Be Cautious of Debt Consolidation Loans

Many Available Offers

A number of advertisements for debt consolidation loans all promise to help you get you out of the debt trap you are in. Tempting those who are swimming in debt, these offers seem like a godsend. Carefully examine the offer before signing up for the program. Getting out of the debt trap is what you should be concerned with. The first offer that comes your way may not always be the best deal for you. Before signing up for any offer, here is what to look for.

Credentials of the Lender

One of the first things that many people who are in debt do is jump at the first offer that comes their way. It is only natural for them to do this, considering the anxiety they feel. If they do not understand the program, they should not be signing anything whatsoever. With many debt consolidation companies, you are required to fill out another one to two page form that will be sent along with your application to their network of banks. Once this happens, you will receive several offers. Any debt consolidation company that asks you to pay a fee to fill out this form is nothing but a scam. You should not have to pay any fees for this part. There are certain other charges that may be applicable, but you must watch these closely.

Amounts Offered

The debt consolidation program basics are the same across the board. From bank to bank, there will be slight differences and fees charged. Every bank will give you differing amounts of time to pay back the loan. The finance charges you will have to pay is the interest on the loan. You must watch out for any scams with these type of loans. Below are some of the scams that have infiltrated the market.

Keep Your Application Fees

Application fees are the biggest scams of all. Loan application fees are strictly not allowed. Taking your money just to get your basic information is unacceptable. Any company that does this should be avoided.

Loan Product Fees

Some companies charge well in excess of 15% of the money offered as loan product fees. Each month, your payments will reflect an additional 15%. Renegotiate with the lender or go elsewhere if they are doing this.

Offered Advice

Ask questions from those who have been in such situations and learn from their experience. This advice should not be ignored. Avoiding scammers or getting out of debt will result from this information. Gaining your own experience can happen if you make the right decisions.