subject: Debt Reduction Tips - Is A Consolidation Loan Financially Wise? [print this page] Debt Reduction Tips - Is A Consolidation Loan Financially Wise?
If you are in debt, you're not alone. But with a consolidation loan, debt reduction is possible so bill collectors can leave you alone. There are many financial services that can offer you a consolidation loan, debt reduction counseling and other services to teach you to manage your money. These services vary from company to company, so be sure to shop around for the best value.
What Is It?
A consolidation loan is a special loan that usually only home owners can get. The debt reduction service pays off your debts. You then pay the debt reduction service monthly or bimonthly payments of the loan. Why would they give you a consolidation loan? Debt reduction services are banks, even if they claim to be non-profit, so they are not going to give you're a consolidation loan out of the goodness of their hearts. You have to put your house or property up as collateral. If you miss paying your consolidation loan repayments, you do stand to loose your home.
The benefit of a consolidation loan is that you're not paying the high interest rates of student loans or credit cards. You also don't have to pay a variety of companies every month you just pay the debt reduction service.
You will not have all of your debt problems removed from a consolidation loan. Debt reduction must become a priority in not only your life, but the lives of everyone you are living with. You have to know where all the money is going and curb unnecessary expenses. If you don't make any effort to live within your means, you will go right back into debt.
How To Tell A Shady Debt Reduction Company
There always has to be a rotten apple in any business field, and debt reduction is one that has some scam artists. Forget about getting a consolidation loan, debt reduction loan or anything else if the prospective company:
asks for donations for it's own company "because we are non profit"
asks you to lie or exaggerate anything, especially anything in writing
asks you to pay for an initial consultation or even for information about their company
offers you a loan and interest rates without first reviewing your current financial records
makes no effort to help you learn how to manage your money yourself
One place that can help you look for a reputable debt reduction service is from whoever you owe the most money to. Your bank, broker or credit card service may have a list of debt reduction services that they have had good, safe business with in the past.
