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The main point of any warning, concerning a company that is offering a debt consolidation loan, even one with an unbelievably low interest rate, to individuals with poor credit, is that looks are often deceiving! Fraudulent, illegitimate companies are well positioned and numerous, in the debt consolidation industry, since these charlatans feed off desperate, in debt people.
The first interesting, red flag warning, stems from the fact that most of these imitation, debt relief assistors, will require you to send in a one time processing/application fee. This is how they make their profits and it is one of the most slippery slopes in the debt relief industry these tough days.
Many times, you will go through the first steps of these forms of loans and then when you call to inquire about the status of your loan, the company has pulled up stakes and departed, with your initial processing fee and your hopes of a smooth, painless, debt release instrument and exercise.
Additionally, once you enlist the help of the local authorities there is nothing that they can do about locating these slick, professional, con-artists! It is best, to only conduct business, with a legitimate consolidation company, like the one right here.
Payday loans are yet another trap that many people who are struggling with deep debt often fall into. The payday loan company requires that you show them recent pay stubs, and they advance you cash, based on the wage amount.
These payday loans are marketed as short term loans that are to be paid back, on the next payday, or spread out over several paydays. The fees that these rip offs charge are often too high for any in debt person to pay. A good way to see how this program works is through the basic math equation listed below.
Borrow $400.00 Pay Back $50.00 per Week End Up Paying $650.00 or More!
If you are unable to make the payment you will then be forced to renew your loan at a penalty of $40-$50, for each occurrence. This makes no economic sense at all, only to the facilitators of these payday loans. Since you came looking for help as an in debt person, the last thing that you needed was a pilfering of your hard earned monies!
Home equity loans are extremely very popular since most homeowners that are in debt, see this as a very attractive situation. In many cases, the person with credit problems, may be tempted to take out a home loan, to consolidate all of their unsecured debts. The problem is that this converts unsecured debts to a secured debt. Fall behind, on even one monthly payment, and you could find yourself out of a place to live.
Although loans through finance companies are very similar to loans through a bank, finance companies are not banks. These firms are in business to make money through the lending of money. The standards are much lower for these types of companies and in no way should be mistake for banks.
You may be able to get a consolidation loan from a finance company, but, because they make loans to so many, poor credit risks, you will pay unbelievably high interest rates, often as much as 40%.
Most banks are willing to work with you, in an effort to settle the monthly payments, but that is not a guarantee of protection. You must recall that each time you are late on a monthly payment, that lateness will cost you in fees and other penalties. Additionally, you may also be required to put down your car or some other valuable possession, as collateral, to secure the loan. This can result in a loss of possession for the collateralized item, in the event that you default. Moreover, collection department harassment and wage garnishment are the norm with finance companies.