Bad Debt Consolidation Can Be Thelmost Like The Fairytale.

Posted by Graham McKenzie

December 18, 2009

Somehow, there is someone out there that can take all your debt and put into one easy payment while lowering it at the same time. By doing this, you are supposedly going to save money somehow. Bad debt consolidation loans are not as great as you might think.

These advertisements seem to be everywhere you look. Businesses who prey on those who are overwhelmed with debt.

They tell you that debt relief is a simply click away, or cut your payments or interest rates in half.

These promises are extremely appealing to those who are sinking because of too much debt. They are willing to try anything to get it taken care of. Before you start looking at these companies, there are some things you should know.

There are three bad consolidation moves that you might take

Getting a consolidation loan is not the best choice. The interest rates are very high. While your payments might seem lower, it is going to take longer to pay it off. Bottom line, you end up paying more over all.

Consolidation companies offer to get your payments and interest lowered and deal with your creditors if you make a small payment upfront.

For the most part, your monthly payment includes a fee that you will pay to them. It is about 10 percent of your payment. They make your payments and receive 10 to 15 percent back from your creditor.

Why should pay them when you can negotiate with your creditors for free?

Creditors are infamous for intimidating debtors. Because of this, many debtors avoid any contact with their creditors. You decide to deal with a debt consolidation company instead. They all offer the same services but think about this. They estimate that you will spend 32 years paying off your debt by yourself. They say they can do it in 4 and half years. Sounds good until, you do the math.

Get a calculator or find one on the internet and put in the numbers. You are going to find that you can pay off your debt faster on your own.

Debt consolidation companies also have a reputation for missing payments. Isn’t that what you are trying to stop?

Finally, do not transfer balances from one credit card to another. In the beginning you may have a lower interest rate but it is only an introductory offer. To keep a low rate, you would have to constantly switch cards. This has a negative impact on your credit.

Get in touch with your card companies if you choose this option. Tell them to put closed at consumers request and close the account.

Some good options for paying off your debt are listed below.

Home equity loans have low interest rates and offer a tax deduction for the interest you pay.

You can also refinance your home if you have equity built up. Pay off your debt with the money you receive.

Several other option are refinancing your car, getting a personal loan and negotiating for better interest rates.

Layla Vanderbilt is the webmaster for a leading website that offers for instant bad debt consolidation advice and guidance.

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