Ara Betty is a freelance financial writer and speaker about personal financing. She helps people realize their goals on becoming debt free with the use of debt consolidation. She hopes to expand her knowledge more about loans and debt to be able to write a book.
You are having financial problems and do not know what to do? Had taken several payday loans and are having trouble repaying them? How do you get out of this financial woes? This article may be of help to you. Here you will find information about payday loan consolidation which is probably one of the best ways to get out of the payday debt cycle. We will walk you through every step of the payday consolidation procedure and make it easy for you to understand. It is important that you know you are not alone in your financial troubles and there are payday loan consolidation companies out there that can help in these difficult times.
When you should use payday loan consolidation:
You want your paycheck to be only for you
One downside of a payday loan is that your creditors can garnish your paycheck. That means every month, they will receive a part of your wage because you have not repaid them. The size of your debt grows incredibly fast once you fall behind on your payments. As a payday loan is a high-risk loan, it comes with high interest rates and penalties fees. That means those monthly cut from your paycheck can last very long time if you do not take any action to get rid of your debt.
You do not want to pay high payday loan interest rates
As you may already know, a high-risk loan payday loan has high interest rates. What you may not know is that if you take a payday consolidation loan, that will change. With a payday loan consolidation loan, you will be able to repay most if not all of your other debt. In the end, you will only have to pay one interest rate – the payday consolidation loan interest rate and it will usually be lower than what you used to pay for multiple payday loans you had before.
You are sick of being stuck in the payday loan cycle
Have you ever tried to repay your payday loan with another payday loan? You are not the only one. In fact, it is kind of addictive because of the immediate relief a payday loan gives. The thing is, it is a temporary solution which in fact creates a much bigger problem. Sooner or later, you will realize that you now have multiple payday loans. At that point, it seems impossible to get out of this and you start to feel pretty desperate. However, payday loan consolidation may be able to help you.
You are finally ready to have your financial situation under control
You need to decide is that you will have to gain control over your financial situation and make your monthly repayments. Payday loan consolidation can make your life easier in the sense that you will only have to make a single payment every month and the amount and interest rate will be lower. However, you will still need to be able to keep up with it. There are various programs and you can consult with a professional to choose an option that matches your personal financial situation. Have the courage to start getting out of financial trouble today.
How does payday loan consolidation work
To understand how payday loan consolidation works, we have divided it into several simple steps. Stay well-informed and motivated.
Get to know the process of payday loan consolidation and make sure you completely understand it.
You can find a lot of information online. If you still have problems with some of the details, you can try consulting a professional. However, you want to make sure that you are consulting a third party who will provide you with honest advice and realistic valuable information. You have to be critical of everything you read or hear. Your third option is to discuss the loan consolidation process with people who have already gone through it. They can provide you with good first-hand experience. However, you should have in mind that each person’s story is different – they would have different debts or have used a different payday loan consolidation companies. You will have to compare the differences and similarities and evaluate the situation accordingly.
Decide if loan consolidation is the right option for you
There are three payday loan relief options disposable to you – payday consolidation program, a consolidation loan, and a payday loan consolidation loan debt settlement. They function very similarly but there are some differences you might need to know when deciding how to proceed. Here is how you can compare them:
– In relation to what each of them does. Without going into too much detail, a payday loan consolidation debt settlement reduces the number of your total debts, while payday consolidation program reduces the interest amount of your debt. A payday consolidation loan simply transfers your current debts to one different lender. All three options transform your multiple debts into a single one.
– There are different payoff periods for every option. They vary from as short as a year to as long as 30 years. You could say the shortest version is payday loan consolidation debt settlement which normally takes between 18 months and four years. It is shortly followed by a debt consolidation program which has an approximate length of between two and five years. Although payday consolidation loan may seem as the longest version and therefore not so desirable, it is exactly the opposite.
It is true it can take somewhere between one and thirty years but it all depends on how much money you have and how much you are willing to pay. It is entirely up to you how long will it take. There is not anybody else telling you how you should do it. That is not the case with the payday loan consolidation loan debt settlement and the payday consolidation program where you have strict rules about how you are supposed to repay and you are obliged to follow them. Naturally, this can get harder and harder to do in time.
– Another factor is how you are supposed to make the payments to your creditors. With payday consolidation program and payday consolidation loan, you have to make monthly payments. On the other hand, with payday consolidation loan debt settlement you have to make one lump sum payment. The thing is in order to collect that lump sum, you will have to open a special saving account a put money in it every month.
So there is not really that much difference in this section. The only benefit you are getting with all the three options is that monthly payment will be the only one in opposition to you having to make monthly payments to all of your creditors on all of your multiple debts with different interest rates. Therefore, you might actually save some money by choosing one of those options.
– At that point, you might ask yourself what are the requirements they would want you to meet. As already stated with payday consolidation loan debt settlement you will have to save the amount you will need before the settlement. The payday consolidation program will require you to make monthly payments and payday consolidation loan works with a collateral (which funnily enough does not change its nature as an unsecured debt, which is a little detail you should have in mind)
– The last but not least important thing is the result these three options have on your credit score. With payday consolidation loan debt settlement your credit score will drop initially, while with both payday consolidation program and payday consolidation loan it will continue to drop gradually.
Generally, whatever you chose will help you improve your credit score and keep it better because they are designed for you to keep up with your payments and get out of debt. Both those things look good on a credit score and you want to have a good credit score as it is very important for many areas of your life.
In conclusion, you want to use payday loan consolidation debt settlement when you are looking to settle your debts rather quickly for less money and pay them all at once or in other words to just get it over with. Payday consolidation program is the best choice for you when you are looking to make cheaper monthly payments with a lesser interest rate amounts. If so, that is your thing.
A payday consolidation loan is a very good solution when you get approved for one. It might be your thing if you are able to pledge a security as a collateral. Consider your options very carefully and take the first step towards a life with fewer debt troubles in it today.
Talk to your payday loan consolidation company and share with them your financial troubles
In any case, you need professional help so let them help you. It is important to not to give up throughout the process. It will all work out eventually.
Get the legitimacy of your payday loan verified
You want to make sure that everything is legal. So do not miss out this step.
Receive a repayment plan that takes your personal situation into account and is affordable to you
With a viable repayment plan, you should be able to repay whatever it is that they are offering you and it is up to you to negotiate it correctly.
Monthly payments that come with payday loan consolidation?
This varies from case to case. There are several factors influence the amount you have to pay each month. Those include but are not limited to:
The exact number of debts you have and amount
There are different ways in which you can use payday loan consolidation. For example, if you have ten debts but you have managed to stay on payment on top of four of them and you want to keep it like this, you can choose to consolidate the other six payday loans. That way instead of ten, you will have only five debts – four you are managing to deal with anyone and a new one with a lower interest rate and in some cases even a lower monthly payment.
You may also want to consider consolidating all your payday loan debts at once. Depending on how overwhelmed you feel with the situation, that just might be your option. Having simply one debt instead of ten with different creditors will definitely make you feel less stressed and can help you get out of debt sooner than you expect.
Will your lenders be willing to reduce their interest rates
Now, that is a tricky one but there is really not much you can do about it. What you need to know is that before taking out your payday consolidation loan, you should talk to your creditors and try to negotiate with them. If your relations with them are extremely bad, you can consider finding a professional to do it for you.
It is important because if none of your creditors agrees, you are losing an important advantage of the payday consolidation – the reduction of the interest rate. However, even in that case, payday loan consolidation still has benefits to offer- you will have fewer creditors, subsequently fewer payments calls and you will have only one payment to make which is always much easier to do. Try to get the best out of the situation you find yourself in.
How much you can afford to pay
Naturally, the goal is for you to get help. Therefore, a payday loan consolidation program is trying to make sure you do not sink further into financial problems. Make sure you are well aware of your current financial situation before you talk with them for ultimate results. Make a list of all our debts and late payments. After you have finished with that, make another list consisting of all your disposable sources of income. In addition, you will need a third list with all the expenses you simply cannot live without such as expenses on food, clothes and utilities. When you have prepared all of that, you can discuss at length with your payday loan consolidation company what would be appropriate for you and how they can help you.
Normally, they will take into account all the information you have given them so it is important you have all your data correct. Be careful with the details and if any point you find you have made a mistake, contact your payday loan consolidation company and let them know before it is too late. It sounds like a lot of work,but if you do not want to have financial hardships in the future, you should do such lists on a regular basis. This way, you can have control of your budget and make get into the world of planned household budgeting. If you can do it, it will be very useful for you as it can keep you out of trouble.
How you can get out of payday loan debt
This is a tricky question and you should be aware that the answer depends on several factors. First of all, which state you are living in is very important. That is so because regulations vary from state to state and a certain option available in one of them may not be available to you if you live in another state. Secondly, it matter how many loans you have and how much debt you are in.
Another thing you should bear in mind is that it is important whom you have borrowed money from because different creditors have a different attitude towards your repayment of their debt. Some may disagree with the conditions of the option you have chosen as most appropriate for yourself. Although payday loan consolidation will most probably work out for you just fine, you need to check the things stated above and see how they apply to your case.
What you need to know before you take out payday loans online
Getting a payday loan consolidation is certainly very tempting. However, before you rush into it, there are a couple of things you need to do. First and foremost, you want to make sure you have found the right company to do business with. How should you do that?
- Check if the online debt consolidation has a physical address as well
- Try to see what kinds of reviews the payday loan consolidation company has
- Make sure the company you have chosen has a fee structure that can easily match your budget
- Check what state and federal regulations there are in regard to online payday loans
How should you deal with your payday lenders
There are two really harsh steps your payday loan creditor can take towards you- first, they can garnish your wage and second, they can send you a court summon and sue you. If you have more than one debt it is possible at some point you have to deal with both those things at the same time. What should you do? There are some steps you can take
When creditors deduct money from your account with an authorization
You can take a series of actions in this case. First, inform both your payday loan creditor and your bank of your disapproval. Second, revoke the authorization. Third, change the location of your money. In other words, transfer them to another bank account. Open a new one if necessary. After all of that talk to the person who has lent you money and try to clear out the situation. The best case scenario is if you use payday loan consolidation and pay off this debt completely. An alternative would be for you to beg him for a repayment plan to which he may not agree. So do the smart thing and get payday loan consolidation.
If you have received a court summon
Unfortunately, at that point, there is not much you can do. The best piece of advice we can give you is – answer it! It is never a good idea to ignore court documents.
Normally, it will activate a much more complicated and longer procedure if you do not. In any case, things can get worse. You should know that if you do not show up in court, you creditor will get a default judgment. Meaning, he will win the case for no other reason than you failing to show up for the hearing. You do not want that to happen. Do not be afraid and just go there.
If it is possible try to talk with your creditor before things go to court. You might be able to reach a settlement with him in advance. That will save you both court expenses and is the sensible thing to do in this case. However, try to approach him carefully as it is a very delicate situation.
What loan consolidation traps you may fall into and how to avoid them
You need to know there are laws regulating payday loan consolidation and similar activities. There are special institutions that watch over what is happening and are trying to help you. Their job is to catch when there is a break in the system and fix it through an improvement in litigation.
In payday loan consolidation, Consumer Financial Protection Bureau (CFPB) is the institution responsible for all that. There are two main ways they try to interfere in the process in order for you not to fall into some of the most common traps that usually come with payday loan consolidation through prevention of scams and through protection of you as a customer.
What you should know is that there are some new rules which the Bureau has proposed. There is constant change in the area but sometimes it takes a long time to put the new regulations into action. Make sure you have sound the last active version of the relevant regulation you need. There is plenty of information on the Consumer Financial Protection Bureau (CFPB) webpage. Check it regularly and make sure you are on the safe side when dealing with your money and debts. Good luck!