This article will explain some considerations before you take out a debt consolidation, a step for rolling all your loans into one single bill (with a lower interest rate). At least you should consider several things below:
- You may have to consider some other options before taking refinance
- Examination of every debt consolidation loan
- You need to avoid the trap of refinancing
- Ask for more convenience
Consolidation can be interpreted as a refinancing loan and this can be useful for some people because they do not need to be bothered by the bills. They just need to concentrate on just one bill. If you want to take out a debt consolidation as a solution then you should consult your credit card company. Tell them all the things that make you cannot pay the debt in a timely manner. If they can provide the relief then you probably do not need to take the path of consolidation but if what happens does not match your expectations then you can contact a third party as negotiation service provider for debt consolidation or debt settlement.
Some things you can do before you decide to take a debt consolidation as your solution:
Switch the loan
This is one solution that can be used but you should be wary of brokers who encourage you to switch the loan. Most brokers are likely to mislead their clients about how much they (clients) can save. Sometimes switching the loan can be a very bad thing.
Sell your home
If you own a home as an asset that you can sell it without involving a mortgage broker. You should watch out otherwise you’ll find yourself just end up as a homeless person who still has to pay some bills.
Follow financial counseling
You can follow a variety of financial counseling to help you in deciding what to do to free yourself from the shackles of debt.
Assistance of Ombudsman
If you see an injustice in a negotiation that has been done then you are advised to contact what called an external dispute resolution scheme for free.
- Do not trust anyone who asks you to sign a blank document as a blank document is a kind of classic trap for any inexperienced person.
- Compare everything with detail, especially the new interest rate to be borne.
- Consider the term of the loan so that you can avoid the “trap of low interest rates.”
- Using a personal loan calculator so you can compare different loans.
- Make sure you only contact debt consolidation companies that already have an official license.
- You should not deal with refinancers who make unreasonable promises.
- You should be aware that some brokers do not disclose the total cost in time for the borrower when they take decisions.
- Find info about “equity stripping”, a sneaky trick where the brokers charge fees higher than the actual value of the home equity.
- Again, do not ever sign a blank document of any kind!