Consolidation Loan

5 Red Flags to Indicate Bad Choice of Consolidation Loan

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The debt ceases to be “power” when you begin to struggle for the repayments. Whether it was a wrong borrowing decision or a failed business plan, the moment you need to cut your regular expenses to manage the monthly repayments, it is time to restructure your debt accounts.

It is not only you; hundreds and thousands of people apply for consolidation loans in the UK every year.  Consolidation of loans is a debt management plan and thus it is the right step in the direction of better credit health.

Apart from main street lenders, you can find flexible offers on debt consolidation loans for bad credit online. Using private online loans is swift as well as hassle free. However you should be alert while searching for a legitimate consolidation plan. Online hunt for cheap consolidation loan is recommended, however you also need to know how to stay safe at the same time.

1

First point of contact

According to the FCA which is a financial watchdog in the UK, no loan provider can contact you to persuade for borrowing loans. The first point of contact always needs to be initiated by the applicant and based on your query the loan provider shares the deal. With this said, if any lender contacts you with the exact deal for your requirements, you should not jump off to seal it. You must first ensure that the lender is a regulated one. In many cases, fake companies act as loan sharks. They are on constant hunt for desperate victims.

Upfront Fees

If a lenders or broker asks for upfront fees to share the loan deal, you must think twice before agreeing to their terms. When advice on all types of best loans in UK is available without any upfront fees, why spend anything for the same.

3

Guaranteed Loan

If a broker or lender claims that they can help you find guaranteed loan without a credit check, do not make any deal with such unscrupulous people. No one can guarantee loan approval. The loan deal is always offered according to the profile. With past “tainted” credit history, little income and high debt, the loan approval is only based on your affordability. No one can assure the deal without a check.

4

Debt reduction

Debt consolidation loans are not a means to reduce the debt. Consolidation is a debt management tool. Herein the applicant merges all their liabilities into a single loan. The purpose of debt consolidation is to reduce the monthly debt burden which is usually due to longer duration and lower interest rate. The loan burden is not reduced but it is restructured. So you need to be cautious of loan deals that claim reduction in overall debt.

5

Documentation

A lot of fake companies sugar-coat loan promises. While a loan shark deals with you, they will make more of verbal promises. It is recommended to check each and every word of contract by reading the loan agreement. Do not believe only on verbal assurances.

Identifying a loan shark is thus not a rocket science. All you need is careful eyes for detail and you can always sense the presence of the wolf!

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