How Debt Consolidation Quotes Can Help You Avoid High Fees and Fraudulent Practices

If you are thinking about consolidating your credit card debt, you can avoid scams by getting debt consolidation quotes and consultations from several companies before making your decision. Knowing what to ask and what to look for will ensure that you not only get the lowest interest rate available, but that you also do not push yourself deeper into debt.

There are two ways to get a consolidation loan. The first is to get one secured loan that is backed by your home equity or the value of some other form of collateral. This one loan replaces all of your unsecured loans (such as credit cards) and you make one monthly payment instead of several. These loans are generally obtained through banks or other lending institutions. The second way is to have a debt consolidation company purchase your unsecured debt at a discounted rate, and then give you one unsecured loan, usually with lower interest rates and lower monthly payments. You do not need collateral, or even good credit, to obtain this kind of loan.

Although banks and mortgage companies may appear more legitimate, and therefore more reputable, than the debt consolidation companies, getting scammed is possible with either type of lender. In some cases, the bank or mortgage company will wait until a client is struggling with payments and then will offer consolidation as an option, but with significant fees tacked on. The hope is that the client will either not have the time to shop around, or will not realize that there could be better options available.

Debt consolidation companies, on the other hand, will try to convince you that you need to pay significant fees upfront, or even that you need to pay for your consultation. Their employees are also trained to try and get you to sign up with them immediately. They will often play to your fears to get you to sign agreements and pay large fees without looking around.

To avoid paying too much for your debt consolidation loan, whether secured or unsecured, compile a list of at least three or four companies from which you will obtain a debt consolidation loan quote. Before you even call, check the company’s status with the Better Business Bureau and your state’s Attorney General. Then, make sure your consultation with the company is free. Do not provide any personal information. They only need your balances, monthly payment amounts, and interest rates to give you an initial quote. Finally, after you have received all of your quotes, take some time to compare the advantages and disadvantages of each quote before making your decision.

To avoid paying more than you need to in either fees or interest rates shop around for your debt consolidation quotes before making a decision.