Bill Consolidation Service, How to Use It to Your Advantage
Bill consolidation service has some advantages to it. If one is carrying credit card debt, a car loan and a mortgage, it could be overwhelming to say the least. But if the interest you can get from the new loan is higher or the same as you pay for the other existing loans you're aiming to replace with one bill, there is no sense in going through this route.
Select the best consolidation service you can find. Study them carefully and get references for them to see if they are legitimate. See if they are accredited and if their customers have been satisfied. Find out from the Better Business Bureau if there have been problems with their record.
Compare the record of approximately three companies to see where you can get the best deal for your money. Don't agree on the first rate you get. Try another company and see what they will offer. Get these companies to compete with one another until you get the best offer.
Tally down how much each company will cost you. Remember that the reason you're getting this loan is to get out of debt. So you have to choose the one that will cost you the least amount of money. Hopefully, in your talk with several companies, you have written down how much the loan will cost you from the start to finish.
There are two directions a bill consolidation service can go. One direction is mostly an actual consolidation of all debts. A new loan will take the place of a number of loans and usually the new loan will be considerably less than all the other payments for the old loans put together. This may make one jump at the chance but hold your horses for there are pitfalls to consider.
Remember what I said before? Interview a number of them. Write down the amount of the loan and all the payments including the total amount that goes to the company that is giving you the service and add them all up. Do the same with another company, and another, and yet another. Compare all the figures and you will see which one will cost you the least.
Sometimes it is just too tempting to sign up for the first quote when you find out that the amount you will pay is considerably less than what you are paying now. But consider this, usually the loan will last a longer time and will cost you more, much much more in the end. Ouch, indeed!
The temptation is great because you can tell in one glance you will have enough money for a surround TV system, just like in the movies. Or a boat, or a cruise and what have you. Then after we have spent all that extra money, here we go again. So think hard before you proceed.
The other direction the bill consolidation service is through credit counseling. This is well and good if it is real credit counseling but mostly the root cause of misspending is not addressed so the cycle is not broken. And this credit counseling hides behind the skirt of the consolidation service.
Mind you, the bill consolidation service offered through credit counseling is usually cheaper because they will not offer a large one to make you pay a monthly service fee for a longer period of time. What they usually do and this is the good stuff is negotiate with all your lenders to lower your loan, not only the amount but the interest rate as well.
So the monthly payment will be lower and if you stick to the terms you will soon be debt free. This is the problem. Only 30% sticks to the terms of the agreement making the interest higher again. So make sure you stick to it and you will be just fine.
There's another danger here too. They say that going through the credit counseling route will make one get a negative record in the credit report. Not fair, is it? Try to negotiate by telling them you will only sign up if you will get a clean record as long as you stick to the problem. Nothing ventured, nothing gained so go and get the best bill consolidation service.
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