Posts Tagged ‘Debt consolidation for payday loans’

Debt Consolidation For Payday Loans – Should You Go For It?

Debt consolidation for payday loans can help you get out of the viscous cycle of debt caused by short-term cash advances. Many people, especially the ones who live paycheck-to-paycheck, when have to meet some temporary financial emergencies often borrow small amount of payday advances to get easy and instant cash. But, this easy and instant cash very soon turns out to be a serious debt problem when they fail to make the repayment on the set due date. This mainly happens because of the sky-high interest rate and hefty penalty charges that these lenders charge. Things sometimes become worse, as many lenders are involved in unfair and even illegal practices. Before you proceed and get debt consolidation help to pay off your payday debt, you must first get yourself educated about the payday loan laws applicable in your state in order to make sure that whatever your lenders are charging is in line with the law. If you find something wrong, you can file a complaint against your lender with your state authority.

The Process Of Debt Consolidation

If you are considering using debt consolidation for payday loans, you have two options to choose from – you can either do it yourself by merging all your outstanding dues into one big loan or sign up with a debt consolidation company who will work as a mediator between you and your lenders. Both options have their pros and cons. In general, if your debt problems are very complex and quite unmanageable on your own, you can consider signing up with a debt consolidation company and let them handle everything on your behalf. These companies talk to your lenders and try to convince them to reduce interest rates and waive off penalty charges. They merge all your loans into one, eventually requiring you to make a single consolidated monthly payment. You make the payment to the consolidation company, which further disburses the money thus received to your individual lenders.

Review The Provisions Regarding Fees

For their services, the companies charge a fee, which is generally a certain percentage of the total outstanding debt they are managing for you. Some companies also charge a flat fee. You are strongly recommended to review the provisions regarding fee for such services thoroughly before you go for it. The idea is to make sure that the resulting financial obligations after debt consolidation for payday loans are fair and affordable for you. Some important factors that you must take into your careful consideration in this regard include the total monthly payment you have to make (and if that is affordable), the number of installments (how many months), and how much you are paying to the consolidation company for their services.

Caution

It is very important for you to keep in mind that not all such companies are genuine out there. There are many who are only after your money. They will just take your money and run away. Therefore, you must do a thorough research and background check before you finally sign up with a company. You can check their reputation by reviewing their past records with the Better Business Bureau (BBB). Never sign up with a company who is not registered with the BBB or a similar accredited organization. You must also read the fine prints thoroughly before you sign an agreement. Some companies take the first couple of installments as their fee and make no payment to your creditors. Such practices will only worsen your debt situation. Therefore, make sure that you have done your research thoroughly and you know what you are doing.

Overall, it is entirely up to you to decide whether you should use debt consolidation for payday loans or not. If you keep in mind the above things and act accordingly, it will definitely help you make an informed decision.


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What are the pros and cons of debt consolidation?