If you have multiple payday loans from different lenders, then getting a debt consolidation can be wise. However, if you have a negative credit score, it may be hard to get a debt consolidation loan to take out your payday loans. Luckily, Encompass Recovery Group has specialized in debt consolidation for borrowers with bad credit scores. 

Benefits of a Payday Loan Debt Consolidation 

Secured debt consolidation Debt consolidation for your multiple payday loans comes with massive benefits. These include:-

Lower Interest rate

 It is ideal for you to get a payday loan debt consolidation if the interest charged on this loan is lower than the amount you are currently paying. For example, if the interest rates for your current loans are between 16 to 20 percent, you can get a consolidation with an interest rate of about 14%.

The monthly payment is fixed

Unlike monthly payments on credit cards, interest rates on payday loan debt consolidation are fixed to avoid inconveniences when repaying your loans.

Your finances are simplified 

When you consolidate payday loans, your multiple loans are merged into one; thus, the hassle of repaying different lenders each month is eliminated. You will no longer have to worry about missed or late payments. Your credit score will also improve as a result of the consolidation.

Qualifications for a Debt Consolidation 

There are different requirements that every lender sets for those opting to take debt consolidation. However, most of the lenders will consider your income level; credit scores, the ratio of debt to income to determine your capabilities of repaying your loan. A credit score of around 650 is often required to secure this loan. 

However, some lenders give loans to borrowers with poor credit scores. But in most cases, the poorer the credit score, the higher the interest rate.

Guidelines on How to Get a Debt Consolidation for Bad Credit

In case you are having difficulties getting out of debt and think getting a debt consolidation could be of help, you should keep in mind that there are a number of requirements. A credit score of above 650 is necessary, sufficient income, and a record of timely payments. But different lenders have their own specific qualifications set for lenders.

The following steps could better your chances of approval.

Close Monitor on Your Credit Score

Debt consolidation organizationsMany loan providers usually base their decision on whether or not to give you a loan based on your credit score. Mostly, if your credit score is low, you will pay high interest rates for your loans. The lenders set the minimum requirement that must be met by the borrowers. A good credit score is usually above 650, but bad credit lenders can accept a credit score of about 580.

Many banks offer free tools; borrowers can use this to check and monitor their credit score levels. It is easy to identify debtors that may be willing to consolidate payday loans if you know your credit score.

Opt for a Secured Loan

Debt consolidation loans are usually unsecured as no collateral is required. But in case you are having challenges securing a reasonable unsecured debt consolidation, it might be worth considering a secured loan.

Collateral such as home, vehicle, or any asset is required in secured loans. However, the collateral should be of value as it may be used to cover the loan amount if you default to pay the loan. This makes it easier for a borrower to get approved for a secured loan than an unsecured one. You even get a much better interest rate.

Do Your Research

Most of the time, it is usually not a good idea to accept any loan offer that comes your way. Hence, it would be best if you took some time to research and contrast the loan amounts, terms of repayment, and interest rates from different sources. You could research local banks, credit unions, online lenders, and national banks. This process may be hectic, but it could save you a lot of money in the long run. 

It would be best if you focused on improving your credit score to get a chance of getting a debt consolidation with a favorable interest rate.

Clear Your Payday Loans with Encompass Recovery Group

Our financial experts at Encompass Recovery Group are willing to guide you through the process of securing a debt consolidation loan if you have bad credit, in order for you to clear your payday loans. We have helped thousands of our clients become debt-free and we’ll be happy to help you too. Contact us today and start your journey to freedom from payday loans! 

References and Resources

Extended payment plan

Payday debt relief