Payday loan consolidation: work towards becoming debt free
With the current economic times, more people are finding themselves buried under the weight of numerous credit card debts and other debts. The need to become debt free and regain financial freedom is almost impossible. With a smart payment plan, this pattern of outstanding payday loans can be changed.
When companies provide you the option for a debt consolidation program, what it means is that they will work with your lenders to bring down the interest rates and provide you a debt management plan that will work best for you. Most lenders also work towards ensuring you do not endure additional charges as the goal is to help you get out from under the rubble of debt and not add to it.
To get you started, counselling is important. Let the lender evaluate your current financial position and provide you the best payment plan for your situation.
It is not uncommon to hear of individuals struggling to meet their monthly payments and suffer late fee charges on the numerous debts they owe. Payday loan consolidation services provide debt relief by giving you a cash advance to pay off other payday loans and get control of your finances.
With loan consolidation, you have plenty of time to pay back loans at a lower interest rate and reduced monthly installment. Things cannot get better than that.
When should you get payday loan debt assistance?
It will be wise to take debt consolidation when you are looking to steer away from high APRs and when you want to protect your paycheck from overpriced payday loan lenders. Another occasion is when you are facing a financial crunch due to hefty loans.
Benefits of payday loan consolidation
- Easy repayment – Since you no longer have to worry about numerous payday loans, it is easy to remember just one payment to make from your paycheck without defaulting. In efforts to regain financial stability, one debt consolidated payment is all you have to manage.
- Forget collection agency annoying calls – Your consolidation company will provide you a cash advance to pay off other payday loans. This will put an end to the many collection agency calls that are a constant reminder that you have to pay for with no solution as to how.
- Reduced Monthly payments – This unsecured loan can help you eliminate the compounding effect of high-interest rates that come with payday loans. Doing away with these interest rates means you no longer have to pay more.
- Psychological Benefits – Knowing you have taken the steps necessary to overcome debt and its stress will ultimately rejuvenate you. Give you back the zeal for life and help you relax more. You can finally see the proverbial light at the end of the tunnel.
- For Unsecured loans – If you choose to get this type of debt consolidation, you will not face additional guarantees. This means you will not, in any case, lose your property- house, car or any other valuable in case you fail to keep up with your repayment plan. However, you may be charged higher interest rate as this is the only guarantee the lender has. If you do have a good income, this high rate can put you in a deeper financial mess. You can opt to put up collateral to drive the interest downwards. The maximum loan amount you enjoy will be greatly determined by your credit score. If you have a good score, you have better chances of getting high amounts.
- For Secured loans – If you decide to take out this type of consolidation, you will definitely get a cheaper option than unsecured loans. The rates are still dependent on your credit history and the amount of the loan. Having collateral will play a role in securing you a lower rate. Secured loans also have lower requirements, making the application process easy and fast. The main thing to note with secured loans is your property is at risk of being reposed in the event that you fail to repay the loan as stipulated in the lenders’ terms and conditions.
Payday loan traps and the CFPB proposed law to end them
The Consumer Watchdog Consumer Financial Protection Bureau (CFPB) is not blind to the challenges that borrowers are facing when dealing with lending companies. On March 2015 they proposed laws to protect borrowers from scrupulous payday loan lenders. The goal of this law is to prevent and protect the consumer.
- Proposed rules:
The rules state that lenders have the right to verify borrowers’ willingness and ability to pay off the loan, accompanying interest and the principal amount. They also have the right to check borrowers’ income, financial liabilities and their credit history. The rules further state there should be a minimum of a 60-day cooling off period between payday loans.
- Lenders can only issue a second PDL within two months of the first. This is to enable the borrower some period to improve their financial standing. Once a borrower has received 3 consecutive loans from one lender, he/she can only get another after 60 days.
Lenders have to provide fair and realistic payment plans to borrowers to assist them in eliminating their payday loan debt. In addition, lenders cannot keep a borrower in debt for more than 3 months in any given year.
- In favor of the borrower, the law proposes that a maximum of 2-3 rollovers be made available with a mandatory 60-day cooling off period. The lenders are further advised to suggest a way out of debt to their clients before approving a second or third loan. Methods to use include a drop in the principal with each loan, ‘off-ramp’ offer on the third loan so it is paid without incurring any extra fees
Advice to follow before you get support with payday loans online
The need for research cannot be overemphasized before embarking on taking advance loans. You can do so by checking the companies physical address. Knowing where they are located in the first step towards finding out the credibility of the lender. Second, how good are their services?
Check online reviews to find out what other customers are saying about the lender you are considering. Thirdly, do a detailed study of the company’s website, find out their fee structure, plans, policies, terms and conditions and any other information you may need to be comfortable. Also, check if the lending company has a good rating on BBB (Better Business Bureau).
Finally, check out the state payday loan laws. The laws are not the same in all states, find out what your state states.
A simple guide on how to choose the best debt consolidation company for payday loans
Type ‘Payday loan debt Consolidation Company’ into your search engine. From the many options, go to the official website of several companies, check out the reviews section and the fee structure. Do thorough research as you will be dealing with these companies on a number of occasions.
Get one that will not add undue strain. Compare the different companies until you land on one that you are most comfortable with.
Deciding to go for debt consolidation is a start to regaining your freedom and having savings and investing. So go ahead, get a debt consolidation company today. Fill out an application form and watch as your life slowly transforms for the better.