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Debt Consolidation Companies

Elizabeth Johnson

Financial Advisor
Updated: 12/2017

In the world today, more and more people are finding themselves in debt due to lack of knowledge, experience, or budgeting. As a result, people are struggling to eliminate their debt due to high interest rates or failure to stay on top of their debt. Before you are quick to fall behind or even think about filing bankruptcy, it’s vital to understand all of the financial options that are available to you. Even if you are not in extreme debt but want to organize your debt into one monthly payment, there is one financial tool that can completely transform your life and finances: debt consolidation.

In today’s article, we are going to dive into the depths of debt consolidation and how to pick how to pick the best company out of the best debt consolidation companies that exist today. On top of this, we will even cover the different financial options that are available to ensure that debt consolidation is best for you. This way, when it comes to sign the dotted line, you are 100% sure that you are making the right choice.

What is Debt Consolidation?

So, whether you are new to debt consolidation or not, it’s important to begin with the most primitive and basic step: what is debt consolidation? At the core, debt consolidation is a financial method available to consumers to help organize and eliminate debt. As the name implies, it functions through taking one’s debt and merging it together into one large loan. In other words, instead of having four-or-five monthly credit card bills to think about, debt consolidation will simply merge all of these credit card payments into one handy monthly payment.

Many consumers tend to find this financial strategy favorable because of this facet. In light of this, debt consolidation also comes with some unique benefits and advantages. For example, through consolidating debt, one can easily lower their monthly payment, decrease their interest rates, and even, in some cases, pay off their debt quicker. Now, as we said, debt consolidation can result in paying off debt quicker, only if you are careful when selecting a debt consolidation company. In other cases, people have found themselves increase their debt with debt consolidation due to the length of the term and increasing interest rates over time. This is where thorough research is required, which will cover later in the article.

With a deeper understanding of what debt consolidation is – we would like to share some more valuable information about the financial options that are available to you and when debt consolidation companies are right for you.

Understanding Your Options – When is Debt Consolidation Right for You

In the financial sector there are many different forms of financial tools to handle your debt. With that being said, before you sign any contracts with any debt consolidation companies, it’s important to understand when debt consolidation is right for you, and the other options that are available:

  1. Debt Consolidation – Debt consolidation is often best for individuals that already have established credit and plan to only consolidate unsecured debt, such as credit cards. Now, the reason why it’s best for individuals with established credit is, the better the credit, the better the offer and rates that will provided. If you are looking to consolidation a mortgage or home loan, debt consolidation is NOT for you.
  2. Debt Management – Debt management is typically more suitable for individuals with bad credit. If you are unaware of how to handle your debt, struggling to find help in a financial hard time, debt management may be best for you. This is simply where individuals seek the consultation of a debt management or counseling company. This company will craft a debt-payment plan and budget based on your specific situation.
  3. Debt Settlement– This financial tool is quite similar to debt management. The major difference between debt settlement and debt management is that, with debt settlement, consumers are making monthly payments to the counseling agency. From there, the counseling company will handle all payments, ensuring your priorities are taken care of.

As you can see, there are financial tools available for everyone. Now, with debt consolidation, there are dozens upon dozens of different debt consolidation companies, all proclaiming their right as the best company on the market. With that being said, we are going to share some of our best tips on how to pick the best debt consolidation company. As always, if you ever have questions about a company, write it down and be sure to ask it. There are no silly questions when it comes to something as serious as debt consolidation.

How to Pick a Debt Consolidation Company

With a better understanding of what debt consolidation is and the options that are available to you, we are now going to share some tips and tactics to utilize to pick the best debt consolidation company.

Expertise Reviews

Before you are quick to pick just any debt consolidation that claims to be the best, it’s essential to see what the experts are saying about the company. The best way that consumers to learn more about a company is through the Better Business Bureau. This website and company’s purpose is to help consumers view and gauge the reputation of businesses in a professional manner. Here, consumers can file public complaints about a company, effectively making all records public. When it comes to debt consolidation, this could become consumer’s best friends. If you want to learn the truth about a company and expert reviews, BBB is your best source. On top of this, BBB gives business owners the platform to respond and clarify matters, if they so choose. This may also prove beneficial to see how a company responds and reacts to public complaints. Aside from BBB, there are many other expertise sources that consumers can check into. It’s recommended that consumers utilize any search engine and research a specific company and their professional reviews. Here, you will find financial experts and gurus shed insight on both the positives and negatives.

Fees and Charges

On the journey to pick the best debt consolidation company, it’s important to learn what fees and charges a company has. Now, we would like to preface this with many debt consolidation companies are not always too kind and generous when it comes to this information. The truth is, they are more concerned with selling their product and then sharing information regarding fees because many understand that higher rates and fees will be a turn-off for consumers. In our opinion, a company that is not forthcoming with this information should be removed from your lists. For research purposes, always try to, at bare minimum, get an estimate for the costs of the services. This information will come in use later down the road in picking the best debt consolidation company.

Know the Process

It should sound like common sense; however, many consumers often jump into a debt consolidation contract without understanding exactly how the process will work. So, take the time to ask different debt consolidation companies questions regarding their process. What does the process entail from beginning to end? How do they prioritize payments to creditors? What does the payment schedule look like? Ask as many questions as possible to get as much clarity as possible. Like fees and charges, debt consolidation companies tend to be shy on this topic. The more questions you ask, the more you will shine light on their process. Again, if a company is not forthcoming with this information, there are ample of debt consolidation companies to choose from – simply move on.

Compare and Contrast

The best way that consumers can ensure they are securing the best possible deal is through taking the time to compare and contrast different quotes and companies. With previous tips, we talked about learning the different fees and charges and, with this tip, it’s important to compare and contrast all of the information companies provide to see what companies are really the best. Since debt consolidation is such a risky endeavor, any debt consolidation companies that provided minimal information should be removed from the competition. The most pertinent information that should always be disclosed is the length of the debt consolidation loan, interest rates, and the anticipate monthly payments.

Term Length

When it comes to debt consolidation, one of your primary concerns should be how long it will take before you will be officially debt-free. With that being said, learning what some debt consolidation companies term lengths are is crucial! Now, there will be debt consolidation companies that specialize in short-term loans and some that specialize in long-term loans. With that being said, be sure to weigh the costs and benefits of each with your particular situation. Do keep in mind that, while long-term debt consolidation companies can provide better monthly payments, you will be paying more money in the long run. Keep this in consideration when picking the best debt consolidation company for you.

Interest Rates

Are you aware of how detrimental interest rates can be? Many people, given the lack of financial knowledge, never take into consider both introductory rates and go-to interest rates. Many debt consolidation companies will attempt to secure new consumers with lower interest rates; however, after one missed payment, the interest rates will soar beyond payable. With that being said, take the time to look at each debt consolidation companies promotions and find out who can offer the best possible introductory rates and go-to rates. You might be asking, why is this so important? Higher interest rates will extend the life-expectancy of loans and your debt. In other words, the higher the interest rates, the longer you will be paying. In truth, the best debt consolidation companies will offer reasonable interest rates alongside reasonable charges and fees.

Monthly Installments

Before you are quick to signing-up with any debt-consolidation company, you should be clear as to what your monthly installments will be. It’s imperative that you craft a sophisticated budget that matches your lifestyle and includes this future consolidated payment. Now, through crafting this budget, if a company’s monthly payments is causing you to stretch thin or barely making it through each paycheck, it’s not worth it. With debt consolidation, you should find a balance between staying on-top of your debt and handling all other bills without stress.

Honesty and Genuine

In our opinion, one of the biggest indicator of a great debt consolidation is one that stays truthful and genuine through-out the entire process. You never want to choose a company that does not provide enough information or is seemingly money hungry. On top of this, everyone in the financial industry knows that debt consolidation is a risky choice, and expensive to say the least. With that being said, if a debt consolidation company is saying otherwise, they are not being truthful and seeking only to get your money. 

Customer Reviews

On top of taking the time to research expert’s reviews of debt consolidation companies, we highly advise taking the time to look at specific customer reviews. To do this, take the time to read the reviews on social media. In the digital age, more and more customers are heading to social media and other websites to review their positive and negative experiences. We separated customer reviews from expertise reviews as those websites tend to have more professional feedback. Since debt consolidation is such a grave endeavor, we suggest taking the extra step and research.

Picking the Best Debt Consolidation Company

Debt Consolidation is most certainly a viable option for consumers that are seeking an organized method to eliminate debt. However, before you can be quick to sign any contract for a debt consolidation company, it’s imperative that you take the time to evaluate all the options that are available to you. In this article, we have explored and shared the many tips and facets to consider, all of which should help to pick the best debt consolidation company. Keep a look out for more articles on our website that may assist on your journey!