Are you one of those thousands of Americans who are reeling under payday loan (pdl) debt? If yes, you should find out the right way to get out of the debt asap!
Well, payday loans are comparatively easier to take out than opting for a personal installment loan ! Moreover, payday lenders usually don’t offer stringent eligibility requirements for taking out a pdl . And these things are enough to allure people to take out a payday loan during urgent money requirements!
In short, taking out a payday loan is a cakewalk! But you have to pay a hefty price for the convenience of taking out fast cash!
Yes, you heard it right! You know what? The worst thing about payday loans is the incessantly high-interest rates!
So, ignoring the payday loan debt can create a massive financial burden! Even if you roll-over the loan, you may end up paying more in fees and interest rates than the original amount!
Probably, that’s why most of the time, people fall prey to the payday loan debt trap. And they can’t figure out how to handle the debt and escape from the grasp of a payday loan !
But you don’t need to worry! In this article, we are gonna discuss the best way to get rid of pdls, i.e, payday loan debt consolidation!
You might think,
Can debt consolidation help with payday loans?
Yes! Why not? To help you make a better decision, we have listed some points on how payday loan debt consolidation helps you to get rid of debt!
Let’s have a look!
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1 You can bundle your payment
Earlier, you had to manage your multiple payday loans which means different outstanding balances and their respective deadlines. But with payday loan debt consolidation, you won’t have to be stressed in handling multiple payday loans!
Let’s say, you have taken out a consolidation loan to pay off your payday loans at once! So now, you have to make a single payment towards paying off your consolidation loan every month.
But remember, try to make payments for this consolidation loan always on time! Otherwise, any missed or late payments can affect your credit score. Besides, the creditor from whom you have taken out the consolidation loan can put your account into collections!
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2 Negotiations on your behalf
As I said before, the worst thing about payday loans is the outrageously high-interest rates! That means, if the interest rates are reduced, it will be a bit easier for you to get off your payday loans!
So, let’s say, you have opted for a payday loan debt consolidation program! Once you register with a genuine consolidation company, they will assess your financial conditions first!
Besides, a consolidation company usually has a team of financial experts who are highly-experienced in negotiating with lenders!
So, they will negotiate with your lenders on your behalf and try to reduce the interest rates of your payday loans as much as possible!
Thereby, you don’t need to bear the headache of dealing with your payday lenders anymore. The consolidation company will take care of everything!
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3 Lower monthly payments
Previously, you had to shell out a huge amount of money for making the monthly payments on your payday loans! But with payday loan debt consolidation, your monthly payments are likely gonna be reduced!
Do you know why?
- If you take out a consolidation loan, the interest rate should be much lower than the sum total of your existing pdl interest rates.
- If you opt for a debt consolidation program, the financial coaches of the consolidation company will try to negotiate with your lenders to reduce the high-interest rates!
So, whatever payday debt consolidation option you choose, your interest rates are likely gonna reduce! And eventually, you have to shell out much less for making the monthly payments!
Thereby, you can manage your high-interest payday loans in a better way! And you can save a substantial amount of money every month too!
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4 You won’t get collection calls
Once you start making payments for your payday loans in the case of consolidation programs, the lenders won’t send your accounts into collections. So, most likely, you won’t get any harassment calls from the collection agencies!
And, when you opt for a consolidation loan, you repay your pdls at once! So, no more collection calls!
However, if your account is already into the collection, I would suggest you settle your payday loans on your own and get rid of them!
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5 Boosts your credit score
If you have already hurt your credit score due to late payments, you can opt for consolidation to add positive items on your credit report.
By choosing consolidation option, you repay your pdls in full; so, it gets reported on the credit reports as ‘Paid in Full’. It helps to boost the credit score.
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6 Your money is safe
Once you enroll with a reliable payday loan debt consolidation company, the payday lenders can’t take out money from your account.
The debt consolidation company talks with your bank or credit union to revoke the ACH for your payday loan debt . And thereby, your payday lenders can’t make automatic debit payments from your account.
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7 Elimination of late fees and penalties
If you’ve taken out too many payday loans and your monthly income was not enough to help you pay off the pdls, you must have made late payments.
But with a debt consolidation program, you can easily eliminate the late fees and penalties on the loans, thereby making it possible to reduce the monthly expenses.
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8 Flexible loan terms
Generally, if you take out a payday loan, you have to pay it off on your next payday. Otherwise, you have to renew or rollover to delay paying back your payday loan! And eventually, your outstanding balance amount becomes sky-high due to high-interest rates along with rollover charges!
But if you take out a consolidation loan, the repayment term usually ranges from about 12 to 84 months. So, you can get rid of payday loans in that stipulated time without paying any rollover charges!
Hopefully, now you know, how payday loan debt consolidation can help you to get rid of debts! But you need to keep certain things in mind before you opt for debt consolidation for your pdls.
In other words,
What to consider before consolidating payday loan debts?
Let’s find out!
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1 Your payday loans won’t be charged off
Yes, you heard it right! Undoubtedly, debt consolidation is an effective way to get rid of payday loans ! But it doesn’t wipe out your debts! You will still owe your payday loans like before.
However, unlike before, your debt burden will quite ease as the financial experts of the debt consolidation company will help you to deal with your pdls!
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2 Debt consolidation is a strategic way to get rid of payday loans faster!
Most likely, you will feel relaxed after opting for payday loan debt consolidation . The reason being, you don’t have to deal with your payday lenders anymore .
In the case of a consolidation program, the consolidation company will deal with them . And they will distribute the money (the single payment you make every month to the consolidation company) among your lenders based on your debt amount!
So, no doubt, it will relieve your debt stress but it won’t reduce your debt amount! Instead of handling multiple payday loans, you just need to make a single payment every month now!
That means, payday loan debt consolidation can help you to get rid of pdls with ease and comparatively faster too!
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3 Have your payday loans crossed the statute of limitations?
Well, the statute of limitations (SOL) is the maximum time after which a lender or creditor can’t sue you for unpaid payday loans! It varies from state to state and types of debt!
For example, in Alabama, the SOL for written contracts is 6 years and that for open-ended accounts is 3 years! Whereas, in California, the SOL for both written contracts and open-ended accounts is 4 years!
Let me tell you, payday loans are usually considered as debts resulting from written contracts! So, to know about the statute of limitations on payday loans in your state, check with your State Attorney General’s office!
If your payday loans have crossed the SOL, you are not legally bound to pay them off!
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4 Are you dealing with illegal payday lenders?
In our country, many illegal payday lenders are running their businesses and trapping innocent people! They offer smooth cash disbursement which makes it appealing enough! In return, they charge excessively high-interest rates along with stringent terms and conditions!
So, at first, check out whether or not you are dealing with illegal payday lenders! If yes, you don’t need to make any interest payments. Just pay off the principal amount and get out of payday loans!
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5 Is debt consolidation a good idea for your payday loan debts?
Yes! Of course, it is! Here are a few points that show payday loan debt consolidation is indeed a good idea to get rid of payday loans with ease!
- The high-interest rates of payday loans are likely gonna reduce!
- You are saving a substantial amount of money on your interest payments.
- No stress of handling multiple payday loans.
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6 Can you afford the monthly payments even with reduced interest rates?
Let’s say, you are going through a financial crunch and you need payday loan debt help. But you can’t make payments for your payday loans even with reduced interest rates!
In that case, opting for payday loan debt consolidation won’t be the right step! You can’t miss the monthly payments either for your consolidation program or for your consolidation loan!
So, before you opt for a payday loan debt consolidation, make sure that you can afford the single payment you need to make every month!
Else, it would be better for you to settle your payday loans and get rid of them! Settling your payday loans will help you to reduce your payday loan debt amounts by a considerable margin!
So, the bottom line is, payday loan debt consolidation is one of the best possible solutions if you need payday loan debt help! But that doesn’t necessarily mean you can take out payday loans now, and later, you can pay them off through payday loan debt consolidation!
I would suggest you manage your finances in such a way that you don’t need urgent money now and then! Even if you need, look for better alternatives and stay from payday loans !