Is Debthunch’s 0% Interest Rate Offer a Debt Consolidation Scam?
Debthunch looks like a bait and switch debt consolidation loan scam. Debthunch flooded the market with offers of 0% APR debt consolidation and personal loans in the mail. The problem is, the terms and conditions are confusing, if not suspect, to say the least.
The interest rates are so low that you would need near perfect credit to be approved for any of Debthunch’s debt consolidation offers. “This is nothing new,” according to Ed Miles of Crixeo, “Low APR debt consolidation offers through the mail are about as old as the US Postal Service.”
According to an industry insider who has chosen to remain anonymous, “Debthunch is just a middleman. The companies they sell leads to are the real bait and switch artists. But Debthunch knows that they sell most of their leads to debt settlement companies, not to real lenders.
If you are drowning in the deep sea of student loan payments, medical bills, credit card debt, or auto loans, you may be looking for a life jacket to help you. However, did you know that debt consolidation can make paying bills an organized and easy process by consolidating multiple high interest debts into one payment? So, if you are looking for a way to balance your unpaid debts and keep track of your payments, debt consolidation will allow you to manage it. Read on to learn more about debt consolidation, its pros and cons, and how debt consolidation will work for you.
The process of debt consolidation can be defined as the combination of two or more payments into one larger debt. The approach is often used by consumers who are struggling with multiple loans at the same time. This makes it easier to keep track of your payments, but debt consolidators usually get a lower interest rate on their credit cards.
How Does Debt Consolidation Work?
When a person opts for debt consolidation, they combine all of their monthly bills or loans into one debt. So instead of making several small payments, you only have to make one payment per month. Plus, the new consolidated debt loan is usually at a lower interest rate, which can be beneficial to you in the long run.
DebtHunch Debt Consolidation vs. Debt settlement
Both debt settlement and consolidation prove to be beneficial in improving loan repayment. However, the two work differently. When debt consolidation reduces the total number of creditors, debt settlement will help you reduce the total loan amount you owe. Read on to find out more about the approach you should go for.
In addition to making your life financially easier, debt consolidation also benefits you psychologically. Combining all of your payments into one lump sum takes the stress out of managing multiple payments each month. In addition, it is also possible that consolidating your debts will reduce the overall average interest rate on your debts. For example, if you previously juggled five loans at a time, that means you had to pay variable interest on each loan. However, opting for debt consolidation will result in a single interest rate each month.
Debt consolidation can be subdivided into two broad categories: secured and unsecured debt consolidation loans. The secured loan requires you to use one of your assets as collateral. This means that if you take out a home equity loan, your property papers will secure the loan.
On the other hand, debt settlement requires you to ask your creditors to reduce the amount of debt that you are supposed to pay. If you and your creditor reach a settlement, all you have to do is pay the new amount either in installments or in one lump sum. One of the main advantages of debt settlement is that it allows you to reduce the total amount you owe.
However, you should know that creditors have no legal obligation to accept or even participate in debt settlement negotiation. Additionally, suppose you opt for debt settlement. In this case, it is essential to have the amount of the offer on hand in order to be able to close the deal easily. It has been suggested that creditors should only consider debt settlement if payments are significantly overdue.
If you’re struggling with recent loans or don’t have enough cash on hand, consider debt consolidation over debt settlement.
Pros and Cons of Debt Consolidation
There is a good chance that the amount you owe will increase over time, especially if you have a credit card or have multiple loans to pay off, each with specific terms, balances, and interest rates. You should try to combine them all into one easy to manage payment. The advantages of debt consolidation are as follows:
- Allows you to pay off debt sooner.
- Simplify your finances.
- The consolidated debt amount has a fixed repayment schedule.
- Boost your credit.
- Consolidating your debt lowers the overall interest rate.
However, like everything else, even debt consolidation has its drawbacks. Below are the downsides you should consider before taking out a consolidated loan:
- It will not solve your financial problems.
- Debt consolidation can have upfront costs; this includes annual fees, closing costs, balance transfer fees, and loan origination fees.
- You may have to pay a higher rate.
- Missed payments will slow you down and cost you more.
- Debt consolidation will not reduce the total amount of your bills.
Is debt consolidation a good idea?
Debt consolidation can be a wise financial decision if you are trapped under the burden of loans. It can help you simplify your payments to a single amount. However, you should only consider going for debt consolidation if you have significant debt or are planning to improve your financial situation and are looking for a quick fix. On the other hand, consolidating your debt is also ideal if your credit amount has increased until the total interest on a consolidated payment is lower. Finally, you should only opt for debt consolidation if you have reliable cash to cover your monthly payments.
Before you start consolidating your debt, your goal should be to create a plan to help you pay off your loan early. However, you must also qualify and get approved for a lower interest rate. If you can’t control your financial balances and you tend to go up, credit debt consolidation might not have a major effect on your finances. A person who opts for debt consolidation should be someone who can keep control of future debt for a financially stable future.
Wrap it all up!
Do the math and only consider consolidating debt if it saves you money and benefits you financially in the long run. The most important thing to remember is that debt consolidation does not decrease your credit payments; it only helps you to repay them on favorable terms.
William Wrigley Jr.