The Truth in Debt Consolidation Lending (cont.)
Contributed by Melanie Vannuys
Scams In The Debt Consolidation Lending Racket
Lenders who are trying to get you to use their company for a debt consolidation loan will try to use all kinds of flowery and tricky language to try and prove to you that they know what's best. However, there are few things you should be aware of.
While lenders can certainly charge you whatever interest rate they think is fair, most of the time the rates are unbelievable. If you're fortunate enough to have good credit, you can expect to pay between 4% and 15%, while if you're like so many others who don't have good credit, you'll likely pay 18% and higher. It is sometimes easier to negotiate the interest rate with your credit card directly and avoid the debt consolidation.
The second largest "scam" in this industry is the single premium credit insurance. The lending companies paint this rosy picture of how beneficial it will be if something should happen and you can't pay your bills. What they don't tell you is that it's just another way for them to generate income. The idea behind the credit insurance is that it will pay your loan should you become ill or lose your job. What they don't tell you is that these payments can add up to the tune of $2000 more to your loan!
