While not all debt consolidation companies can be placed under the
header ‘scammers’, there are quite a few that will take advantage of a
consumer’s financial concerns by making all sorts of promises, and then
not delivering on those promises. Many of these companies will ask
trusting, unsuspecting clients for advance fees before the loan
transaction has been completed, or you never hear from them again.
Another ‘trick’ that these scammers use is claiming that they are a
non-profit organisation, while funnelling their funds to their
for-profit companies. With deceptive names, many unsuspecting customers
are willing to trust them and then fall prey to their deceit, falling
deeper and deeper into the debt trap, suffering rising interest rates
and penalties, as well as a damaged credit score or worse, bankruptcy.
Precautionary measures
In order to avoid losing your money on your quest to becoming
debt-free, it is advisable to take the following points into account.
Before you consider signing any type of agreement with a debt
consolidation company, read this:
Excessive fees
Not all finance companies with dubious intentions will cheat you out of
your money, but they could still charge you excessive fees, adding to
your debt. Look out for things such as sign-up fees, service charges and
other monthly fees.
If it sounds too good to be true, it often is
Most debt consolidation companies will offer products that sound too
good to be true. Remember that no additional loan will instantly solve
your debt problems. Use good old fashioned discipline and discretion.
Contact a bank instead
Contacting a reputable bank is probably one of the safest ways to apply
for finance for debt consolidation. They can offer you personal loans
or give advice on other options such as applying for an access bond or
re-financing your vehicle.
Taking out debt consolidation finance
can help you with getting your debt out of the way in a manner that is
more manageable and more affordable on a monthly basis. Don’t forget
that this solution is not ideal. If you do decide on a debt
consolidation loan, make sure you deal with a reputable company, or
better: contact your bank instead.