In the fourth quarter of 2020, New York’s gross household debt soared by $206 billion (1.4 percent) to $14.56 trillion. Mortgage balances, the primary portion of household debt, approached $10 trillion. It rose at the end of December by $182 billion to $10.04 trillion.
Meanwhile, loan balances for car and school loans rose by $14 billion and $9 billion, respectively. Newly developed mortgages have hit a record high and car loan originations have reached their second-highest quarterly volume since 2000.
With the household debt climbing to $14.56 Trillion in 2020, a debt management plan in New York is important, to say the least.
In your attempt to save money on your debt payments you might have taken the services of a debt settlement or consolidation company. You may have heard of the term co-payment making the rounds.
What is Co-payment?
A copayment or copay is basically an amount that a company charges for a service at the time of the agreement. It is paid by a consumer to a company or firm before availing the service. It is a fixed amount that is agreed upon, and usually is not a percentage of the total amount.
Why do companies charge Co-payments?
So, companies generally charge co-pay for the following reasons:
- Capital: The company that is offering the services gets operational capital to do start doing the work.
- Customer Retention: As they have already paid an amount, the customer is bound to take the services of the company or risk losing that money.
- Trust: After the customer pays the co-payment charges upon agreeing to the contract, the company develops trust in the customer. The company now has the security that the customer will not bail on them.
Co-payments in Debt Related Services
Companies that give debt solutions like debt consolidation or debt settlement often ask for co-payments. For instance, you are seeking help to settle a debt of say, 100,000$. The company can ask you to give them a percentage of around 1% to 3% in the form of co-payments. You can negotiate with the company for a fixed, lower amount as well. It all lies in the deal that you strike at the moment.
Remember, most companies do not openly talk about or mention co-payments. But, when striking a deal with them, they usually will ask, and nudge you to co-payments, asking for a certain amount before we can avail their services. As you are going to pay the remainder of the charges after completion anyway, there isn’t much harm to co-payments for consumers.