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Debt consolidation Benefits
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Difference Between Free and Paid Debt Consolidation Services
It seems that in debt consolidation services both free and paid means the same but it is not that. People are frequently been trapped due to insufficient and imperfect information about the industry operations. However, before continuing the discussion, one should observe the core reasons that are convincing people to choose the free services rather than the paid ones. Taking high price toll from ... Read debt consolidation article
Student Loan Consolidation Programs
Keeping in mind that the cost of college education is much higher than it used to be, by the time you graduate from high school you already need to consider applying for one or several student loans. Fortunately, taking up several student loans is not complicated as there is a student loan consolidation program available to you that will roll all your existing loans into a single one.
T... Read debt consolidation article
Debt consolidation Benefits
The main purpose behind opting for debt consolidation is to lower the amount of money that you have to pay out on a monthly basis. So the best option is to discuss the issue with your advisors to get a proper idea of how to avail the debt consolidation services and how to avoid the pitfalls.
There are many benefits that come with consolidating your debt in one single loan if done properly, below I will list some of the most common benefits to getting a debt consolidation loan:
Elimination of Penalties and Financial Charges:
In most cases, when debtors fail to pay their dues, financial charges and penalties are stacked on the default amount. This leads to a growth in the default amount, increasing the burden on the debtor. The debt consolidation loan eliminates these extra charges, keeping the debt amount constant. For ex: a debt of $500, may increase to say $700 on account of the charges. A debt consolidation loan will bring this amount down to the main default amount of $500.
A Single Monthly Payment to Pay Off All Debts
A debt consolidation service enables a debtor to cover all debts including credit cards, medical bills, and other unsecured loans with a single monthly payment for all debts. The debt consolidation company disburses those funds to all the creditors at rates agreed upon between them. This reduces the amount of money that the debtor has to pay out, and the chances of forgetting dates and being late is minimized.
Lower Interest Rates.
Debt consolidation services work out new interest rates on extensive negotiations with the creditors. This leads to a restructuring of the debts with payments much less than what existed. For example: if the debtor was paying 15% interest earlier, it can be negotiated to say 11% by the debt consolidation counselors.
No More Warning Calls
Once a debtor approaches a debt consolidation service, and asks them to help with a debt consolidation loan, the Company represents him and negotiates with his creditors and informs then that they are representing the debtor on their behalf. This helps to keep those calls from collection agencies at bay.
By Gibran Selman
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Students lose interest in debt payoff
Graduates aren't paying off their loans as quickly as they could. Ruth Hill finds out why.
A dramatic fall-off in the amount of voluntary student loan repayments since the government scrapped interest shows graduates no longer have any incentive to pay off their debt to taxpayers, says the National Party.
Inland Revenue figures reveal payments made directly by borrowers (including the self-employed) has dropped by $54.2 million, from $239m last year to $185m for the year ending June 6.
However, borrowers repaying their loans via PAYE tax are making a bigger dent in their debt.
The interest-free policy, which came into effect on April 1, applies to existing and new loan borrowers living in New Zealand.
Christchurch graduate Nichole Davis, who made $22,750 by selling her handbag - famously used by Tana Umaga to discipline Hurricanes teammate Chris Masoe - could have paid off her student loan twice over.
None of her windfall went toward paying her debt.
Davis, who graduated with a double degree in law and psychology last year, said the interest write-off meant there was no point paying more than the minimum, which was extracted automatically from her pay.
"You might as well make money off your money," said Davis, who instead bought a second-hand car.
The government has estimated the policy will cost $1 billion over four years.
National's tertiary education spokesman Bill English said it was "no surprise" that people were reluctant to make voluntary payments.
"Why would they give up more of their income when there is no interest on the loan?
"I would predict that a bigger proportion of students will take out loans and they will take longer to pay them back."
Although some students would exploit the system by taking out unnecessary loans, he would not advocate closer monitoring of how loans are spent.
"Creating more layers of bureaucracy would only make it harder for legitimate students.
"We will have to wait and see whether it gets out of hand, or whether people behave sensibly."
Acting Tertiary Education Minister Steve Maharey said the fall-off in voluntary repayments was in line with forecasts when the policy was introduced.
The volume of voluntary repayments was expected to reduce over four years to 20% of current levels and the decrease had been "built into forecasts".
"Repayments from borrowers in paid employment are up 15% on last year. With no interest, students will be repaying their loans much sooner."
Repayments made via employers (through PAYE) increased from $271m to $314.2m.
An IRD spokesperson did not know how much the drop in voluntary payments was due to the interest-free policy. "If there is a relationship between the two, this won't become evident until after April 1, 2007."
New Zealand University Students' Association co-president Conor Roberts said the interest-free loan policy was "good for graduates and good for society".
"These punitive interest payments were holding back society as a whole because graduates were having to put off buying houses and having families, not to mention all the graduates who were forced straight overseas to pay off their loans."
He said there was little danger graduates would "slack off" on repayments. "Because there is no interest, they can pay off their loans much more quickly."
The latest quarterly student loan report from the IRD shows that at June 30 this year there were more than 445,000 people in debt to the scheme.
The average loan balance was $15,799. Almost 600 people owed more than $100,000 - a 68% increase on the same time last year. The most indebted student in the country owed $248,897.
Outstanding loans are forecast to rise from $8.6b to $10.4b by 2010.
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