Starting Your Own Debt Consolidation Business

Debt consolidation could be a risky but emerging industry. Confronted with insurmountable consumer debt, often borrowers find it impossible to take care of monthly payments. So they often bank on reliable debt consolidation companies for their debt relief solutions. Although it has always been assumed that debt consolidation is an effective resource for people earning low wages, but in recent times, thanks to the economic recession, even the middle-class has been forced to seek assistance from debt consolidation services.

When you come up with a debt consolidation company of your own, your primary role would be, consolidating the different debts of your client into one single consumer loan that necessitates lower monthly payment as compared to the aggregate monthly payments due to the client’s existing debts. This is achieved by combining a relatively longer repayment plan with a lower interest rate. Unsecured debt consolidation certainly is inherently risky business.

Starting a debt consolidation company would be requiring very little funding but a profitable debt consolidation business would be yielding quite an impressive income every year up to as much as six figures. Debt consolidation companies would be providing effective assistance and relevant services to people who are perpetually struggling under the burden of never-ending debts. You need to convince your distressed clients by telling them ‘Choose debt consolidation option for your business to eliminate financial distress and attain freedom from debts.’ You play the role of a mediator trying to establish an understanding between the creditor and the debt owner. Remember for all those people who are struggling desperately with a financial crisis due to ever rising debt, debt consolidation providers could offer effective solutions.

Debt Consolidation Startup: Finance Issues

Any debt consolidation startup could be financed chiefly in two prominent ways: Direct Lending and Margin Lending.

In direct lending, the debt consolidation firm would be financing the client’s consolidated loans simply by using up its very own capital resources. Margin lending does not involve lending your firm’s capital but your debt consolidation firm could establish any effective credit line with some other lender for funding your lending activities.

Know Your Competitors

You need to check out the existing competition in your locality. Get detailed information about your local competitors. Find out what all is happening in the local debt consolidation scenario. Try and determine how much market share your company could grab. Keep reviewing local advertisements in order to observe the ways how your debt consolidation business competitors try reaching out to their clients.

Stay Updated Regarding the Laws of the Land

You must do ample research relating to your state’s debt consolidation laws. It is mandatory in several states for debt consolidation companies to get licensed and accredited before their debt consolidators and debt counselors could start working with clients. Moreover, most of the credit card firms do not work with any non-accredited companies. The accreditation and licensing would be requiring money and time but it is worth investing both time and money on it as it would be equipping you with adequate knowledge about the trade and it would reassure your customers about your quality.

Develop a Business Plan

You need to generate a proper business plan. This plan must be a standard business strategy for any startup. A debt consolidation business certainly is no different from others. Your plan should include some important factors such as ways to run the business, how much capital required for operating the business, ways of promoting the business, marketing and advertising plans and costs involved, location of the business and reasons for the decision to start your business there etc.

Structure and Finalize Your Services & Fees Clearly

A debt consolidation company contacts the creditors on behalf of their clients. The debt consolidation firm would, therefore, be saving their clients from the trouble of making numerous calls to the creditors directly. Always remember that you would be working with individuals who are themselves in debt due to financial crunch. Your fees should be considerate and fair. You must never take undue advantage of people who are already suffering from financial crisis.

Conclusion

You must start networking and develop business relationships with creditors and credit card companies. Inform them about your newly launched debt consolidation company, the services you offer and include information regarding your licensing and accreditation. This way gradually you would develop business relationships with creditors and credit card companies and they would identify your company as a legitimate business.

Image Source