Important Things to Know for Proper Evaluation of a Debt Consolidation Loan Company

When you browse the Internet, you would find numerous debt consolidation services vying for your attention. You would come across a lot of advertisements and promotion but before you start your search for a suitable debt consolidation company, you must necessarily boost your knowledge and enlighten yourself with certain key facts so that you know the difference between a trustworthy genuine debt consolidation company and an illegal or spam company.

It is really difficult to differentiate between the companies that are helpful and those that would sink you deeper into the dark hole of debts. But once you are clear about the basic issues and concepts involved you are good to go. You must sharpen your knowledge about the different kinds of companies, the costs involved, the advantages, the drawbacks, or the traps associated with debt consolidation. Only then you could properly evaluate debt consolidation services.

When You Should Consider Hiring the Services of a Debt Consolidation Company

Debt consolidation is supposed to combine seamlessly multiple debts into a single payment with the intention of simplifying your repayment process and schedule. It would also be reducing your overall monthly debt repayment amount.

Professional debt consolidation services would be helping you in paying off all your debts faster and alleviating the tension and stress related to paying bills. In case you are having an ever-rising unsecured debt, you could consider partnering with a trustworthy debt consolidation company. However, you must have a steady source of income.

Any reputed debt consolidation services would be working with you to chalk out a realistic and affordable monthly payment amount and they would be advocating your creditors on your behalf and would be helping in making your debts far more manageable.

Learn about the Different Types of Plans

There are many kinds of debt relief options, however, two major kinds are popularly chosen by many people. Both methods are supposed to help you achieve the same objective but they actually differ in terms of approach. Your success depends primarily on your capacity to understand these basic differences and choose the most suitable plan to cater to your specific needs.

Debt Consolidation: This kind would involve taking out an appropriate debt consolidation loan. You can then use the loan for paying all your existing debts at once. Then you need to make monthly payments to the debt consolidation company till the loan is repaid.

Debt Settlement: This would actually involve identifying a company that would be negotiating settlements for all your current debts. You would be required to pay them a fixed monthly amount and then they would be distributing the amount to your creditors.

Your first step toward debt consolidation is identifying the right type of debt relief plan for your unique requirements. Whatever your choice, you must opt for an option with an affordable monthly payment.

Learn the Key Benefits of Debt Consolidation Loan

Installment loans would be looking good in your credit report. However, if a reputed company accepts your debt consolidation loan request and offers an enticing interest rate, it could be a wonderful way of paying off all your existing higher interest debts and effectively boosting your credit score.

Moreover, you simply need to manage a single monthly payment. You no longer need to juggle multiple payments and no need to keep track of different due dates. In certain cases, you could even organize a convenient EFT withdrawal directly from the checking account. This way, you would never miss any payment.

Understand the Drawbacks of a Debt Consolidation Loan

It could be pretty challenging to get an approval for a debt consolidation loan. It is as difficult as getting approval for a personal loan. In case, you have been defaulting due to the burden of excessive debts, there is a chance that you would not be qualifying for the debt consolidation loan. Moreover, you could be in double trouble if you have already made the mistake of seeking a debt consolidation loan and simultaneously using your credit cards again. Debt consolidation loans must be utilized for consolidating your debts and not for increasing your debt.

Always Make It a Point to Read Carefully the Fine Print

Whenever you are hiring the services of a debt consolidation company, there would be fees involved. You must make sure that they are not asking for any money upfront or that they are not charging any extra fees. You must read carefully the fine print so that you could discover any other fees hidden somewhere in the fine print.

Remember often reputed companies also ask for additional charges that you may not be able to figure out until you have already signed the agreement. You must make it a point to read carefully the contract, its terms, and conditions.

Always Try to Compare Rates

It is best to seek quotes from two or more companies so that you could do a comparative study of the prices and services offered. Some debt consolidation companies would be offering better deals as compared to the others. In this context, you must always remember to factor in all the hidden charges while comparing multiple offers.

Find Out If the Company Has a Good Reputation in the Market

You must browse the Internet and go through the customer reviews about the particular debt consolidation company you are thinking of doing business with. Examine the website of Better Business Bureau. See if any complaints are lodged against your chosen company. You could seek recommendations from your close friends and family. You may rely on word-of-mouth.

Do Not Forget to Get All in Writing

You should never trust a company that has agreed to work for you based solely on verbal commitment or authorization. You must also ask for relevant documentation. You must maintain all copies of paperwork involved. A reliable company would be sending you an accurate breakdown of exactly where your money would go every month.


Identifying the best company for assisting you in debt consolidation would be time-consuming, challenging, and demanding a lot of patience. It is essential to do a thorough scrutiny as that would give you an ultimate peace of mind and you could save thousands of dollars.

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