Posts Tagged ‘consolidate payday loans with one big loan’

Dealing With Payday Debt – How About Borrowing One Big Loan To Consolidate Payday Loans?

There are several ways out there to consolidate payday loans. Debt consolidation is a popular concept and it has helped thousands of consumers to manage and pay off their debts. This option is suitable for those who have borrowed multiple payday loans from different lenders and are now struggling badly in dealing with the resulting debt burden. The sky-high interest rates and fees that lenders charge on these loans and the general provisions like automatic rollover of loan on non-payment result in a small amount of debt taking shape of a monster within a very short period of time. The horror of the situation can be realized with the very fact that a $500 of payday advance can become a debt of over 1000 dollars or even more within a matter of just a couple of months. If you keep on making defaults, you will probably never be able to get out of this debt trap. That is the reason it is sometimes wise to consider consolidating these loans into one big loan with a comparatively much lower rate of interest.

Are Your Lenders Following The Laws?

Before you consolidate payday loans, you must first do a thorough research and find out if your lender is charging you as per the limit set by your state laws. In almost every state, there are specific legal provisions (or restrictions) regarding everything associated with payday lending, such as the maximum amount of money a lender can offer, that a borrower can have at a time, the lenders can charge, whether rollover or automatic renewal is allowed (if yes, ), the that can be charged, and whether the state makes it mandatory for the lenders to offer an affordable to the borrower in case he/she is unable to repay the loan otherwise. You must first educate yourself about the laws and then find out if your lender is following those laws properly or not. Are they charging you more than the set legal limit in your state? Are they denying you an affordable repayment plan in small monthly installments while your state laws require them to offer this convenience to you? Are they charging unreasonably high collection fee? Are your loans being rolled over again and again while any such rollover is strictly prohibited in your state? If you find out or just suspect that your lender is violating these laws, you must . But if everything is in line with the law, you can go ahead with the debt consolidation process.

Borrowing One Big Loan To Replace Multiple Payday Loans

When you consolidate payday loans with one big loan, you follow a simple concept; you have to borrow a big loan for the aggregate amount of money that is outstanding in your name toward multiple payday advances. You can use the borrowed money to pay off your existing debt. This way, you will end up with just one big loan, where you will be liable to make just one monthly payment. You can save a lot of money in terms of interest and fees. Besides that, you also get the convenience of making the repayment in small monthly installments. Eventually, you can easily get out of the otherwise stressful situation, manage your debts easily, and pay it off within a short period of time.

Consolidating Using A Home Equity Loan

You have two options to consolidate payday loans by using a single big loan – you can either take a home equity loan, or alternatively, you can borrow a personal loan. There are pros and cons of both the options. You must own a home in order to qualify for a home equity loan because this is a secured lending program that requires you to put your home as a collateral against the money you borrow. Your home becomes a security against the loan. If you make defaults and do not repay the loan in time, the lender has the right to sell off your property to get their money back. This way, it can be a risky option. You are recommended not to go for it if you are not confident that you will be able to keep current with your monthly payments. On the other hand, this option might just work for you if you have a handsome regular monthly income and are sure that you will never make a default. The best thing about this option is that you can get this loan at a comparatively very low interest rate.

Consolidating Using A Personal Loan

Another option to consolidate payday loans using one big loan is to go with the unsecured lending programs. You can take one big personal loan to pay off all your existing dues on multiple payday cash advances. The best thing about this option is that it does not require you to put anything as collateral or security. But, the negative side is that it charges a high rate of interest as compared to the rate charged by a home equity loan. How high this rate is going to be will depend on how good your credit score is and how much your regular monthly income is.

Overall, it is entirely up to you to decide which option you want to go for. One thing is for sure; if you are struggling with rapidly growing payday debt, you can easily get out of the viscous cycle of debt if you choose to consolidate payday loans with one big loan. It will give you an opportunity to manage your debt and finances in a better way and to put things back on track.

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What are the pros and cons of debt consolidation?