A credit counseling service makes money in a variety of ways. It needs a source of funding to cover expenses such as supplies, rent and salaries. The amount of funding it receives will vary by source.
Features
When a customer enrolls in a consumer credit counseling program he may have to pay a one-time set-up fee of $50. This can vary from company to company.
Types
Consumer credit counseling agencies receive grants from various foundations and organizations that believe in their cause.
Significance
The bulk of the income for consumer credit counseling agencies comes from creditors, who offer a voluntary contribution that could be as much as 15 percent of the payment amount collected by consumer credit counseling.
Debt Management Plan
A consumer credit counseling organization provides a variety of functions, including debt management, credit education and budgeting for its clients. If the consumer credit counseling service does not solve the problem, the consumer is referred to the debt management program. Consumers pay a lump sum to consumer credit counseling each month and they disburse funds to the creditors.
Benefits
A repayment plan is usually set up for 36 to 60 months. A consumer credit counseling service will lower interest rates and waive fees for customers. A customer's monthly payments are decreased as a result and become more affordable.
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