It is far too easy to get into debt. Credit card offers in the mail. Retailers are offering their own store cards. Even banks try to lock you in on bigger student loans. It is also easy to feel powerless with debt.
The only way to feel in control is to educate yourself on debt. Debt consolidation companies are sometimes not your friend. Most claim to be able to help these people with this unmanageable debt. If you are thinking of using a debt consolidation service, you need to be informed. If you understand as much as possible about the process, you won't hate yourself from making the wrong decision.
Here are some things to consider when getting a debt consolidation loan:
- You Will Still Be in Debt
Debt consolidation will usually make your debt situation easier to manage. The smaller payments are the sell point for these companies but there is a catch. If you are not careful, you might be tempted to spend the extra money, putting yourself into more debt later. Do not think just because you got a debt consolidation loan, that you can continue to get into debt. A debt consolidation doesn't take away the fact you still owe money.
- You're Paying More - in the Long Run
Do consider that fact that you will be paying more money overall with a debt consolidation plan. Consolidation companies are businesses too and make money with their services. They will produce this income through the extra money you pay, over time, through interest payments. You need to recognize that different consolidation companies will ask more for their services so do research to understand which debt consolidation company charges you the least amount of money over time.
- Consolidators can be Sharks
Not actual sharks but they can eat away at your pocketbook. Just like many businesses they are not looking out for your best interests. The best way to know if they are is if they tell the truth and offer full disclosure. They tell you the good side and bad side. There are companies out there that will charge outrageous amounts over the life of your loan, either by charging back end fees or lengthening your loan so you end up paying more in interest.
- It's not the Silver Bullet
Debt consolidation is not the silver bullet to your debt problem. If anything, it can make things worse. Not changing your financial habits that caused the debt will only make things worse. The more you are able to change your financial habits, the more beneficial the debt consolidation you have will be.
There are debt consolidation companies that can help you with your debt and thought they can make money off of you, it can be worth it in the end. Just remember that they feed off the desperate, so before you make a decision, take your time to do research the best option.