Payday loans are usually short-term loans; they must be paid back after a few weeks. The period for a payday loan is within 30 days or less. The amount limit for payday loans goes up to $1000.
Payday loan consolidation online repayment is usually made through a single payment at every end of the month. The creditor is required to take a post-dated check from the debtor. Even though they have high-interest rates, payday loans are effective as they are lent out without a credit check.
Payday creditors know that you require a loan and will most of the time give you a new loan, thus challenging your capability of paying back the original payday loan.
The amount of the loan fee and the principal is reflected on the check. The lender may require the bank to deduct the amount indicated on the check if the borrower does not make timely repayments.
A borrower’s source of income and working checking account is required to qualify for a payday loan.
How Payday Loan Consolidation Online and Debt Relief Works
Under payday loan debt consolidation, all your payday loans are combined into one and monthly payments. After that, money is paid by the borrower to the consolidation company directly. Who, in turn, pays the owed amount to the lenders.
The main benefit of payday loan consolidation online is that it helps you quickly get out of debt by handling your lenders. The total amount of monthly payments and the sum that you owe are drastically lowered.
Benefits of Consolidating Payday Loans
- Payment amounts are lowered
- It facilitates faster repayment of payday loan
- Monthly payments are merged into one thus facilitating efficiency in payments
- Helps to eliminate the strict agencies associated with debt collection
- It helps reduce the high APR fees
- Your other expenses are managed as well
- You are provided with the professional knowledge required ineffective management of funds
- You are relieved of stress associated with repayment of loans
- Lenders will no longer be able to access your bank account
- You are relieved of multiple repayments as all your loans are merged into one
- Spiraling of debts is eliminated
- Credit counseling is offered to you
How is Debt Consolidation Loan Different From Debt Consolidation?
A debt consolidation loan involves a combination of different personal loans by the borrower into one umbrella loan. By doing this, the borrower’s life is simplified as only one payment is required monthly instead of multiple payments.
On the other hand, debt consolidation entails the change of unsecured debt into secured debt. Under secured debt, some form of collateral is required from the borrower. A house or other personal asset could be used as collateral.
Choosing a debt consolidation plan has severe consequences in cases where the borrower cannot repay the loan. The borrower’s assets are at stake, and they may be taken to service the loan.
To avoid lenders from taking over the borrower’s assets, some creditors tend to max out their credit cards to help them repay their payday loans on time.
Consolidation of payday loans helps to cut down the full amount owed and also the monthly installments.
How Does Payday Loan Consolidation Affect Credit Score
Since the consolidation companies do not give out personal information to credit bureaus, it is hard to evaluate the borrower’s credit report; hence, loan consolidation has a negative impact on the borrower’s credit score.
Through timely repayments in payday loans, you can better your credit score in the long run.
Is It Possible for Lenders to Lower the Interest Rate?
Through the right negotiation between the lender and the borrower, it is possible to get interest relief on the total amount owed. The nature of relief will depend on the consolidation agreement between the company and the lenders. Other companies do not have the borrowers’ best interest and do not offer any relief. In this case, you are supposed to hire a payday loan consolidation company to negotiate on your behalf.
What Happens When One is Unable to Pay the Monthly Payments?
If a person cannot afford the amount required for monthly payment, they may opt to cancel the program and exit at any given time, depending on the initial terms of the agreement.
Why wait? Take a payday loan consolidation and debt relief today and better your loan repayment experience. Contact Encompass Recovery Group for guidance on how to go about this and gain freedom over your finances.