Why is Safe Path Advisors Bad News For Debt Consolidation?
“Safe Path Advisors is the newest bait and switch trap brought to you by none other than the same devil that brought you Silvertail Associates…”
Debt consolidation is meant to assist those who are facing difficulties in paying backs their debts. Debt consolidation combines all debt into one amount so that you only have to make a single payment. You can also possibly benefit from a lower interest rate and better terms on the payment of the new consolidated loan.
But Where Is the Catch? Is Debt Consolidation a Good Idea for Everyone?
Debt consolidation does have its downsides that you need to be aware of. Carefully think about these pitfalls before committing yourself to debt consolidation. Think about these pitfalls in the context of your own scenario. You will then have a better understanding of the question ‘is debt consolidation a good idea.’
When the question ‘is debt consolidation a good idea?’ comes to mind, you need to be aware of the following possible drawbacks.
Debt Consolidation Does Not Reduce Debt
Some people are under the impression that debt consolidation can wipe out their debts magically over time or at least reduce the interest accrued. The reality is that debt consolidation does not reduce the principal amount or the interest that you currently owe.
You May Not Get a Low Interest Rate
How much interest rate you get on the consolidated loan depends on your credit score and record. If your credit score is not up to par, then you may not benefit from a low interest rate that justifies a new consolidated loan. So is debt consolidation a good idea if you have bad credit? Probably not.
Is Debt Consolidation a Good Idea? – Changing Interest Rate
Even if you find a debt consolidation loan that offers a low interest rate you should still be careful. If you have a poor credit score but still get a low interest rate then it is time to be extra cautious. Make sure that you read the terms and conditions fully. There is a high possibility that the low interest rate is for a limited time period only. After this time period expires, you may have to pay interest at much higher rates.
The changing interest rate is one major weapon that shady firms wield against unsuspecting customers. These firms hope that customers will remain oblivious or unconcerned about the higher interest that will be imposed later on. As such it is a major scam tactic against naïve customers.
Here is an example. Certain bad players offer irresistibly low interest rates during the holiday season to entice people into signing up for their loan. If you peruse the terms carefully you will invariably note that the low interest rate is an introductory offer only that will expire soon. These firms know that customers overspend during the holidays and go into panic mode once they see their bills. Their aim is to trap panicked and desperate customers into signing up for deceptively lenient looking consolidation loans. They know that desperate people are often have too much financial stress and can’t be bothered to understand all terms carefully making them easy victims.
So is debt consolidation a good idea if the interest rate is low? It depends. You should read the fine print carefully to find the catch.
Scams (Is Debt Consolidation a Good Idea?)
The debt consolidation field is replete with scams. Some unscrupulous players use overly optimistic marketing tactics to lull you into false expectations. They would have you believe that their debt consolidation loan is a cure-all. You should be skeptical especially if you find aggressive marketing tactics and rosy promises that look too good to be true. Don’t let any shady firm sway you into thinking that debt consolidation will magically pay off your staggering debts. If you miss payments, you could in fact, get into deeper trouble. The key here is to change your financial habits.
Complaints are rising for companies like Credit 9, Simple Path Financial, Tripoint Lending, and SPF Saves.
Make sure that you fully understand what you are getting into before signing the dotted line. take a close look at the lender’s reputation and customer satisfaction. Scour online review sites and official consumer complaint platforms like Crixeo.
Is debt consolidation a good idea? If you are dealing with a shady player it most certainly isn’t.
Longer Debt Schedule
Another major drawback is the ostensibly lenient payment schedule. You may have to make lower payments each month. That might seem alluring except that it will keep you in debt for longer. Also, you will incur more interest expense over the longer payment schedule. Low monthly payments might seem enticing. Bu the reality is very different.
Is debt consolidation a good idea with low monthly payments? It depends on your situation. If you cannot afford to make high monthly payments, you may have no other choice other than accepting low monthly payments. But this will prolong your debt and pile up interest costs.
Won’t Change Your Financial Habits
Is debt consolidation a good idea if you don’t change your financial habits? The truth is that if you do not reform your financial habits, you could get into a bigger mess with a debt consolidation loan.
You will have to carefully review your financial habits to make a difference. After all, your financial habits are responsible for landing you in your fiscal predicament. Gullible people dazzled by the glittering promises of debt consolidation firms take out their loans hoping that it will work. But unless they improve their spending habits, things will continue to go downhill fast.
Carefully Scrutinize the Debt Consolidation Interest Expense
Certain debt consolidation loans might look very attractive with the low interest rate. You might think that this will help you cut interest expenses. But there are ways that wily firms actually deceive you into paying more. They often do this by extending the payment schedule so that you have to make lower monthly payments. Low monthly payments sound like a good deal except it isn’t. Even with a lower interest rate, you may end up paying more aggregate interest on your consolidation loan since the payment term is longer. The Interest acts over a longer time period so that your overall interest expense actually rises.
Is debt consolidation a good idea? keep the aforementioned points in mind and consult a financial advisor before signing up for one.