Payday Loans Debt Consolidation

Four Types Of Loans For Payday Debt Consolidation

If you are looking out for information on the different types of loans for payday debt consolidation, you will be glad to know that there are several options available out there for you. But, before you borrow a new loan to consolidate your payday debts, you are advised to first do a thorough review of your specific situation. It is very important for you to keep in mind that almost every state now has enacted specific laws to protect consumers from unfair payday lending practices. You have been provided certain legal rights in this regard. Educate yourself about the laws applicable in your state and then try to find out if your lenders are violating the laws. If yes, you can file complaints against them with your state authority or with the Federal Trade Commission. Always remember, debt relief solutions like debt consolidation must be used only when your lenders are treating you fairly as per the laws. Following is a brief rundown on four most common types of payday debt consolidation loans.

Loan From A Debt Consolidation Agency

There are many agencies that offer specific loans for payday debt consolidation. When you hire an agency, they manage your debts on your behalf and charge a certain amount of fee for their services. But, despite the service fee involved with the process, you may still end up saving a lot of money on your debts. This is because these agencies also negotiate the debts with your lenders. In most cases, they often succeed in convincing the lenders to reduce interest rates and waive off penalty charges. The process does not require you to borrow a new loan literally, but the way things go on, you feel like you are having just one loan. The agency consolidates your monthly payments toward multiple payday loan accounts into a single consolidated monthly payment. When you make this payment, the agency then further disburses the respective payments to your lenders as per the new repayment plan that the lenders have agreed upon.

Credit Card Advance

If you do not want to hire any agency for loans for payday debt consolidation, you have several other options to handle things on your own. A very easy way to do this is to borrow an advance from your credit card. Calculate how much money is still due on your payday debt accounts and then figure out if you can take that much cash in advance from your credit card. If yes, go for it. You can this way pay off all your payday debts in one go and then you will be left with just one loan. Your multiple payday loan accounts will be replaced with just a single credit card account. It will make things much easier for you to manage. Though even credit cards charge a very high rate of interest but the rate is still much lower as compared to what you pay on payday loans.

Personal Loan

If you do not find credit card advance a feasible solution, you can consider using unsecured loans for payday debt consolidation. For example, you can borrow a big personal loan that should take care of all your debts. Depending upon your credit score, you can easily qualify for a low-rate personal loan. Even if your credit score is not at par and the rate that is being offered to you is a bit higher, you are still advised to consider this option because no matter how high the rate on a personal loan is, it will always be much lower than the rates charged on payday loans. As compared to a credit card advance, this option is more convenient, as it allows you to pay back in small installments without any additional penalty.

Home Equity Loan

When it comes to choosing from different types of loans for payday debt consolidation, there is also a fourth option, which is probably the best but can also be risky if not handled carefully. Instead of a credit card advance or a personal loan, you can consider borrowing a home equity loan. Since it is a secured loan, you can easily qualify for a very low-rate loan. But, it can also be risky because you have to put your home as collateral against the money you borrow. It means if you fail to repay the loan due to any reason, you may lose your home in foreclosure.

Overall, as you can see, there are certain pros and cons associated with all four types of loans for payday debt consolidation. Therefore, make sure you do a thorough research and review before you finally choose to go with a specific option.


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