Understand the difference between a consolidation loan, a debt management program and debt negotiation. Companies that claim to be able to help you reduce your payments or get fast debt can pretend to be offering consolidation loans, may have the name “consolidation” in its name, when in fact even using methods such as debt management, subsidence, and even bankruptcy. it will be affect you supplied your consolidation information. These are substantial differences between these options:
A consolidation loan is simply a loan that pays off other loans. Once you consolidate a loan, owe the money to the new lender, not the original creditor. A consolidation loan can lower your monthly payments, either by reducing their interests or by extending the length of time to repay, but the other creditors write off completely.Consolidation loans can hurt your credit temporarily, but usually not to the debt management program or debt negotiation.
The debt management programs can also reduce your payments, but they work differently. A debt management agency acts as an intermediary between you and your creditor and try to negotiate a reduction in the rate of interest or fees on their loans. Then pay an agreed sum to the administrator of debt or credit counseling agency and they distribute the payment (usually less a fee) to your creditors.Participation in a debt management plan usually appears on or credit report, and may adversely affect your credit rating.
Debt negotiation is the act of setting a debt for less than it should. Pay a portion of what he owes to a creditor, and this clears the rest of the debt. The credit card companies usually offer a fixed lump sum as a way to recoup some of their losses.As you end up owing less, an array can severely damage your credit. Worse, third party companies that offer debt settlement are known for misleading practices such as consolidation, and these companies usually charge exorbitant fees while simply share with your creditors early, sometimes failing to negotiate any differences in terms of repayment.
The bank customer will have handed the binding offer,
which is a document issued by the entity in which
include loan conditions and must have a
valid for more than 10 business days.
For us to sign a loan contract or
credit with a bank, we verify that
maintaining the data of the offer made to us.
We also have the right to be delivered to us at
least the following:
“If the contracts to be signed by a notary or other
notary public, the bank will give us a copy of
writing.
“The bank must collect contracts explicitly:
* The nominal interest rate to be used in settlements.
* The frequency with which they produce the accrual of
interests, the dates of accrual and settlement of
themselves.
* Commissions to be applied with specific
its concept, size, date of accrual and settlement.
It is illegal to refer generically to tariffs,
unspecified data.
* The contractual rights which correspond to the bank,
on all matters related to the change in the rate of
agreed interest and the procedure must
comply with such changes.
* The rights of the client as to the possible
early termination of the operation. Usually be linked to
cancellation charges which, it is desirable
review and negotiate (with the legal thresholds
2% for operations and fixed interest rate of 1%
operations at variable rate).
* As to the expenses payable when the amount
can not be fixed at the time of signing the contract,
at least its concept should appear.
As the beginning of our study was to reflect the
different stages of any negotiation of a
financing transaction with a financial institution.
The financial needs analysis is done
calculating the liquidity that we currently or short
term. For this study the treasury account,
where we can check the entries and exits
money within a period of 12 months.
Every month we will see the money gained from the difference
between revenues and expenditures to forecast
of our funding needs, and watch the months
liquidity that we have to use it
more efficient.
Now we would be in the proper position for
develop a financing plan.
Prior to the visit to a financial institution to request
A provision is appropriate as much information visit
several. So we know what the market trend
(if rates are rising or falling, commissions, etc.)..
Where we place special emphasis on the
negotiating terms with the bank, so
we have to know beforehand:
• What is our financial need
· Our ability to deal with the real cost of
loan and repayment conditions. If not
will have to try to reduce them.
If we reach an agreement with the bank will be sought
operation and deliver the information that they requested.