Payday loan debt consolidation: Get instant relief from high APR loans

Payday loan debt consolidation helps you to get back your financial freedom from your high-interest debts through an effective program. It helps you get rid of expensive short-term loans and crooked lenders quickly.

How does a payday loan work?

Payday loans are short-term loans issued to borrowers who need fast cash but don’t have a good credit score to qualify for traditional loans. They are issued both online and through stores.
You can apply for a payday loan within a few clicks and get fast cash within 24 hours in your active checking account. The lender will debit a significant amount from your checking account after you receive your paycheck.

Why are payday loans bad?

Almost 12 million Americans borrow $7 billion on payday loans every year to cover their unexpected emergency expenses and some recurring expenses. There are more than 19.000 payday loan stores in the country. That’s more than the total McDonald’s stores in the USA. Undoubtedly, these loans are extremely popular in the USA. People need fast cash and payday loan companies are taking advantage of the borrowers’ weakness. But are payday loans good for the consumers? The short and simple answer is ‘no.’

Let’s find out why a payday loan is a bad option for the people.

It has a very short loan term

Payday loans have a short payment cycle. It usually has a 2-week term. This implies that you have to pay off the entire loan plus interest within a single paycheck cycle, which is too difficult.

It is too expensive

Some loans charge between 391% and 500% interest rate on the loans. You pay 100% more than normal in some situations. Borrowing a loan of $2000 can snowball into a debt of $200 due to the high-interest rates.

It has many hidden charges

You can’t trust most payday loan companies since there are too many hidden charges involved. It’s tough to know how much you have to pay in total.

How can payday loan debt consolidation help you?

A payday loan consolidation program gives you a personalized plan to get out of payday loan debt. It helps you get rid of high APRs, finance charges, late fees, and fines. When you enroll in a payday loan consolidation program, you get 2 years time to repay your loans. The interest rates are reduced drastically so that you can save some dollars every month. Plus, the hidden charges are eliminated so that it becomes easier for you to pay off debt.

How does it work?

It is a process where the legitimate payday loan consolidation companies negotiate with your lenders for lowering the high APRs on your outstanding loans. They help to rejuvenate your financial life by putting your existing payday loans into a single and affordable monthly payment plan. It helps to cut down the interest rate and fees by around 500%. Borrowers have to worry about only one affordable repayment plan to get back on the right financial track.

Typically, this payday loan relief program works in 3 steps:

Give your debt details

Most legitimate payday loan consolidation companies have a sign-up form on their websites. Give your debt details there. For instance, your name, phone number, email address, the name of the state, type of debt, and the total debt amount.

Get a free consultation

A legitimate consolidation company will contact you within 24 hours and have a detailed discussion with you regarding your debts. They will check the state laws, calculate your interest rates, and evaluate your monthly income to provide you with the best payday loan debt assistance.

Consolidate your loans

After you get a free evaluation of your financial situation, the company suggests you the ways to stop automatic debits from your checking accounts and negotiates with lenders for an affordable repayment plan. They help to consolidate your loans into one easy-to-pay monthly payment.

More on How does payday debt consolidation help you to get rid of debts?

What are the pros and cons of payday loan debt consolidation?

Pros

Easy repayment plan

The biggest advantage of payday loan consolidation is that you have to make only one single payment every month to manage your multiple payday loans. You need to make only one affordable payment to attain financial freedom. Late fees and additional interest rates are waived off.

Lower monthly payments

The exorbitant interest rates keep you in debt for a long time. A payday loan debt relief program helps you avoid paying high-interests to lenders. You won’t have to roll over a payday loan and increase your debt burden due to the cumulative effect of the compounding interest rate.

Less collection harassment

Debt collection calls act as a constant reminder of your financial problems. A payday loan consolidation helps you avoid collection calls and think about the important things in your life. The structured payment plan keeps your lenders happy.

Less mental stress

A payday loan consolidation program helps you to get out of debt and relax. It helps to reduce your emotional stress and focus on your financial future. You won’t have to worry about the automatic ACH debits at the beginning of every paycheck cycle.

Cons

You have to reduce your luxury expenses

Payday loan consolidation will only work when you make timely payments to the consolidation company, save money in your emergency funds, and make additional payments when you can. So you have to cut down your luxury expenses and save as much money as you can.

Once you enroll, there’s no looking back

Once you have enrolled in a consolidation program, make sure you make payments on time. Otherwise, you’ll be back to square one. You’ll owe the whole amount again along with the additional interest rates, fees, fines, and finance charges. Defaulting on your new repayment plan is the worst financial move you can ever make. So try to avoid it.

Payday loan laws – FAQ

Here are a few questions and answers you must read when you’re in payday loan debt.

Payday loan debt consolidation is a legitimate debt relief option in most states. However, some companies play with the rules and twist them for their own financial benefits. So you have to be careful and stay away from them. Here are a few ways to identify a legitimate payday loan consolidation company in your area:

The company does not charge an upfront fee

The company follows all the FTC rules and regulations

The company explains the program clearly

The company contacts lenders on your behalf
Payday loan laws are subject to state rules and regulations. Payday loans are banned in 13 states in the country. Some states allow only low-cost payday loans like Maine and Oregon. Around 32 states allow high-cost payday loans. Before taking out a payday loan, check out the state laws. Find out if it’s legal in your state.
This is one of the frequently asked questions in payday loan forums. The honest answer is that you won’t go to jail for not paying off your payday loans. Lenders may file a lawsuit in a civil court for collecting debts. But they can’t file a criminal lawsuit against you.

Payday loans are short-term loans. The amount is also small. Most lenders don’t want to get into legal hassles for collecting debts. They send several reminders so that borrowers are able to clear their dues. They extend the repayment term, impose additional interest, and withdraw money from the borrowers’ checking accounts till the ACH authorization is revoked.

Consolidation companies charge a fee for their professional services. The fee structure varies from company to company. So it’s better to compare the fees charged by consolidation companies and then enroll in a program. Don’t enroll in the program if a company asks you to pay an upfront fee because that is against the federal law.

If the fee is a major concern for you, then you can look for a non-profit debt consolidation company. They charge a nominal fee for bringing your loans into a budget-friendly repayment plan.

There are a few ways to get help when lenders refuse to cooperate with you:

  • You can seek advice from a credit counseling agency about your next financial move.
  • You can request the bank to revoke the ACH authorization so that lenders can’t debit money automatically.
  • You can consolidate or settle cash advance.

You can apply for community assistance plans for help with utilities, house rent, and food.

Payday loan debt settlement is a viable option for you. It helps you to settle your high-interest debts with a lump sum payment and save money. In this program, the settlement company negotiates with your lenders after conducting a thorough evaluation of the state laws. They help to scrap down a large amount of debt by using their smart negotiation skills.

Some states have banned payday loans. Some states have capped the interest rate. If your lender has broken the law, then it will be easier for the settlement companies to settle the account.

Bankruptcy is another option. It does help with payday loan debt. But it does come with lots of complicated rules and formalities. You break one law, your case will be dismissed. For instance, if you have borrowed cash advance 2 months before filing bankruptcy, then it will be presumed fraudulent. The onus is on you to prove that you didn’t have any fraudulent intention. If you can’t prove, then your case will be dismissed.

Legitimate payday loan consolidation companies know the state and federal laws very well. When a lender breaks the state or federal laws, the consolidation company can catch him instantly and negotiate accordingly to reduce your monthly payments. See also – How to get out of illegal payday loans – 5 Easy steps for you
With the rise of loan defaults in the country, it has become a major concern for many borrowers. What happens when someone fails to pay back the lender? Typically, borrowers have to face these consequences when they default on their loans.

Bank overdraft fees: Lenders don’t wait when you owe money to them. They will instantly initiate automatic withdrawals from your checking account if you have given them access to it. If they can’t debit your checking account, then they can try to collect whatever money is there in it. This can drain your checking account and cause other bank transactions to bounce, which triggers a bank fee against you.

Frequent collection calls: When you default on your loans, lenders will start calling you after some time. They will send you letters or threaten to take legal action against you. Some lenders may also call your friends and relatives for money. As per the federal law, that is illegal.

Lawsuits: If you assume lenders won’t sue you for a small amount, you’re mistaken. According to Michael Bovee, the owner of a debt settlement company, most lawsuits filed against consumers are for small amounts. Lenders often win the lawsuits simply because consumers don’t appear in the court. The courts issue a summary judgment and collect money from the consumer on behalf of the lender.

Depending on the state laws, liens can be imposed on properties, bank accounts can be levied and wages can be garnished.

Lenders don’t check your credit score before approving your loan application. So you don’t need a good credit score to qualify for the cash advance. Rather, lenders are likely to do an income verification before giving you fast cash. So if your income is too low, then you might be in trouble.
Lenders can garnish your wage if the loans go unpaid. They can file a lawsuit against you and your non-appearance in the court may help the lender to win the case. This can lead to summary judgments and wage garnishments later. Know more…
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