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 that the terms and conditions are confusing, if not suspicious, to say the least.
Interest rates are so low that you would need to have near perfect credit to be approved for one of the Debthunch Debt Consolidation Offers. “It’s nothing new,” according to Crixeo’s Ed Miles, “low APR debt consolidation offers through the mail are about as old as the US Postal Service.”
According to an industry insider who chose to remain anonymous, “Debthunch is just a middle man. The companies they sell tracks to are the real bait and switch artists. But Debthunch knows they sell most of their leads to debt settlement companies and not to actual lenders.
If you’re drowning in the deep sea of student loan repayments, medical bills, credit card debt, or auto loans, you might be looking for a life jacket to help you out. 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’re looking for a way to balance your debts and keep up with your payments, debt consolidation will make it easier for you. Read on to learn more about debt consolidation, its pros and cons, and how debt consolidation will work for you.
The debt consolidation process can be defined as the combination of two or more payments into one larger debt. This approach is often used by consumers struggling with multiple loans at the same time. This makes it easier to track 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 smaller payments, you only have to make one payment per month. Moreover, the new debt consolidation loan is usually at a lower interest rate, which can benefit you in the long run.
DebtHunch Debt Consolidation vs Debt Settlement
Debt settlement and consolidation both prove beneficial in improving loan repayment. However, the two work differently. Where debt consolidation reduces the total number of creditors, debt settlement will help reduce the total loan amount you owe. Read on to learn more about the approach to take.
In addition to making it easier for you financially, debt consolidation also benefits you psychologically. Consolidating all your payments into one installment saves you from having to manage 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 used to juggle five loans at once, that means you had to pay variable interest on each loan. However, opting for debt consolidation will result in a single interest rate every month.
Debt consolidation can be divided 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 you are expected 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 payment. One of the main benefits of debt settlement is that it allows you to reduce the total amount you owe.
However, you should be aware that creditors have no legal obligation to agree to or even participate in debt settlement negotiations. Further, 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 proposed that creditors should only consider debt settlement if there is a significant delay in payment.
If you’re struggling with recent loans or don’t have enough cash on hand, consider debt consolidation over debt settlement.
Advantages and disadvantages of debt consolidation
There’s a high chance that the amount you owe will increase over time, especially if you have a credit card or have multiple loans to pay, 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:
- Allows you to pay off debt sooner.
- Simplifies your finances.
- The consolidated amount of debt has a fixed repayment schedule.
- Gives your credit a boost.
- Consolidating your debts lowers the overall interest rate.
However, like everything else, even debt consolidation has its drawbacks. Below is the list of disadvantages you should consider before taking out a consolidated debt loan:
- It will not solve your financial problems.
- Debt consolidation can have initial costs; this includes annual fees, closing fees, balance transfer fees and loan origination fees.
- You may have to pay a higher rate.
- Missed payments will delay you 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 in the burden of loans. It can help you simplify your payments into a single amount. However, you should only consider debt consolidation if you have significant debt or are planning to improve your financial situation and are looking for a quick fix. Additionally, consolidating your debt is also ideal if your credit amount has increased until the total interest of a consolidated payment is lower. And finally, you should only opt for debt consolidation if you have reliable cash flow to cover your monthly payments.
Before you start consolidating your debts, your goal should be to create a plan to help you pay off your loan as soon as possible. However, you must also qualify and get approved for a lower interest rate. If you can’t control your financial balances and tend to find their way out, credit file 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 consider only consolidate your debts 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 lower your credit payments; it only helps you to repay them on favorable terms.
William Wrigley Jr.