Debt consolidation is a great way to get a handle on your out of control debt. However, with so many debt consolidation companies out there, how do you know which one to choose. Here are 14 easy steps that you can use to help guide your decision in choosing the right debt consolidation firm for your needs.
Understand debt consolidation options.
Before you begin the process of looking for a debt consolidation lender, the first step is to understand the two different types of debt consolidation companies. Debt consolidation services can be divided into two groups: debt negotiation services and debt consolidation lenders. The former are not lenders. Their services are aimed at helping borrowers lower their debt by negotiating better deals with your existing creditors. This process can take a little while to begin showing benefits, however, are very effective in helping people pay off debt. The latter are the companies that are ready to help you now by offering you a way to pay off your existing creditors now using a loan product known as a debt consolidation loan. You still have to repay your debt, but the interest rate is lower, the payment amount is fixed every month and you won’t take a hit on your credit like you do with a debt negotiation service. There are major benefits to taking out a consolidation loan over having your debt renegotiated.
See if they are accredited by any trade associations.
While there is no onus for a debt consolidation loan company to belong to any sort of professional organization, those who take their roles seriously often do. For example, a debt consolidation loan company that is truly interested in helping people pay off debt and learn better financial discipline may also offer credit counseling services. If so, they may belong to the National Foundation for Credit Counseling or the Financial Counseling Association of America. Lenders do not have to offer such services and those who do may offer high quality services without accreditation. However, if this is something that you are interested in benefitting from, you might make this part of your search criteria.
Check their rating with the Better Business Bureau.
Reputable lenders will have a solid track record with their clients. Having a good rating with the Better Business Bureau (BBB) will reflect their commitment to their customers. It will also help you see how responsive they are when it comes to responding to customer needs/issues.
Confirm that they are licensed
Lenders are required to comply with many regulations that govern how they go about their day to day business. One of these requirements is that they obtain and maintain a license in the state in which they do business. To check this status, all you have to do is locate the state’s website on the internet and run a search. Active business licenses are available for you to look through.
Inquire about their fees.
Reputable debt consolidation loan companies don’t charge exorbitant fees for their services. As with any other loan, you will have to pay a loan origination fee and you will have to pay interest on the loan. Steer clear of the companies that want to charge you outrageous fees for obtaining a loan.
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