A payday loan can be a real lifesaver when your monthly budget is hit by an undiagnosed roof leak or a medical emergency. Ready cash is available to bail you out of an immediate financial crisis. It’s a high interest loan, but well, it takes care of things until your next pay check comes in!
The repayment deadline is usually when your next salary is due. If you are unable to pay it, it is carried forward.
The problem with payday loans is that it can be a vicious cycle. Before you realize that you have signed up for multiple loans, it becomes very difficult for you to keep up with the payments and charges on time. The ease with which you can get one is partly to blame.
How do you pay off these loans?
Payday loan consolidation is the solution for those individuals who have accumulated huge debts. However, you first need to understand how it works.
The counselor will first assess your financial situation. This includes validating loans and ensuring which ones are still active. The company pays off your outstanding debts; Hence all your loans are merged into one against the new terms. You are then answerable to only one credit agency.
High interest rate is a distinctive feature of this type of loan. A company that works towards consolidation will first look for ways to reduce the interest rate that the amount was loaned to you against; Thus, paying back your loan is easier. It can also help you defray additional fees and charges. To add, they give you enough time to repay your loan. Hence, at a lower rate and with longer repayment tenure, your monthly installments are going to be lower.
Even in payday loan consolidation, you have two options:
Secured debt consolidation involves securing a loan against an asset of some value like your home or car etc. The rate of interest is low; However, in case of default, you will lose the assets put up as collateral security.
Unsecured debt consolidation that is offered without the need for collateral security. The rate of interest is slightly higher than the first option but less than the fees charged by payday loan lenders. This is a good option for someone with a good credit score.
You can consolidate the loans yourself or get payday loan loan assistance from companies that offer such services. If you choose the latter, they will handle everything for you, from handling communication with your lenders to paying off your loans.
The bottom line is that a payday debt consolidation company does not write off your loans. They work with you and your lender to design an affordable payment plan.
Now if you want to get the best settlement quickly, you have to choose your payday debt consolidation company carefully. You need to make sure that the company is registered. This step helps ensure that the financial institution is authentic. Be clear about the fees you pay for settlement. Payday loan consolidation should be based on your financial condition. The company should not operate with a one size fits all approach. If they force you to accept terms and conditions, avoid the company and look for another. If the company is trying to sell you stuff other than Payday debt consolidation services, that’s a red flag.
So, if you have taken a loan and are unable to repay the loan, don’t be fooled by phone calls and repayment agents. Schedule a free consultation session with a payday debt consolidation company and eliminate your stress.