Get the facts before you consolidate or work with a settlement company.
In other words, they haven’t established good money habits for staying out of debt and building wealth.
Their behavior hasn’t changed, so it’s extremely likely they will go right back into debt. The debt includes a two-year loan for $10,000 at 12%, and a four-year loan for $20,000 at 10%.
Your monthly payment on the first loan is $517, and the payment on the second is $583. You consult a company that promises to lower your payment to $640 per month and your interest rate to 9% by negotiating with your creditors and rolling the two loans together into one. Who wouldn’t want to pay $460 less per month in payments?
If that’s not bad enough, you’ll end up shelling out $46,080 to pay off the new loan versus $40,392 for the original loans—even with the lower interest rate of 9%.
The truth is debt consolidation loans and debt settlement companies don’t help you slay mammoth amounts of debt.