Payday Loans Debt Consolidation

How To Consolidate Bad Credit Payday Loans?

Though it is very easy to obtain bad credit payday loans, the borrowers often find it very difficult to repay the same because of a wide array of drawbacks that these loans come with. The extremely high rate of interest that these lending programs charge causes the outstanding balance on these loans to grow very fast. The repayment period is very short, usually 2-4 weeks. If you fail to repay the loan on its set due date, the payday lender is very much likely to offer you an extension, allowing you to make the repayment after one extra month. The catch here is that the lender charges interest for this extended period of time, which can be a shopping amount of money considering the very fact that these loans charge a notoriously high 3-digit APR (Annual Percentage Rate), which can be as high as 600% per annum, or sometimes even more. However, even if you are trapped into the viscous cycle of payday debt, there are still several ways out there that can help you to get rid of your debt problems. Debt consolidation can be one of the best solutions for consumers who are neck deep in payday debt. Following is a brief rundown on some of the basic things that you must be aware of in this regard.

Review Your Credit Report

When it comes to getting out of the debts caused by bad credit payday loans, the first thing you have to do is to review your credit report. It is very important for you to understand that payday lenders often do not report the nonpayment of payday loans to the major credit bureaus. Therefore, even if you have missed your monthly payments toward these loans, your credit score is very much likely to remain unaffected. If you have a high FICO score, you can easily qualify for some great deals in debt consolidations programs. Your FICO score is a 3-digit number, usually in the range of 300 and 850. Scores below 600 are considered as poor scores; scores within the range of 600 and 720 are good; scores above 720 are excellent.

Review The Terms Of The Loans

Almost every state in the United States of America now has enacted specific laws to regulate bad credit payday loans. Thirteen states have even completely banned these lending programs. Other states where these loans are still legal have imposed various restrictions on payday lenders. Therefore, it is very important for you to review the terms and conditions of the loans thoroughly. Look at the interest rates the lenders are charging and whether the rates are within the legally allowed limit. If they are charging you a higher rate, you can file a complaint against them either with the FTC (Federal Trade Commission) or with the state authority. There can be several other types of legal violations as well. For example, rollovers or renewals of these loans are strictly prohibited in many states, which means the lenders cannot renew the loans if you fail to make the repayment on the set due date. Always remember, awareness of your legal rights is very important when it comes to protecting yourself from the predatory nature of these lending programs.

Do A Thorough Research And Comparisons Shopping

When it comes to consolidating bad credit payday loans, the choices for you abound. There are several companies available out there. The market is very competitive. Therefore, you must first spend some quality time to do a thorough research and comparisons shopping. Contact at least 3-4 reputable companies that offer payday loan debt consolidation services. You can visit their website and ask them to provide you a detailed free, no-obligation quote for your specific situation. Remember, in order to get accurate quotes, you must provide accurate information about your debts and finances. Once you get the quotes, you can compare the different offers and then choose the one that seems to be the most suitable one for your case.

Service Fees

Companies that offer debt consolidation services for bad credit payday loans charge a specific amount of fee. Since you are already trapped in debt, you obviously have to look out for a company that does not charge much and still helps you get rid of your debt problems easily. Avoid those companies that charge their fee in advance. As per the laws applicable for these types of programs in the United States of America, debt consolidation companies must charge their fee only after they fulfill all the promises that they make to the consumers.

Do It Yourself

If you are strongly determined to get rid of the debts caused by bad credit payday loans and are ready to demonstrate good financial discipline, you can consider consolidating the loans yourself. An easy way to do this is by contacting banks and credit unions. Many credit Unions and banks these days have launched special debt consolidation loans for those who are struggling badly with payday debt. They can offer you a low-rate loan on convenient terms and conditions. The idea is to obtain one big loan at a comparatively very low rate and to pay off the aggregate outstanding balance on payday loans in full. This way, you will end up having just one loan account, where you will have to make just one monthly payment, which is comparatively a very small amount of money.

Overall, if you follow the right strategies, consolidating bad credit payday should not turn out to be a very difficult task for you. If your debt problems are overwhelming, you can also consider hiring an expert credit counselor to assist you with the process. Make sure that the counselor you are hiring is duly approved by the state government.

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