Payday loan consolidation entails merging all your payday loans into a single one with better payment terms and lower interest rates. Two options on how you can consolidate your loans are available; they include debt consolidation loans and payday loan relief programs.
Payday Loan Relief Program
This program entails working with an agency that will represent you, the debtor. It is also referred to as a debt settlement program, payday relief program, or debt management program. The borrower incurs a flat monthly fee on the repayment of the loan.
Negotiations can be made between the lender and the borrower regarding the reduction of the fees. Sometimes you could repay the loan in time to secure a new loan. You are offered a flat monthly rate over a more extended repayment period without the burden of you calculating your interest. You pay the agency, and they deal with your creditors.
It is imperative to know how payday loan consolidation firms operate to avoid being scammed.
Advantages of Payday Loan Relief Program
- Assistance from experts
- Amount of debt is reduced
- The experts can negotiate better terms
- Easy monthly payments
- The amount owed is reduced
- Specific lenders only offer it
- Increased number of scams thus you should beware
A debt consolidation loan is a personal loan that you secure to pay off your lenders.
How debt Consolidation Loan Works
You first apply for this type of loan; after your credit score has been analyzed and approved, you are given the cash which you use to pay back your lenders. After this, you are now required to pay off the new loan.
The good thing about debt consolidation is that you are in full control. You are fully aware of all the provisions related to this loan. However, they are usually hard to get due to the credit check. If you are in a problem with a payday loan, you probably don’t have the best credit score; it may be hard for you to qualify for this kind of payday loan relief.
Benefits of Payday Relief
If you are trapped in the payday loan problem, there are high chances that you could benefit from a loan consolidation plan. The following are some of the benefits accrued from consolidating your debt:
The fees and interest rates are reduced
Payday loans have dramatically high-interest rates, which range between 20- 30% in the credit card APR. When consolidating your loans, you can reduce the rates to as low as 6-30%. This could help you save a lot of money over the entire duration of the loan repayment period.
Unlike payday loans required to be paid between two to four weeks, you can get a variety of repayment terms with a personal loan that could range between 12 to 48 months. You have the liberty to choose the term that suits your budget.
Uniform Monthly Payments
Late payments of payday loans have hefty penalties, which could be discouraging to the borrowers. Consolidating your loans could save you much trouble. A consolidated package is much easier to comprehend, as it will give you a straightforward plan for monthly payments. You will be required to pay a constant amount of money every month.
The Repayment Terms are Flexible
A personal loan is set to offer flexibility when it comes to the amount to be paid monthly. The debt management plan is much more reasonable than payday loans as you can negotiate with the lenders on terms that best suit you.
Consultation services will cost you nothing; thus, you should seek the advice of a professional who will guide you through the terms and conditions of the loan consolidation agreement so that you can make an informed decision before taking one.
You will be provided with paperwork that includes the payment plan and the consent to represent you to the creditors. Your bank account will be given out to the lenders, and negotiations will be made on your behalf. You will then stop making direct payments to the lenders.
Loan consolidation will significantly help you avoid the high interest rates and the bondage of payday loans. Why wait? Merge your loans today and enjoy a comfortable repayment experience. Contact Encompass Recovery Group for guidance, and manage your finances with ease.
References and Resources
Importance of financial literacy