In Tough Times Don’t Fall for the Fix it Companies

Unfortunately, at a time when people are losing their homes to foreclosure and excessive debit they also have to pay the most attention to who they are dealing with for help.  Anytime you have a market where panic has set in, it is easy to work people on their fears by making large promises.  All too often, however, these promises are fake and only take you for your hard earned cash.

So what is can you look for?  Start with the slogans (these are ones I have heard and seen in my local papers):

1. “We can reduce your debt to pennies on the dollar”
2. “I paid off my house in five years”
3. “We know the tricks to get your credit cards to reduce your debt by 50%”
4. “Pay no tax and have the government pay you”
5. “Refinance for 4% on a 30 year fixed”

All these statements set off red flags because they offer things that to good to be true.  Maybe someone did pay off their house in five years, but how much did they owe?  Sometimes credit card companies will negotiate your debit down, but it does come at a cost.  Pay no tax?  Good luck with that.

If you hear something that sounds appealing that you just have to call, do a few things first.  Research on the internet some of the details of people in you same situation.  100’s of sites offer discussions, reviews, and advice to ways you can deal with your problem.  Secondly, research the company you plan to call from the advertising.  Check for reviews, go to the website and read the fine print, check with BBB, and ask around.  In many instances you will find negative information that leads you to the right decision.

Ok, so now you have found nothing and choose to do business with a company.  At a minimum follow these steps:

• Are there any upfront fees?

This is usually a red flag if a company is offering you things that seem to good to be true.

• Read everything.

Before signing anything, read the fine print and if you do not understand one thing take it home and ask someone else to review the information.  Remember, people got in to trouble with home loans even with the all the rules and regulations regarding truth in lending documents.  Many of these companies are not bound to such laws and can easily hide unrealistic terms.

• What are the policies on refunds, obligation of the provider, and performance warranties?

Make sure you have protection through some kind of refund process, performance obligation, or any other documentation that the company can and will do the things they say.  Most importantly, it must be in writing.  Many companies say yes to your concerns, but a verbal contract holds no weight when you take the company to court for stealing your money.

• Ask for references of people you can contact.

They should be able to refer you to people that have had success with their company.  However, be cautious, they can set these up so don’t believe everything you hear.  It would be best if you can find people that have used the company outside of their reference.  Sometimes you can ask people sitting in the lobby or find reviews on the internet.

• A second opinion does not hurt.

Before you sign anything the commits you to obligations of payments, make sure to check with a few companies.  It is best to check with known reputable companies to see what they say and bring up any red flags to the person you are working with to see how they answer the question.

• Lastly, don’t expect a miracle

Yes, there are cases that do live up to some of the claims, but they are unique and often very few.  Remember many of these firms are feeding on your situation and have no real inside secret to dealing with your problem, they just make it look official and package it with paperwork.  Many of the techniques they use can be done on your own with some research and time.

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1. “I paid off my 30-year mortgage in 5-years”

The add I heard the other day had claimed this. Let me state that if you can pay your house off in five years, you are either buying a very low cost house or make enough money to not worry about services that would be offered by a company like this.

At the end of the day, you have to pay off the principal (purchase price) no matter what path you take. Just to give yourself a baseline, take what you owe and dived it by five. That is the minimum yearly dollar amount you would have to pay not including interest.

On $100K, you have to pay $1,666 per month before any interest. It is that plain and simple, there is no magic way to improve that number. That number in itself is also a lie because no one is going to lend you $100K for free. Know your facts, call these companies if you must, but check your facts and don’t believe any claims that just don’t make sense.

2. “make $50K per month from home using our system”

Wow, what a claim. I am sure someone somewhere does make this, but it is not going to be you. If these companies truly can teach you to make this money, there would be many more legitimate resources reporting on them and not just YouTube videos and mile long websites with 100’s of claims followed by a sign-up now button at the bottom.

Do you ever wonder why these sites always have the same format? Doesn’t make you wonder a bit? You may make something from the systems, but most of the time you will probably just be out your initial investment.

The last thing you should consider, if the system truly is that easy, do you think someone is going to share that information with you? Easy money of that amount is not shared by people, plain and simple.

3. “We pay off your trade now matter what you owe”

Sure, the balance is just wrapped up to your new loan. This may be fine with you, but you still need to do all your homework to make sure the overall deal you are getting is good.

If you go into the dealer with a car that is upside down, you are in the weak position. They know you can’t sell the car, they know you want the new car, and they know you are willing to add to the price of the new car to get it. Consider this like going to battle with a BB-gun Vs. a Machine gun. Chances are your not going to win. They will throw at you discounts, rebates, attractive monthly payments, discounts on the new car, and other tactics to make it sound like the benefits you are getting are paying for the lost value in your trade. Thing is, you can get all of those things with out your trade.

The big question you have to ask, is the new car worth the lose you are taking on the old car? Why not sell it private party? Why not drive it for an additional year while saving extra for the new car?

I recently was helping someone trade in a certain SUV. The dealer offered them $6K below the actual value of the car and $4K less than the street value (this was on a car worth $8K). My advice was give them the finger, drive the car for another year and sell it private party. The money they save in gas does not pay for the $4K hit they would have taken on the car. Be cautious with your trade ins.