It’s little surprise that some companies are trying to persuade consumers that they offer free or non-profit debt consolidation loans. These are bad economic times. And in bad economic times, the scam artists come out. The Federal Trade Commission is warning consumers that they need to do their research before signing up to take out debt consolidation loans from any company. That’s because there is more than one debt consolidation company out there that will promise to relieve consumer debt for free or little charge, but then change the rules, and their fees, once consumers are already committed to working with them. It’s a disheartening but rather common scam when bad economic times create a greater number of desperate consumers.
Free Debt Consolidation Loans Don’t Exist
Here is the number-one rule when it comes to debt consolidation: Free debt consolidation loans do not exist. Like all businesses, the local debt consolidation company exists to make a profit. There’s nothing wrong with that, so long as the company advertises this fact accurately. Too many companies claim to offer free or non-profit debt consolidation when they, in fact, charge their customers exorbitant interest rates or origination fees. The big problem occurs when companies advertise free debt consolidation loans and then change their tune – they’ll usually claim that their clients’ debt problems are too significant to warrant a free service – once they’ve enticed customers to work with them. They’ll then charge these confused customers heavy fees and interest rates.
Avoiding the Scams
Fortunately, consumers avoid these debt consolidation scams by doing their homework. There are plenty of debt consolidation companies doing business today that are upfront about what they do, the fees they charge and the services they provide. Before working with any debt consolidation company, consumers should make sure to ask for, in writing, a list of fees and interest rates that the company will charge them. They should also ask for an estimation of how long it will take them to pay off their debts. Any debt consolidation company that won’t provide this information is not one with which consumers should work.
Avoid the “Free” come-ons
Above all else, though, consumers should have a healthy dose of skepticism whenever they see an ad for non-profit debt consolidation or free debt consolidation. Unless the company in question truly is a charitable organization, there’s just no reason for businesses to offer consumers no-charge debt consolidation loans. There’s simply no money in that. Consumers who absolutely need debt consolidation loans should instead check with their office of the Better Business Bureau to find a lender that has few or no complaints filed against it.