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Consolidation Loans – are they what they seem

Just take a few minutes and really think about what is happening with consolidation loans.  They promise lower payments, they promise lower interest rates.  Seems good huh?  Well look at statistics – in an article written by Dave Ramsey he states that his friend who works at a consolidation company said their studies actually show that 78% of people who enroll in the program actually grow their debt while they are doing the consolidation programs.   Now if you ask me that does not sound like a real solution.  In fact is it well known in the industry that most of the time the payments actually go down because they have lengthened the term of the loan, so that means you’ll end up paying more.  Sounds like you the consumer might be getting the raw end of the deal!  The lenders are MAKING more off you and your credit is being tarnished in the process.

Did you also know that in 2012 Texans, specifically Dallas and Houston, had significantly lower debt amounts that most other Americans?  That is something to cheer about!  But we have to keep on working to help all Texans get their loan amount down and educate them on what to do in the future so we don’t continue this cycle.  One of the things to be aware of is that according to Experian although most Texans carried lower debt loads they had lower credit scores than most Americans, partly due to making late payments.  So there is still work to do as far as improving our state and making sure that we as Texans can work harder to eliminate our debt all while improving our credit scores.  Using a consolidation loan, as you can see above is not always the best answer.

If you are making late payments, or payments that are less that your minimum payment do you know you are hurting your credit score just as much as not making a payment?  There is really no difference.  Also, once you pay off your loan your credit score will start to increase because they will be reported as paid in full.  Debt settlement offers exactly that for consumers.  Yes there will be a negative impact on your credit because you will not be making payments.  Yes you will pay off on your credit in a matter of 3 years or less for less than what you currently owe.  And yes after your debt is paid off your credit score will start to improve.  I am writing this because this worked very well for me.  Be very selective in picking your company to work with you but if you select wisely you will get results that will get your feet on solid ground.  Do not expect results overnight, be realistic.  We have proven since 2010 when we Texans were number 5 worst in America for most credit card debt to now 2012 going to the least credit card debt.  There are options out there and we should investigate what’s best for us and make sure we get out of debt, but beware of getting a consolidation loan to pay off another loan!

 
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