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If you are looking for a company that will help you consolidate your debt, you need to be cautious. Consolidating your loans into a single low interest loan can be a very good step financially, however there is a wide range of quality in the help you can receive. Some organizations are going to be more helpful than others and a few will even try to scam you. Here are a few tips to make sure you go with a reputable debt consolidation company: 1. Don't assume that a non-profit company is necessarily going to look out for your interests more than a for profit debt consolidation company. There are non-profits that are basically trying to take advantage of people in debt. 2. Go with a company that has a good reputation. Your local bank is probably a good place to start. Banks are in the business of providing loans and they make money when people pay back those loans. A company that makes money just by getting someone to signup for a loan may be less likely to look out for your needs over the long term. 3. Watch out for balloon loans. Balloon loans are a type of debt that allows you to pay a very small amount monthly for 5 to 10 years. At the end of that period you are required to pay off the debt in full. Since the monthly payments are usually low, you often end up just paying on the interest. This means that at the end of 5 years you still have made very little progress toward getting out of debt. 4. Check with the Better Business Bureau before selecting a debt consolidation company. If others have had a bad experience you want to know before deciding to go with them. 5. Do the math yourself. Take the time to work through the expenses yourself and see how much you will be paying, how long it will take to pay off the loan, etc. Don't just rely on someone else to tell you what they think is best. 6. If you don't understand something be sure to ask questions until you do. A good debt company is going to want you to fully understand everything. If you get the feeling that they don't want to explain everything to you, beware. 7. Make sure you understand the difference between variable and fixed rate loans. If you sign up for a variable rate loan, you may get a lower rate initially, but within a few years it may go up. It is important for you to understand not only your starting payments, but what those payments may be in the future. By following these guidelines and using good common sense you should be able to steer clear of companies that might be looking to take advantage of you.
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