Debt Consolidation Loans in the United Kingdom

Debt Consolidation is a way to pay off the innumerable bills at a time. They may be credit card bills, medical bills or even school fees. A simple way to streamline debts is through debt consolidation loans. It does not mean you have to pay less but it means that you need to pay off a large debt once in a month instead of several innumerable ones.

To understand Debt Consolidation you need to know how it works. It is like getting a loan and using the money to pay off all the smaller debts. There is only one big bill remaining to be repaid every month.

There are various companies that offer such debt consolidation loans. The borrower needs to only choose the one that is most suited to him. The types of companies that offer debt consolidation are listed below:

  1. Online companies: These companies offer their products online and it is easy to compare the loans online. They also very high privacy. The other benefit is that the borrower can apply for the loan at his own time and pace in the privacy of his home.
  2. Banks and Financial Institutions also offer debt consolidation loans.
  3. Some companies specialize in Debt consolidation loans. While choosing such a company the borrower should make sure that there is a range of services and loans on the offer
  4. The last type is the debt help companies which provide financial services and debt syndication solutions. These companies help to consolidate debts and offer loans.

Typical Debt consolidation loans should fulfill certain criteria to be a good loan. The borrowers need to look at the following in such loans.

First is the low interest rate. This is a most important criteria, as you should understand that you are under a debt load and further increase in interest rate will only add burden. Small changes or reduction in interest rate will amount to huge savings.

Home Equity Loans used for debt consolidation have tax advantages. Such loans make more sense by saving on taxes. The next important factor is the monthly plan. The borrower has to make sure that he can repay the monthly installments and the monthly installments need to be fixed so that the borrower is aware of the repayment.

The term of the loan is another matter of concern. With long terms the borrower ends up paying more interest, but will enjoy paying lower monthly payments which may ease his financial burden.

Though Debt Consolidation loans come with many advantages to the borrower, the lender is at a higher risk. Hence lenders tend to be stricter with penalties for late or missed payments.

Some companies offer discounts to senior citizens and others have discounts for direct debt facility.

Debt Consolidation Loans are a way to ease your financial burden. Avail them and relax.

Internet Loans and Montel Williams

A Hole You Can Never Climb Out Of

I’ll admit, there was a time I found Montel Williams quite likeable. He came across as a regular guy, just like everybody else — he’d get tears in his eyes when he had sympathetic guests on his show; he promoted social programs, like the Boys And Girls Club. As time went on, he got a little sideways.

Nothing, however, is a more egregious abuse of public trust/his fan base, than his latest TV commercial blitz for internet-based payday loan broker – MoneyMutual. There he is, smilingly promoting usury-rate loans to the very class of people for whom he was once advocate. “All you need is a job and a bank account,” he says. “No credit checks… Avoid bank fees… Take that vacation.”

What Montel doesn’t mention is (a) you are giving an internet-based company (who is more than likely offshore) the ability to dip into your bank account at will, (b) the interest rates for the lowest of these loans is usually around $20 per hundred per payday.

“Can’t pay it back all at once?” Montel asks. “Don’t worry – you can make a minimum payment until you’re ready.” Translation: if you borrow $500 and you keep paying them $100 per week interest you can keep rolling over the principal.

These loans are the fastest road to financial ruin and losing one’s bank account. They are as vicious in their hold as a local loan shark and probably even more heartless. Consumer advocacy groups in several states have championed for stricter regulations such that many of these predator companies have had to pull up stakes and move to states with greener pastures and less stringent laws. They target a class of people who don’t need another bull’s eye – the struggling middle class.

Imagine Ann, a single mother of two with two jobs and no other income, living from check to check. Christmas is right around the corner and she’s already feeling badly at how slim the presents will be. One night she sees Montel on a commercial, extolling the ease of getting these loans. He’s a celebrity – he wouldn’t endorse something that isn’t good for you.

Deciding to make it a good Christmas, Ann goes online, fills out her application, and within an hour has offers from several companies, each charging about the same interest and each telling her she’s qualified for a $300 loan. She decides to make it an extra-nice Christmas, go for the whole $300, and keep rolling over with the $60 per week interest payment until she gets her bonus telling herself that she’ll pay it off in full then. She faxes her driver’s license, bank information, a voided check, her paystub and whatever else the loan company needs and – wa-la – within 24 hours there’s $300 in her bank account!

The following week, Ann tries to pay down some of the principal and discovers that you can’t “pay down” – you have to either pay off the entire loan and interest and renew it at a lesser amount or keep making the interest payment until you’re able to pay off the whole enchilada.

By the third payday, Ann has made $180 in interest payments and still owes $300. She’s finding that her budget is a little stretched with the $60 per week hit and decides to take another loan for $200 with another service. She tells herself that with the $200 and her paycheck, she can pay off the first loan for $300. Except her kids need shoes, or her electric bill needs paying and so it goes.

Within a few months, more than 50% of Ann’s weekly check is paying off interest charges on the several loans she has outstanding. She’s taken another job, hoping to get enough money saved to start paying off these loans – but something more financially urgent always comes up.

By the end of a year, nothing is paid off, her interest payments are crippling. She tries to call and/or email her creditors and either can’t find a phone number on their site or they send her a “sorry but you’re toast” email. She desperately decides to close her bank account so she can at least get one full paycheck, hoping to settle the debt without the weekly interest rate. She doesn’t realize that among the documents she signed is an authorization for the Internet Loan Sharks to demand her paycheck be garnished immediately and without further legal action. Illegal? Absolutely, if she’s lucky, her employer knows that. If she’s not, and Ann doesn’t have the money for a lawyer, she’s screwed. Moreover, now her employer knows the embarrassing state of her finances.

Next stop, bankruptcy in order to stop the garnishments. Consumer credit companies deal only with credit cards – not pawn shops, title companies or payday loan services. Extreme? Perhaps to most folks – but not to me. I was Ann once. I never felt so trapped – and stupid – in my entire life. By the time I filed my petition, I had over $2000 in these loans outstanding, for which I calculated I had paid over $7000 in interest.

Bottom line is, that there are very few people who need these loans that have either the financial wherewithal and/or financial discipline to get out of the yoke. It is far better to incur the bank charge for an overdraft and throw yourself on their mercy than jump onto this kind of treadmill.

Shame you Montel. I hope that the money you got was enough to assuage your conscience for the thousands of victims of these companies – who were victimized because they trusted you.