Consolidating Your Bills

My husband and I got a loan from a bank many years ago to pay off debt and go to visit his mom in Mexico. It had been over 10 yrs since he left and was never back until then. The bank made checks payable to the credit and other bills due. We had to pay the amount due every month until the checks were posted so that is something to watch out for. A consolidation is only worth it though if money is in fact saved in the long run. How long is this for? What rate of interest? Doctor bills can usually be worked out to pay some every month with no interest ( I am doing this now). How old are the cars and what rate? Can the loan be paid off early or would there be a penalty? If the loan rate would be 5% and she is currenlty paying 6% on her cars, it would not be worth it to consoldiate since the loan would most likely go out a lot further, plus paying interest on doctor bills. She should look up some calculators online, like at Bankrate.com and see how much interest she will end up paying over the life of the loan.

Saw your update: It can effect her credit score by putting a higher % of balance due in one spot. Part of your score is based on the percent of money owed to credit available. So if she owes $3000 on a $5000 car loan, $2000 on a $4000 car loan the ratio is about 50% give or take. If she takes all that and pays off the car loans they drop down to 0% but they are not revolving credit but the new loan jumps to 100% and can effect the score. Plus she adds debt to her credit by increasing her amount owed with the doctor bills.

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If she can consolidate through this company she can do it through a bank. I don't trust any of those companies. They will make money which means she is paying more somehow.

It doesn't effect her credit score one way or another. She is only moving debt.

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she should thoroughly check out the company. But i say something that is sounds so good.......is PROBABLY a bad idea, lots of fine print and is more trouble than it is cracked up to be.

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There are companies - banks, Household Bank/HBSC - that do debt consolidation loans...any loan is based on your credit score..

If they are giving her the money to pay the debt off and not paying it for her - it's probably legit. i would check out the company thoroughly before doing this. Check with the Better Business Bureau and Angieslist - yes - they even do banks!!!

nothing is stopping her from racking up the debt again.so if she has no self control, it's not something I would advise doing. If she's intent on doing it - great - it's her money and her debt.....

GOOD LUCK!!!

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Really BAD idea. That's why it's called CONsolidation.
This can even affect her credit score--for the worse.
Please advise her not to do it.
She needs to work the Dave Ramsay Debt Snowball plan and pay off these bills, smallest to largest.

How many years is this loan for? Does she really want to be paying on a 10 year old car 10 years from now? Is she prepared to cut up any & all credit cards yesterday?

Debt consolidation can appear as a bankruptcy on her credit report. She'd be better off with a home equity loan.

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sometimes the consolidation thing can make your credit score really bad!!! plus, a lot of the places that do it are scammers or charge super high interest rates. is she going to a reputable bank? did she look them up on the BBB? i would be hesitant!

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tell her not to do it.......there is no way she will be saving money....in the long run she will be spending more money.......the Dr bills can be negotiated & there shouldn't be any interest on them, so you cannot beat 0% interest.......and if she consolidates her car loans all she is really doing is extending her payments on the cars & probably at a higher interest rate

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Definitely have her read Dave Ramseys Book FIRST then make a decision. It is an easy to read, very well written, understandable book, dare I even say an entertaining read. Then let her make a decision. The company I work for has us do a 'read a thon' each year and we hear from speakers and Dave Ramsey about living debt free, and steps to get there. 18 people from our company burned their mortgages last month...not millionaires, just normal folks like you and I that started in debt. This really does work!!! Please give her his name to look up on the internet!

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BEWARE - these companies are usually scams.

Have her talk to a local bank (one that is NOT a part of a national chain is best) and see what they may be able to do for her. If they can't help her ... have her read Dave Ramsey's DOLP program. We just got an offer via yesterdays Mamapedia e-mail to buy his info for $1.00. She could check the book out of the library....

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I took the Dave Ramsey course, Financial Peace University. This has helped me so much!

I don't know why your cousin wants to do this, but I would be cautious as to how this will affect her credit score. Also, did she compare the interest rates as to what she is paying now and what they will charge her.

With regards to her auto loans, what happens if she wants to sell one or both vehicles?

Back to Financial Peace University, Dave Ramsey really opened my eyes and I'm so glad I took the course. It has helped me to rethink my shopping, my bills, what I need, what I don't need, etc.

In fact I believe all teens should take the course.

Hope this helps.

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ewww! I agree with the other posters be very leery of these type of companies. They aren't in business if they aren't making a dime out of it themselves. If its going to actually "save" her money in the long run then yes I would say it might be worth it. However you have to consider interest rates, fees,etc. It sounds to me like she is frustrated trying to keep up with all the different bills she has. Tell her to check out mint.com .....Sometimes it sounds all great to consolidate everything into just one payment but just remind her that none of these companies are in business to help her out for "free". Also consolidating bills is usually a sign that you are headed for trouble and a coverup to get "out" of a pickle so to say. If she wants to take control back of her financial situation tell her to check out Dave Ramsey. I went to my local library and checked his book out Total Money Makeover for FREE. I don't agree with everything to a "t" because everyone's situation is different but Dave has some really good suggestions and can get your head in the right place and best to do it NOW before she ends up going to file for bankrupsty which Dave had to do and now look at where he is at but he was once in that position before and lost it all but he took the control back which is what she needs to do instead of depending on other's to bail her out each time. It's a very stupid cycle and so very easy to fall into but I myself just decided I was tired of being a slave to the creditors and realize now that the old school way of thinking wasn't such a "bad" idea in that you don't buy it unless you can afford it-meaning pay cash if you ain't got the cash then you save for it and then you buy it! Good luck I hope she makes the right decision and I hope that if she is indeed headed down the wrong road that this will steer her clear. Sounds like that is what she wants but you don't get into debt overnite and you aren't going to get out of it overnite either not without a hefty fine or price.