interest rate, as the presence of his property covers the risk of lending money. But still, at the time of finding a debt consolidation loan at a low-interest rate, one should keep the following things in his mind…

Collateral choice:

Always remember that your collateral will be prioritized at the time of deciding the loan rate. High valuable collateral will ensure you avail of a debt consolidation loan at a lower interest rate. So cautiously choose collateral. As collateral, home, or other real estate property, automobiles go well. Besides you can use other valuable objects against the loan amount.

Record of your credit score:

Flawlessly it can be said that as a good scorer, you will get an extra edge when the interest rate will be decided. So, be sure about your credit score. Evaluate, whether it is considered a good score or not.

Shop around for the low rate of interest:

At the same time, do not stick to one lender. Keep your eyes on other lenders and their deals as well. Visit various lending companies, banks, financial institutions in person, ask for their different loan quotes, then carefully compare them and apply for the best deal.

Besides traditional lenders, your searching can be done over the Internet too. Many lenders, these days, are providing debt consolidation loans at a relatively lower interest rate. You can easily get all their loan quotes by simply clicking the mouse. Moreover, it will help you to save valuable time.

Bad credit scorer, like CCJ’s, arrears, defaults even late payment also can apply for low-interest debt consolidation loans. Furthermore, due to the increasing competition among the loan lender, a borrower also can avail of low-interest debt consolidation loans in unsecured form. In that case, a bit search is mandatory.

Debt consolidating is helpful for borrowers in the true sense. Not only managing debts properly but with these loans, borrowers can set aside all the untimely and harassing calls of lenders and wave off all debt barricades.

Image courtesy of VichayaKiatying-Angsulee at FreeDigitalPhotos.net

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

How Does Debt Consolidation Work?

Debt Solutions

Debt consolidation is the act and process of taking out one loan to pay off many other loans and bills like credit card bills or student loans.

The main aim of debt consolidation is to basically reduce the total amount of loan repayment through interest rate reduction.

Many debt consolidation companies, programs, and services have argued the benefits and advantages of debt consolidation when one is in a cycle of debt. But the question is:

Is debt consolidation really useful in helping people get out of their debt problems?

While I agree that debt consolidation can help debtors solve their debt problems, many debtors really have much difficulty getting out of their debt problems even after they consolidate their debts.

Why is that so??

Think about it – Most of these debt consolidators are in debt problems because they spend on credit and are used to spending more than they can afford to.

As such, they eventually run into debts in the long run since they are always spending more than they earn every month.

After debt consolidation, these debt consolidators will have their credit card balance clear and a single monthly loan payment (with an extended repayment period).

With a lighter loan repayment amount, most of these people will begin to relax and usually overspend on their monthly budget again in the near future.

By doing so, they will eventually run into debts again. Thus, it is not surprising to see many people who have had consolidate their debts before to run into debt problems again.

How does one get out of debt?

Debt consolidation is a tool to help debtors get out of debt problems. Unfortunately, many have used it to increase their debt problems as mention above.

The only surefire way to get out of debts is really to adjust your spending habit and commit to a disciplined lifestyle. If you ask me, the get out of debt formula is really simple: It’s either to earn more money or to spend less money.

There are several types of help available for unsecured debt consolidation. You can choose to take out a debt consolidation loan to lower your rates and payments.

You may also choose to use a debt consolidation program, letting a third-party deal with your creditors. And finally, you can turn to a credit counselor to help you find the best plan for your situation.

Debt Consolidation Loans

A debt consolidation loan is any type of loan you take out for the purpose of paying off other creditors.

Ideally, you want to find a loan with a lower interest than what you are currently paying on your bills.

However, even if you don’t lower your rates, you can lower your monthly payments by choosing a long-term loan. The drawback, of course, is paying more in interest charges.

You can choose from a secured loan, usually backed by your home or an unsecured loan. Secured loans, including a home equity loan, second mortgage, and line of credit, will have lower rates and the tax advantage of writing off your interest payments.

However, if you don’t have a home, you can still find relatively low rates with a personal loan.

Debt Consolidation Programs

You can also work with a debt consolidation program to lower your rates and consolidate your bills.

This third-party agency will negotiate lower rates with your creditors for a small fee. You also only make one monthly payment, letting the agency pay your bills from that sum.

Some non-profit agencies also specialize in helping those with six or more months of late payments.

Before you sign up with these types of programs, be sure you have researched several agencies. Compare payback dates, fees, and estimated monthly payments.

Credit Counseling

If you are confused about your options or just don’t have a plan for getting out of debt, consider visiting a credit counselor.

As a non-biased person, they can explain your financing options. They can also discuss with you’re the pros and cons of each option, helping you find the best program for your unique situation.

Besides helping you to consolidate your bills, they can also help you develop a monthly budget and long-term financial goals.

Debt Reduction Advice that Actually Works

Debt Consolidation

Locating good debt reduction advice may end up being somewhat confusing for you if you want to lower how much personal debt you have.

Too much of the available info makes it seem like it’s nearly impossible.

Then you have those places who pretend their advice will help you get out of debt, but it’s actually designed to make stay in debt longer.

There are also those who expect you to live on practically nothing.

While most of them mean well, the truth is that they may not be good options for your current situation.

That being said, the following debt reduction advice will help you get out of debt, regardless of which specific method you end up using.

1. Find out exactly where you stand financially.

Start a spreadsheet or get a sheet of paper and write down all of your debts.

Include every company and person you owe money to, including car payments, mortgage, personal loans, credit card balances, student loans, and any bills that are past due.

Next to each creditor, write down the total amount you owe, the minimum monthly payment, and the interest rate you are being charged.

Once the list is done, add up the totals in all but the interest rate column.

You will now see the total amount of debt you currently owe, as well as the total minimum monthly payments you’re expected to make.

The totals will probably shock you, but it’s important debt reduction advice because it shows you a realistic picture of how much debt you have.

2. Figure out how much money you have coming in and how much you are spending.

Make a list of all of the income you have coming in on a regular basis, as well as any money you could easily get your hands on if you had to (but don’t touch any retirement savings).

This gives you a better idea of how much you will be able to apply toward your debt reduction strategies, but there’s one more step.

You need to also write down all of your expenses. Don’t leave anything out.

The more honest and accurate you are, the better.

Once you see where all the money is going, you can start to see areas where you should be able to cut expenses.

3. Put all of this data together to start reducing your debt.

Free up as much money as you can and apply as much of it as you can toward the debt with the smallest balance (while paying the minimum amount on all others).

With luck, you may even be able to pay it off right away. Each time you move on to the next debt, roll over the amount you were paying on the previous one.

Keep following this debt reduction plan and you will be out of debt faster than you can imagine.

Image courtesy of hywards at FreeDigitalPhotos.net

Top 17 Amazing Steps To Debt Freedom

Debt Solutions

Debt freedom can be experienced by you, follow these simple steps and you will be debt-free. Many of us live with debt in our lives.

Whether it is paying off a vehicle, a mortgage, University fees, or credit card bills, most likely all of us owe a debt in one way or another.

It was Balki Bartokomous who said ‘I am in debt. I am a true American’. However, debt can easily spiral out of control and become crippling.

When you are in a pit of debt and spending, it can be hard to see any way out. Yet, you are not alone. There are many people experiencing the same situation.

Follow these 17 baby steps to debt freedom, and like many other individuals before, you will find yourself free of your debts.

1. Assess your debt in order to experience a life of debt freedom.

To begin with, you need to look at the types of debt you have. There are two types of debt- good debt, and bad debt.

Good debt includes mortgages and student loans, as either your home or your services have more value as time goes on.

Bad debt is debt that has high interest and little to no value- such as car repayments and credit card debt.

2. Talk to your creditors.

Many people who are in debt will be too afraid to speak to their creditors. However, if you want debt consolidation then your creditors can often help.

See if they can offer you a lower interest rate or a settlement fee- a fee at a lesser rate if you pay it all in one go.

3. Assess your steps to financial freedom.

You have two options here. The first is to pay off the debt with the highest interest rate first. Pay all your other debts with a minimum repayment, except for this.

Once this highest interest rate debt has been consolidated, you will have fewer repayments each month and it will be easier to pay off the rest.

The other option is to do the opposite- pay off the smallest loan first.

This is Dave Ramsey’s steps to debt-free living options.

Ramsey says: ‘The math seems to lean more toward paying the highest interest debts first, but what I have learned is that personal finance is 20% head knowledge and 80% behavior.

You need some quick wins in order to stay pumped enough to get out of debt completely.

When you start knocking off the easier debts, you will start to see results and you will start to win in debt reduction.’

4. Choose your payment method.

The first option relates to credit card debt.

Take out another credit card with a lower interest rate, ideally one with the first year at 0% interest, and transfer the balance of the higher card to the lower.

You will pay less interest and pay the debt off more quickly.

5. Take out a loan.

If you can, take out a personal loan from the bank.

The interest rate will be lower than credit card debt, so use this loan to pay off your other debts more quickly and save money.

Never use an online personal or payday loan- the fees are extortionate.

6. Use any savings you have to pay off your debt.

This can be risky in the long term, as your circumstances regarding employment or health may change, however, in the short term, it will bring you to debt-free living.

7. Set yourself some goals.

Henry Shaw says “Debt is like any other trap, easy enough to get into, but hard enough to get out of.” this does not have to be true. Use baby steps to become debt-free and it will become easier.

One of the baby steps is to use goals.

Set goals of paying off a loan in a certain time frame, another debt in another time frame, and divide that amount of time by the number of months so you know how much you should be paying off each month.

8. Assess your everyday spending in order to experience a life free of Debt.

Gather all of your monthly financial information- bills, rent, transport, food shopping, non-necessities.

Be true to yourself- do not leave anything out- make sure that you acknowledge every penny that you spend.

9. Create a spreadsheet in order to experience a life of freedom.

On your computer, use Excel to create a spreadsheet of your spending.

Use one column for your fixed monthly expenses- these are things you have to pay, for example, your utility bills, your rent or mortgage, and the amount you want to pay back on your debt.

Use the other column for your monthly earnings. Now, minus the tax, insurance, anything else that comes out of your earnings.

This will give you an accurate number of how much you earn each month.

10. Create a budget in order to experience a life of debt freedom.

Take the amount of money you earn each month, and minus the amount of money you spend on your monthly expenses, including your debt repayment.

What you will be left with is the amount that you can spend on ‘other’, such as entertainment, food, clothing.

Look back at the financial information you gathered earlier and see how much you usually spend on these things, and compare to how much you now have to spend.

Keep using the spreadsheet. Write down everything that you spend,and make it a part of your life.

If you are finding it unrealistic to live on this budget, then adjust the amount that you want to payback of your debt.

11. Make sure that you stick to your budget.

To make sure that you stick to your budget, allocate finances for each category- entertainment, food, etc. Put the money for each expense in their own envelopes.

This is a great way to keep track of how much you have spent and how much you have left to spend. Take Andrew Jackson’s advice: “Live within your means, never be in debt, and by husbanding your money you can always lay it out well.”

12. Make a debt repayment plan and budget.

With your debt repayment plan and budget in mind, make small adjustments to your everyday life. Take these baby steps to a life of debt freedom.

Start walking wherever you can to save money on gas. If you do have to drive, then combine your errands into one trip. If you usually drive yourself or children to extracurricular activities, see if you can carpool.

13. Become a thrifty spender.

It is easy to spend more than we have when buying household items and food.

You need to be conscious of how much you are spending. Become a coupon cutter and a voucher saver- every penny will help.

Take a shopping list with you so that you do not throw in items you do not need.

Take the budgeted amount with you and take a calculator or your phone, adding up the items as you go along to make sure you do not overspend. Go for the basics- buy the home brand version of everything.

14. Even better- do all of your shopping online.

Use the internet to purchase your weekly groceries. This way, you can compare the prices of all of the goods, look at how much you are spending, and take advantage of all the deals.

15. Sell off what you do not need.

There are so many ways that you can sell your unwanted and unnecessary items.

You can use apps such as Depop to sell old clothes, and sites such as eBay and Gumtree to sell off clothes, furniture, DVDs- anything.

Get your items into the best condition possible and use excellent wording to really sell your items. Be brutal- don’t hold on to anything that you do not need or use.

16. Change the way that you spend money every day in order to experience a life of debt freedom.

The best way to be spending money- to use cash. Dave Ramsey says: ‘Debt is dumb. Cash is king’ and he is right.

It is easier to keep track of your spending as you have the money right in front of you, you cannot borrow from what you do not physically have.

Of course, there are some things that you cannot pay for with cash, however, use cash for all of your daily expenses. Definitely do not use checks.

These are very rare these days anyway, simply because they take so long to process.

You can write a check when you have money in the bank, yet it may not be processed until three weeks later when you do not have the money to cover this in the bank, so you hit fees every day until you can cover the cost of the check.

‘Don’t write any check that your tail can’t cash’– Bo Diddley. Whatever you do, do not use credit cards.

They have the highest rate of interest. This is not money that you have, it is money that you are borrowing, so stop borrowing. Cut up your cards to avoid all temptation to use them.

17. Reward yourself.

This is going to be a long journey to living a debt free life, so make sure that it is a lifestyle change and you do not slip back into your old habits.

Let yourself have a treat when you have paid off a debt- like going out for a meal or having a drink at the bar with your friends.

Yes, you have to be frugal, but you can treat yourself once in a while (as long as you do not go crazy and undo all of your hard work!).

Conclusion

Follow these baby steps to debt freedom and you will be living a debt-free life. It may take months or years, but eventually, it will happen to you.

Just remember to stay on track- do not make any excuses and do not let yourself slip. If you do slip, just get right back into the habit of living to a budget.

Debt makes slaves of us all, handing over money each month to pay back the money we once borrowed.

Heed the words of William Shakespeare: ‘Neither a borrower nor a lender is, for loan oft loses both itself and friend, and borrowing dulls the edge of husbandry’.

Free yourself of your debts- and enjoy a life of debt freedom today.

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

Debt Consolidation Company:Qualities To Compare

Debt Consolidation

When you decide that using a debt consolidation company may be your best route out of debt, you’ll need to do some research to be sure that you choose the best company for your needs.

There are a variety of qualities to compare, ranging from the industry reputation of the companies you are considering to the specific characteristics of the consolidation program to the rate and fees charged for services. Careful consideration will help you to avoid potential pitfalls and to move towards achieving your financial goals.

Know Your Company

This is one of the most important factors of choosing your debt consolidation company. This is an industry that has experienced exponential growth. Furthermore, it services people who are often vulnerable, due to a lack of in-depth financial knowledge and experience. Thus, there are a lot of predators among those that are truly dedicated to helping you find your way out of debt.

There are debt consolidation companies that are run for profit and those that are non-profit. It is important to note that just because a debt consolidation company claims non-profit status does not make it trustworthy. In fact, some of these companies request higher fees than those run for profit. You’ll have to research any company you consider.

The Better Business Bureau is a good place to start. However, predatory companies often change names quickly and try to stay under the radar. Thus, a good rating via the Better Business Bureau is not always a sure predictor. Use the Internet to run a search on the company name and the individuals heading the company.

Understand Services Offered

The most obvious qualities to compare concerning the services offered by various debt consolidation companies are fees, rates and terms. There are other important qualities to compare as well.

You’ll want to compare the amount of time each company is prepared to spend with you working out a plan to fit your needs. The best companies are willing to spend time preparing an individualized plan for you that not only is geared towards helping you out of your current financial situation, but also towards helping you to develop the money management skills to avoid being in the situation again. Those that just hurry you through – promising fast and easy solutions, just sign here – are most likely just interested in adding another set of fees to their profit margin.

In order to compare, you’ll need a clear understanding of how the offered arrangements will work, including a projected date at which you will have everything paid in full. You’ll want to make sure that the debt consolidation company keeps meticulous records of negotiation with and payments to creditors, and that you will have easy access to necessary documents for your records.

When it comes time to choose a debt consolidation company, making a list of qualities to compare can help you to choose a company that can help you to bring you financial life under control. Time spent in asking questions and doing research will go a long way towards protecting you from predatory companies and let the company you do choose know that you are serious about your money and your goals.