Debt Consolidation Lending

By Tim Grimsley

Many folks today are facing ever increasing burdens of debt. Most people have problems with maintaining their monthly bills. With the rising costs of homes and automobiles this problem is only going to persist for the foreseeable future. Many of us are in desperate need of help.

Usually, we tried to hide the fact that we are in financial difficulty. Often our own families do not know there is a problem. More and more each day we depend on credit cards to meet day to day expenses. As the months go by the increasing balances and minimum payments continue to add pressure to the situation. You do not need to feel alone, recent studies show that as much as 75% of Americans are in the same situation.

There are options that can help, one such option is debt consolidation. For anyone that is in need of help immediately, this can be a godsend. Debt consolidation will help lower your monthly payments and give you a fresh start. Once you are on firmer ground you can work out a solution that will alleviate the problem over the long haul.

You can take advantage of several excellent options that are available online, several sites will shop your loan request to get the best offer. This works much like Lendingtree does for mortgages. By taking advantage of such websites you can save a lot of money.

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Beware Of This Debt Consolidation Lending Risk

By Stuart Laing

If you've been considering debt consolidation to consolidate your debt, one of the biggest threats to the success of your debt mangement is a sales person who encourages you to borrow more than you need.

In the past, this practice of encouraging people to borrow more than they needed was always suspected, but now all that has changed.

During the past week, leaked documents showing the commission structure offered to salespeople have left two major banks facing acute embarrassement.

The reports, leaked from the Royal Bank Of Scotland and the Natwest, consist of commission tables showing how these large organizations encourage their staff to sell big personal loans, mortgage loans and profitable insurance policies to accompany them.

So what!

These sales people have to learn a living.

But now we come to the important part of the leaked documents. The incentive tables allow them to earn a disproportionate amount of commission for selling larger loans and loans that are covered by insurance.

So it doesn't take a whole lot of imagination to work out that the staff may try to lend you more than you actually need, or get you to take repayment insurance that you could do without.

Just take a look at one of the commission tables;

SIZE OF LOAN (£)/Commission Points Without Insurance/Commission Points With Insurance

20000+ / 270 / 590
15000 - 19999 / 220 / 500
13000 - 14999 / 180 / 430
11000 - 12999 / 165 / 380
9000 - 10999 / 130 / 310
7000 - 8999 / 100 / 240
5000 - 6999 / 60 / 160
3000 - 4999 / 30 / 90
1000 - 2999 / 10 / 35

And their customer service advisors can earn a £1200 quarterly bonus provided they earn 2700 commission points a week for the three month period and their branch achieves its quarterly targets.

So if they sell a loan without insurance for £2500 they get 10 points. But if they sell a loan for £3000 (20% more) they get 30 points (300% the amount of reward points!). So it's certainly in their interests to convince you that you need to borrow more.

But the potential problem becomes even clearer when payment protection insurance is taken into account.

Sales people can earn up to three and a half times more commission points just by getting the customer to take payment protection insurance to cover their loan.

Why? Because in many cases, the banks earn more money from selling insurance than they do from the interest they receive on lending money.

If they sell a £3000 loan they get 30 loyalty points, but if they manage to tack insurance onto the loan, they gain 90 commission points.

Now let's put that into context. If they want to meet their weekly target of 2700 points, they would have to sell 90 loans of between £3000 and £4999 without insurance.

But if they managed to sell insurance with these loans, they would only need to sell 30 of these small loans to meet their targets each week. That's quite a reduction in workload.

And if they managed to increase the size of each loan to £5000 with insurance (160 points each), they would only need to sell 17 loans each week to meet their commission target.

So when the banks claim that their products are sold appropriately, I don't belive them.

These sales people are trying to make a living and no matter how much integrity they have, these commission tables must be floating around their subconscious thoughts influencing the loans that they try and sell to the public.

And these leaked reports are probably just the tip of the iceberg. Banks and financial institutions all around the world operate using similar principles, so there's no reason to think that other sales people aren't working on a similar commission system.

So when you need to consolidate your debt, take great care. Know how much you need to borrow and don't let anyone "show you how you could borrow more but pay less". Always remember that they may have a commission target to meet.

Work out how much you need to borrow to consolidate your debt and stick to it. If you can do this your chances of financial survival will increase dramatically.

by Stuart Laing

Copyright (c) Get Out Of Debt.

Have you been struggling with debt for as long as you can remember? Are you ready to do something about it? Visit http://www.icanhelpyougetoutofdebt.com for free, impartial information on how to reduce debt.

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Debt Consolidation Lending - Are All Debt Lenders Created Equal?

By L. Sampson

The short answer is no—all debt lenders are not created equal. Unfortunately, there are companies out there that exist simply to prey on others’ misfortunes. It is extremely important to compare companies before deciding to work with one, especially if you’re already struggling with your finances. This article will explain some of the things you should look for in a debt consolidation lender:

The Company Is Reputable

A reputable debt consolidation company (1) has been in business for a substantial amount of time, (2) does not have consumer complaints filed against them with the Better Business Bureau or Consumer Reports, and (3) is recognized as reliable by other credit companies. Credit companies also work with debt consolidators, and they have better resources to check the company’s reputation.

They Offer Debt Counseling

The purpose of debt consolidation is to both get you out of debt and teach you how to stay out of debt. Reputable debt consolidation companies will pair you with a debt counselor who will go over your finances and teach you how to better control your money.

They Have Reasonable Rates

A reputable debt consolidation company will not charge you for an initial consultation or quote. The best way to compare fees between debt consolidation companies is to use a website that offers side-by-side comparisons. Never enter into any loan contract without first making sure you are getting the best deal, especially if you’re already struggling with debt.

Visit Debt Sanity to view our Recommended Debt Consolidators online. Also, visit Debt Sanity to find more information on Debt Consolidation Lending.

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Debt Consolidation Lending – Understanding Your Lending Options

By Carrie Reeder

Consolidating your debts into one easy to manage loan helps you save money while paying off your debt. With a low interest loan, it is possible to cut your repayment schedule by years, just by paying the same amount you are now. There are several lending options when consolidating debt. So whether or not you own property, you can trade in your high interest accounts for a low rate loan.

Using Your Home’s Equity For Collateral

For the best rates, tap into your home’s equity. You have several options for using your equity. One choice is to refinance your entire mortgage and cash out a portion of your equity as well. This will save you money on application fees if you have already been thinking about refinance your mortgage. You will also get lower rates on your cash out.

The other choice is to apply for a second mortgage or line of credit. Both of these allow you to keep your original low rate mortgage while accessing your equity. Application and miscellaneous fees are relatively small. And rates are near conventional levels.

Getting Help With A Personal Loan

For those without property to act as collateral, you can choose a personal loan to reduce your rates. Even with a personal loan, you can cut your credit card rates nearly in half.

Personal loans are based on your credit history and income. The better your credit score, the better rates you can get. With a large income or assets, you can also qualify for good rates. But even with poor credit, you can still lower your rates with a personal loan.

Try using one of ABC Loan Guide's Recommended Debt Consolidation Companies.

Opening Up A New Credit Card Account

If you only have a few thousand to consolidate, then consider opening a new credit card account that has a 0% on transfers or a low rate. With these introductory offers, you can begin to trim your principal.

It’s important though that you close old accounts so that you don’t further hurt your credit score. Too many open accounts, even unused, will reduce the future amount of credit you can qualify for. It also keeps you from adding to your debt load.

No matter which option you choose to consolidate your bills, take some time to investigate lenders. Make sure that you are getting the best deal available, saving you more money.

View our recommended lenders for a Home Equity Loan to consolidate debt. Also, view our recommended sources for a Low APR Credit Card.

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