| Most debt consolidation loans rarely solve the problem | | | | make a fortune. |
| of getting out of debt. Typically and individual will | | | | The FTC defines Debt Consolidation as: "you may be |
| contact a bank or a unsecured credit company of | | | | able to lower your cost of credit by consolidating your |
| sorts and they will request a loan for an amount high | | | | debt through a second mortgage or a home equity line |
| enough to pay off smaller accounts. The consumer | | | | of credit. Remember that these loans require you to |
| hopes to achieve the security of one monthly payment | | | | put your home as collateral". When a lender loans |
| and that is the only benefit they will receive. | | | | money to pay off all your credit cards and other debt, |
| Consumers often impatient will not seek out the best | | | | you have one monthly bill which is paid to the lender. |
| finance company for their loan and rather act on | | | | Often these loans do not have a lower APR, and can |
| impulse. When a bank looks at offering you a loan to | | | | be as high as APR's of 24%. Even if you do get a |
| pay off other accounts they are technically assuming | | | | decent APR, you are still in debt. The big mistake |
| the debt for you. They evaluate the risk and 90% of | | | | which the debt management industries have seen is |
| the time the interest rate on the new loan will be the | | | | people giving up unsecured debt for secured debt. |
| same or higher than what the present rates are on the | | | | Many consumers nowadays are turning to the ever |
| existing accounts. The bank issues loans to make | | | | popular debt settlement programs that are readily |
| money not to give indebted consumers an interest | | | | available by a variety of companies and law firms. |
| free route out of debt. | | | | These types of programs provide one lower monthly |
| 0% offers are a great example. Banks data mine the | | | | payment unlike a typical loan where because the |
| credit bureau's in order to find the consumers with | | | | amount of debt does not change so a payment |
| debt that they can entice to transfer balances to | | | | reduction is not possible. Debt settlement programs |
| these 0% accounts. On average less than 1% of | | | | negotiate with your creditors to reduce the amount of |
| balances that are transferred for 0% financing offers | | | | debt that you owe. |
| are ever paid off within the allotted period of time. The | | | | Always consult a banker or other official before |
| banks count on that for future earnings. For the banks | | | | looking into potentially costly consolidation loans that |
| its almost like shooting fish in a barrel. It may take them | | | | could potentially have you paying your debt years |
| a year before you pay a penny in interest but when | | | | after you would have initially liked to. |
| you pay your debt for the next 20 years they will | | | | |