Is this offer to good to be true.

September 11, 2009 11:13 AM

Financial filter: I recently received a very fancy mailing from a company in Florida (Trascendental Lending), offering me (due to new government regulations) to consolidate my credit card dept (35K) to a new 5% loan, with much lower payments. This sounds too good to be true so I presume it is?

I am recently divorced, and I am having trouble getting the financial ends to meet. I got most of the credit card dept after the divorce.
I am barely able to make minimum payments as it is. All accounts are current though, and I have no late payments.

So one day I got fancy letter from some company in Florida called Trascendental Lending or something close to it, offering to consolidate my credit card dept, allegedly based on some new government program, into a single loan with 5% interest. Which would lower my payments substantially.

Now this offer seems to good to be true, but I really want it to be true. I do not understand why this company would offer 5%-6% loan of 35K which is basically unsecured and without collateral. Unless there is indeed some new government program which makes this feasible.

Can anyone offer advice as to how I might go about consolidating my credit card depth in a reliable way, or other practices that might help me be able to dig myself out of the hole I am in now.

If anyone knows if this offer is legit, or if there are other vendors out there who could make a legit offer.

Does anyone know about new government programs?

posted by digividal to Work & Money (9 answers total)

Read the fine print - there's a good chance there are fees out the wazoo for signing on, along with who knows what sort of contractual obligations that you're better off without. Maybe the interest rate goes up 20 points after the first six months, or something equally diabolical.

Getting a loan to consolidate debt is a great idea - but getting a loan through a company you know almost nothing about, who came out of nowhere with this offer, is not. Especially for $35K - that's no small number.
posted by caveat at 11:21 AM on September 11, 2009

Google doesn't provide any relevant hits for Transcendental Lending, either positive or negative, and the lack of any business history under that name is a gigantic screaming, strobing red flag. My advice would be to take the letter, shred it, and not think of it again.
posted by deadmessenger at 11:21 AM on September 11, 2009 [3 favorites]

Hey, this is about your debt, my wife and I went through the same thing about 8 months ago. First, have you called your credit card companies to see if you can have the rate reduced. Asking got me 5% off one card and 10% off another.

I then found American Express's 5% transfer balance for the life of the balance. I consolidated 3 credit cards to it and paid it down much more quickly than I would have leaving the balances on each card.
posted by TheBones at 11:32 AM on September 11, 2009

Years ago I was in the exact same place, and a book called Money Troubles by Nolo was my lifesaver. Nolo's newest version of this book, called Solve Your Money Troubles: Debt, Credit & Bankruptcy is available at www.nolo.com, and probably also at your local bookstore. I highly recommend you purchase it and follow their instructions.

Hang in there, be persistent and patient with yourself, and you'll come out ok. I kept a binder with a spreadsheet listing all the debts, contact info, amounts, dates, etc. on it, and kept a record of every conversation and email correspondence I had related to each debt under a separate tab. I finally threw the binder away ten years after the last debt was settled.

Today, my ex has gone through bankruptcy, is again back in debt, and still has no retirement plan in place. By taking the debt in the divorce, I was able to keep my own retirement investments without having to share them with him, and I negotiated down and then paid off all the debt and am doing just fine. Best of everything to you -- there IS new life and a future out there!
posted by northernlightgardener at 11:42 AM on September 11, 2009

There are no government consolidate your credit card programs going on. You know how much you've heard about cash for clunkers until you are just sick to death of it? Yeah, you'd know if the government were making it easy to get 5% consolidation loans for credit card debt.

If it isn't outright fraud, it's likely one of the following:

1. If you read the small print, it actually says something to the effect of YOU QUALIFY FOR A LOAN possibly maybe as low as 5%!!!! depending on credit application loan rate may vary from 5% - 122%

2. It's actually a home refinance deal where and will end up sticking a fat packet of closing costs etc. up your credit rating.

3. You qualify for a fantastic (cough cough introductory cough) rate!!! Which will suddenly shoot up to 22% in 6 months per the paragraph on the fifth page of itty bitty print!

Or a combination of these. From my own experience at the current time, if your credit is all right you could get credit-card originated consolidations at fixed rates under 6%, you have to shop around and make sure they are really fixed rates for the life of the loan (I've seen some doozies, like the "great" rate is actually the "fixed" percent they add to the prime rate for your total interest), and remember if you default or make a late payment (and in some cases these issues can carry over from other debts) your low rate will turn into a high variable rate.

Banks rarely offer consolidation loans for personal debt, they don't like that kind of debt. People suggest that a lot but I've honestly never known one actual person who managed to get that kind of loan.

Maybe double check that lender name, "Trascendental" isn't a word (and Transcendental Lending would be weird enough to avoid on general principles.
posted by nanojath at 11:49 AM on September 11, 2009 [1 favorite]

Now this offer seems to good to be true, but I really want it to be true.

Incidentally, whenever I feel this way I see it as a trigger to take the default position that I am being scammed. I'm sure there are some examples from my past where this was not the case, but none spring to mind.
posted by nanojath at 12:00 PM on September 11, 2009

I tell my kid "if you ever need help, walk up to the first woman you see and ask for help." You're getting a self-selected group disproportionately consisting of predators if you wait for someone to see you looking sad and offer help.

Same thing goes with loan offers. Walk up to the nice looking financial adviser in your neighborhood and ask for help. Don't wait for a self-selected group of predatory fucks to come find you.
posted by paanta at 12:43 PM on September 11, 2009

Do you own a house, so that you could qualify for a home equity loan? The interest rate on that would be MUCH lower than most any credit card. I got one about two months ago at near 5%.
posted by orme at 1:26 PM on September 11, 2009

^^^Just beware that if you take a home equity loan you'll lose protection of your house if you have to declare bankruptcy (in Florida, anyway).
posted by torquemaniac at 1:47 PM on September 11, 2009