How to Find a Reliable Debt Consolidation Loan Company

Times are hard and with a sluggish global economy, the situation is expected to continue. In such an environment most household owners are deeply in debt. From credit card debt, car loans, mortgages, tax, among other pending bills, there are so many financial obligations and paying for them every month can get hectic. If you have multiple debts with different lenders you appreciate how frustrating it gets when the bills start coming in. This is where debt consolidation can help you.

What is Debt Consolidation?

While there are many ways to relieve the pressure off your multiple debts, consolidating your debt into a single loan still remains the most viable option. A debt consolidation loan basically pays off your small debts to allow you to make a single payment and avoid the hassle of organizing multiple loan repayments every month. These loans are offered by a third party which can be a financial company or a non-profit organization.

It is important to distinguish debt consolidation from debt management or settlement. With a debt consolidation loan there are no negotiations with your creditors because the payments are made directly and you now have a single loan with the lender. Your life becomes easier because you only plan for a single monthly payment. More importantly, you enjoy a lower interest rate because you are paying a single loan.

With a debt consolidation loan, you can also improve your credit rating because every loan repayment you make is recorded by the credit bureaus which will gradually improve your credit score. In essence, debt consolidation is an innovative way of getting back on your feet if you are struggling to juggle multiple debts.

Finding the Best Debt Consolidation Company 

While there are so many debt consolidation firms out there you have to choose wisely. There have been many complaints about debt consolidation scams with many companies luring unsuspecting customers into debt settlement and management. If you are looking for a reliable debt consolidation company consider the following factors:

  1. Ask for References

You should talk to your friends and family before using any financial institution. With the increase in consumer debt, most people are using debt consolidation companies to alleviate the debt burden and you will thus find someone out there who has used one of these companies. You should also go online and check comparison websites to assess the reliability of different companies. Most customers will review the services they have used and it is easy to find such information online. Testimonials are also important when you are looking for a reliable lender.

  1. Try the Better Business Bureau (BBB)

When creating a shortlist of the debt consolidation companies make sure you check their name on the BBB website. A good lender should be accredited by the BBB because the program rates service providers based on the information they get from consumers. If the company is not even listed keep looking. BBB rates these companies depending on customer reviews which makes this a reliable yardstick when choosing a debt consolidation service.

  1. Registration

Before using any debt consolidation program, check whether they are registered with the National Foundation of Credit Counseling (NFCC) or The Association of Independent Consumer Credit Counseling Agencies (AICCA). While it is not mandatory to register with these agencies, a reputable lender will go to such lengths to maintain high standards of service. By registering with these agencies the company is guided by a strict code of ethics and customers are better protected. Many debt programs have been delisted by these agencies due to consumer complaints and it is thus important to confirm that your debt consolidation company is registered.

  1. Customer Service

Use a company that guarantees prompt resolution to your issues. During the initial consultations, assess the quality of customer services as this helps you understand the quality of service you are going to expect in future. You can also try the company’s website to confirm what communication channels are provided. Look for live chat, email, social media networks and phone number, and try using them to see how reliable they are.

  1. Company Website

A good debt consolidation service should have a resourceful website where you can learn about their services. Any business that does not have an online presence in modern times is not credible enough. A business website is a sign of a serious debt consolidation service. What’s more, such a platform not only allows for easier interaction with customers but also provides important information about the services a customer should expect.

  1. Type of Services

It is important to confirm exactly what service you are getting to avoid falling for a scam. You should talk to a customer agent to confirm that the company is offering you a loan and not any other service. While many companies advertise themselves as debt consolidation services, they end up introducing debt negotiations, which is not the most effective way to manage your debts. With debt consolidation remember you are bundling all your small loans into a single package which basically means you are buying a new loan. With debt negotiation these companies promise to negotiate with your creditors to get lower rates or other favorable terms.

  1. Use a Non-profit Organization

There are different types of loan providers out there but if you want favorable terms it is advisable to try a non-profit organization. Such a company not only consolidates your loans but also gives advice on how to get out of your financial rut. They also offer better repayment rates to help you enjoy the benefits of debt consolidation.

If you are in over your head in debt, consolidation is the best option. There are many reputable debt consolidation companies out there and they are ready to offer good terms. With a single loan payment you are able to handle your finances much more easily. This is one of the best financial decisions you can make as it helps you track your finances much more easily.