Types of Credit Card Debt Consolidation
There are many companies that are offering debt consolidation solutions for people with bad credit. Many consumers don’t know where to look for help with the recession hitting everyone so hard. If you have bad credit and you’re looking for a debt consolidation loan you can find one. While there are many legitimate companies out there to help you find a loan for debt consolidation there are some companies that are not legitimate and may worsen your situation. Before you jump into a loan with a company you should take several steps to ensure that you don’t end up in a scam.
The most important thing that you should know is the types of loans or services that are offered. Knowing what types of loans and services you will encounter will help ensure you pick the best one for your specific situation.
One type of loan that you will encounter is a debt settlement loan which is also known as a debt negotiation loan. The companies that offer these services will agree to handle your debts by negotiating better interest rates with lenders. This can be a great way to handle your debts and get a lower interest rate. However you should be cautious as some companies will take your money and may not even contact the lenders. This can be a serious problem which can cause you to have many late fees and your creditors may even seek collections.
The second type of loan you’re likely to encounter is a debt consolidation loan. A debt consolidation loan is a loan where you will have all of your debts combined into one loan. This will allow you to have one payment every month. However the downside to this is that the company will usually charge a fee and sometimes an interest rate of their own. This can cause you to have to pay a decent amount of money for your consolidation loan.
Finally you may also encounter a debt elimination loan. This type of service can be a very shady service as companies will charge you a fee and then give you a document stating why that line of credit is not legitimate. This is one type of service that you should avoid at all costs as you may find yourself in a potentially bad situation.
If you’re considering going through a company then you may want to try to contact your lenders yourself. You may be able to work out something with them before you invest your money into other types of service. If you decide to get a credit card debt consolidation loan then you should check the internet and the Better Business Bureau extensively to ensure that you’re not dealing with the wrong company. You can also try to get a loan from the bank or ask a banker for a recommendation. Even if the bank can’t give you a loan the banker will help you find a solution to your problem. You should always remember that if a debt consolidation loan sounds too good that you should investigate it further to ensure that it’s a legitimate deal.