Payday Loans Debt Consolidation

Manage Your Payday Debts On Your Own With These Three Payday Loan Debt Consolidation Programs

There are different types of payday loan debt consolidation programs available in the market. In order to make an informed decision on how to choose the best out of them, you must first look at the pros and cons of each and every program. A thorough comparison is very important. Some programs are designed in a way that do not require you to hire a third party to mediate between you and your payday lenders while there are other programs where mediation from a third party (such as a credit counselor, a debt attorney or a debt consolidator) is required. Following is a detailed overview on the advantages and disadvantages of three different types of consolidation programs that allows you to manage and pay off your payday debts on your own.

Obtaining A Large Amount Of Personal Loan

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This is probably the easiest option among all payday loan debt consolidation programs. As per this method, you have to borrow an unsecured personal loan from a conventional lender. Obviously, you must have a decent credit score to qualify for this type of loan at a reasonably low rate. Most conventional banks and financial institutions will probably reject your application straightaway if your credit score does not meet the eligibility requirement. However, there are still many sub-prime lenders out there that will be willing to offer you a personal loan even if you have poor or bad credit; it is just that the rate of interest in this case will be comparatively much higher. The main point to note here is that the cost of a personal loan will always be very, very low as compared to the cost of payday lending. Therefore, even if you obtain a personal loan that charges interest at 40% per annum, you may still like to consider this option. You can pay off the entire payday debt using the money you thus borrow. Once all your payday debts are paid off, you will just have to pay a single monthly payment (a comparatively very small amount) toward a single personal loan account. This way, your debts will become easily manageable and you will probably not face any difficulty in making the timely repayment because of the easy monthly installment facility that personal loans provide.

Doing A Cash Out Refinancing

Cash out refinancing can also be used as one of the best payday loan debt consolidation programs. In this method, you have to refinance your mortgage for a much higher amount of money than you actually owe. The extra money you receive through this method can be used to pay off your payday debts. If you are a homeowner, this is probably the best strategy you may like to consider. Once you pay off all your debts, you will be left with a mortgage loan account, where you have to pay a little higher amount of money as monthly installments. Considering the very fact that negotiating with payday lending companies and convincing them to allow you to pay back through an affordable repayment plan (in easy monthly installments) is almost impossible, this option is worth your consideration, especially if you are a homeowner. The worst problem with payday loans is that the outstanding debt balance keeps on increasing very fast if you leave it unpaid. If you are late by three months, you will probably have to repay three or four times the actual amount of money you had borrowed initially. The negative aspect of the cash out refinancing method is that it requires you to put your home at a higher risk. If you fail to payback the increased monthly payments in a timely manner, you may end up losing your home. However, you can avoid this risk by refinancing for a much longer period; this way, even the amount of monthly installments will be much lower than before.

Getting A Home Equity Loan

If you have a decent amount of equity in your home and are looking out for various options on payday loan debt consolidation programs, you may also like to consider obtaining a home equity loan. This is a secured loan, where you put the equity in your home as collateral against the money you are borrowing. This way, the same risk applies here as well; failure to make timely repayment on a home equity loan may result in your lender foreclosing your property. It is also important to note that most lenders however will require you to have at least 40% of equity in your home, which means you must have paid back at least 40% of the mortgage. The positive aspect is that this loan comes with a very low rate of interest. Besides that, many banks these days waive off closing cost and origination fees as well.

As you can see, when it comes to payday loan debt consolidation programs, the options abound. Consolidating your payday debts is always a wise decision because leaving the payday loans unpaid will keep on damaging your financial situation.

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