Payday Loans Debt Consolidation

Debt Consolidation Pay Day Loans

As per a recent report, more than one million people are affected because of the predatory lending nature of short term payday cash advances, which often pushes the borrowers into a never-ending series of debt. Debt consolidation pay day loans can help you break this cycle. There are usually two ways these consolidation loans work. The first method is where a debt consolidation agency manages all your debts on your behalf while charging a certain amount of money for the services. The second method is where you borrow a big loan from a consolidation company to pay off all your payday debts. Following is a brief description on how the two methods work.

Hiring A Third Party To Manage Your Debts

If you are struggling with your payday debts and are having a tough time dealing with the harassing collection calls from your lenders and debt collectors, it might be a wise idea to hire a financial expert to help you manage your debts smoothly. The companies that offer services for debt consolidation pay day loans also provide credit counseling. When you contact them, they first appoint a credit counselor to study your specific case. This financial expert will review your present debt and financial situation and will work with you with your budget planning. They will educate you on how you can make the best use of the money you are earning with such hard work. After a thorough analysis of a wide array of financial factors, the company then talks to your payday lenders and tries to negotiate an affordable repayment plan. In most cases, these companies often succeed in convincing the lenders to waive off penalty charges, to reduce the rate of interest, and to increase the repayment period so that it should be easy for you to repay the loan. You are then asked to make a single consolidated monthly payment to the debt consolidation company. After receiving the payment from you, the company then pays back to your lenders as per the new repayment plans approved by them. This way, the company takes all the hassles away from you. They work on your behalf and manage your debts quite effectively. If you do not make further defaults, you will soon be able to get rid of all your payday debt problems.

Borrowing A Big Loan

Debt consolidation pay day loans also work in a different way. In this second method, you can borrow a big loan from a debt consolidation company and then pay off all your debts by using the money thus borrowed. Here again, the process initially works in a similar way. A credit counselor is appointed to review your specific case. The counselor also works with your budget plan to help you have some control over your finances. The company even negotiates the loan terms with your lenders, which again often result in interest rate reduction, waiving of penalty charges, and other such things. But a new repayment plan is not finalized. The company negotiates a debt settlement deal with your lenders, where the lenders agree to accept a reduced amount of money as a full and final settlement of the debts. The company then issues a big loan to you on the basis of all these factors. You pay off all your existing payday debts and end up having just a consolidation loan on easy terms and with low interest rates. Here again, you get the convenience to repay in small monthly installments.

Overall, no matter which of the two methods of debt consolidation pay day loans you choose to go for, it can definitely pave the path for you to get rid of your mounting payday debts.


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