3 Debt Consolidation Strategies you Should Avoid

Hiring Debt Consolidation Firms

There are several debt consolidation firms all over the country. These companies often target people that are desperate and in bad monetary situations. Such companies will promise you that you’ll make huge savings and reduce your debt. However, in the real world, this cannot be possible. Therefore, most of the time hiring such companies won’t benefit you. These lenders are costly, and you can do the same work free of charge by only investing more time and also by being persistent. Keep in mind that debt consolidating companies aren’t free, and will make promises that aren’t reasonable. Instead, consider credit counseling which can sometimes be free or inexpensive by not-for-profit firms that can assist you with making repayment plans and budgeting.

Commercial Hard Money Loans

Commercial hard money loans are either personal loans or mortgages secured using collateral. You will need to place a huge down payment or provide collateral in the form of real estate property, cars, or jewelry. Commercial hard money loans have high-interest charges. Because of the high-interest rates, you will most likely be unable to pay the principal amount (defaulting) and when in such a situation you’ll lose your collateral. However, commercial hard money loans are sometimes beneficial because there isn’t any credit required. But this type of debt consolidation should be avoided.

Balance Transfer

If you have credit card debts but make prompt payment, credit companies will compete for your business. Although they may give you great introductory rates sometimes with 0% interest rates, the rates will quickly increase until you’re unable to pay the monthly payments. There is a 3% to 4% transfer charge, and this means that the 0% rate is not real. You won’t have paid off your debt even with the 0% introduction rate, and you’ll pay more money in the long run.