Posts Tagged ‘advantages of consolidating payday loans’

7 Top Benefits Of Consolidating Payday Cash Advances

Payday loans, when not paid back in time, often take a very horrible turn and cause some very serious dents on your finances. When you fail to have any idea on how to handle your rapidly rising payday debts, you can consider consolidating payday cash advances. Debt consolidation is a process that allows you to merge all your debt obligations into a single debt account, which eventually makes it very easy for you to repay the debts and to take control of your finances. There are several options you have in this regard. For example, you can do it on your own by borrowing a new conventional loan, which is big enough to cover all your existing payday debts. Alternatively, you can hire a debt consolidator or payday debt attorney to perform the task on your behalf. No matter which option you choose to go for, you will enjoy the following benefits.

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Debt Reduction

You can reduce your overall debt balances as well as the rate of interest substantially by consolidating payday cash advances. The extremely high rate of interest that payday loan companies charge is one of the major factors that make these small, short-term loans very risky. Besides that, the provisions of rollovers and lots of hefty additional charges make things more horrible with time. When you consolidate these debts, you get an excellent chance to negotiate with your lenders and convince them to reduce the outstanding balances. You can go for such negotiations on your own or with the help of a debt consolidation company. Even if you are not lucky enough to have lenders that can be convinced to accept a reduced amount of payment as full and final settlement of their loans, consolidation of payday debts still allow you to reduce at least the interest charges to comparatively very low rate.

More Favorable Repayment Terms And Conditions

Another benefit of consolidating payday cash advances is that the repayment terms become much more favorable for you. For example, there are no more rollovers or too hefty penalty charges. There are no risks of bounced checks or multiple NSF fee. Whether you convert your payday loans into a conventional loan or sign up with a debt consolidator to mediate between you and your payday lenders, you eventually get more favorable terms and conditions as far as the repayment of your debts is concerned.

Smaller Monthly Payments That You Can Afford

What is more, things become much more affordable for you because the monthly payments are much smaller when you consolidate your payday debts. When you hire a debt consolidator, they first review your finances and then offer you a solution in a way where the monthly payments become as small as you can easily afford to pay every month.

Single Monthly Payment

It is usually very stressful to deal with multiple debt accounts, where you have to make multiple payments every month. By consolidating payday cash advances, you can say goodbye to such stress. There are no more multiple monthly payments that you have to deal with. As part of the process of payday debt consolidation, all your debts are merged into a single consolidated monthly payment, which is small enough to fit into your monthly budget.

Additional Charges Are Waived Off

Another great thing about consolidating payday debts is that the process allows you to get rid of hefty penalty charges and other additional fees. For example, when you pay off all your payday loans through a conventional loan, there is no question of penalty charges on your payday debts because they are already paid off. And, in case, you miss a few payments on this new conventional loan, the penalty charges are comparatively very small (however, it does not mean you should miss the payments). Likewise, the first thing that a debt consolidator does is that they negotiate with your lenders and convince them to offer you a more affordable repayment plan; in this process, lenders often agree to waive off all sorts of penalty charges.

You Do Not Have To Deal With Collection Agents Or Your Creditors Anymore

As it is quite evident now, consolidating payday cash advances also helps you get rid of collection calls. If you consolidate the debts on your own, the debts are paid off in full, which means there is no question of anymore collection calls from payday lenders. Likewise, when you sign up with a payday debt consolidation agency, the agency becomes your representative and deals with your creditors on your behalf. This way, even though you have debt obligations to your payday lenders, there is no direct communication.

An Opportunity To Improve Your Credit Score

Probably, the biggest benefit of consolidating payday cash advances is that it also provides you an excellent opportunity to repair and improve your credit score. However, you have to be very careful in this regard. If you are not careful with the debt consolidation method you are opting for, you can actually end up hurting your credit score. When you consolidate your payday loans, you will have to request your lenders to make positive reporting to credit bureaus about the payments you are making. For example, if the lenders are reporting your payments as “paid as part of a debt consolidation program” or as “paid partially”, it will hurt your credit. If you want to protect and improve your credit score, you will have to make sure that your payday lenders to agree to report the payments as “paid in full”. You can ensure this by choosing a reputable and experienced debt consolidation company.

Last, but not the least, consolidating payday cash advances also provides you an opportunity to bring your finances back on track through simple budgeting. In fact, most debt consolidation agencies also offer credit counseling services, where you are taught about how to create and implement effective budgeting to ensure a smooth financial life.

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What are the pros and cons of debt consolidation?