Posts Tagged ‘payday debt consolidation program’

What Is The Difference Between A Payday Debt Consolidation “Loan” And A Payday Debt Consolidation “Program”?

Many people have the misconception that payday debt consolidation loans and consolidation programs are same things, just the terms are different. It is not true. There is a big difference between the two, which you must understand thoroughly if you are considering using such options to get out of the viscous cycle of payday debt. Besides that, you must also have a clear understanding on how you can qualify for the same. There is a common assumption that debt relief programs are available to everybody, which is not true. In reality, there are certain qualifying criteria, which vary from one company to another.

Consolidation “Loan” For Payday Debt

What Exactly Is It?

A payday debt consolidation loan is a loan. As part of the process, you are required to borrow a big loan to pay off all your existing outstanding balances on short-term cash advances. Once you get out of the nasty cycle of payday debt, you can start making payments toward this big loan that usually comes with more favorable terms, low interest rates, and without additional charges. This option can be suitable for those who are unable to make the repayment on their payday loan debts while the outstanding balance keeps on growing very fast with every passing month because of the sky-high interest rate and other hefty penalty charges.

How Does It Benefit You?

In the form of a payday debt consolidation loan, you get a chance to manage your debts and finances more efficiently and easily, as you no more have to worry about handling multiple payday loan accounts. There is a single loan. You have to make a single monthly payment. The consolidation loan requires you to make a certain amount of payment every month, something that you can easily afford to pay. Many debt consolidation companies these days also offer credit counseling service to those consumers who borrow consolidation loans from them. The credit counselor works hand in hand with you on your finances, educating you on how you can create and implement a successful budget, save more money, and increase your income to achieve the kind of financial freedom you always dreamed of.

Is it a secured or unsecured loan?

In most cases, payday debt consolidation loan is a secured loan. It requires you to put a particular property or asset as collateral against the money you borrow. It means if you fail to make the repayment for this loan, you may lose the property put as collateral to the debt consolidation company. Therefore, you are strongly recommended to do your calculations thoroughly before you sign up for any such loan offer. Go for this option only if you are 100% sure that you can repay the same in a timely manner. Non-repayment on these loans can turn out to be horrible, as you may lose some valuable property.

Is there no way to qualify if you have no property to put as collateral?

It is very difficult to qualify for a payday debt consolidation loan if you do not have any property to put as collateral. But, there are still some companies out there that can approve your application on the basis of certain other factors, such as a very good credit score, the presence of a co-signer with a great credit history, your sources of income, and other such things. Make sure you read the fine prints thoroughly before you sign up with an unsecured consolidation loan because companies that offer such loans often include some hidden clauses in the contract, such as wage garnishment.

Consolidation “Program” For Payday Debt

What Exactly Is It?

A payday debt consolidation program does not require you to borrow another loan to pay off your exiting debts that you owe to different payday lending companies. The company that offers such programs just manages your debts on your behalf. They talk to your creditors and convince them to reduce interest rates and to waive penalty charges. Even payday lenders want their money back. So, in most cases, they are more than willing to work on a repayment plan when a reputable payday loan debt consolidation company works as a mediator. As part of the repayment plan, you agree to make a single consolidated monthly payment to the consolidation company, which further makes the payments to your respective creditors. This way, these programs help you manage your debts and finances more efficiently.

Does these programs also require you to put any property as collateral?

No, payday debt consolidation programs do not require you to put anything as collateral. You just have to pay a certain amount of money as fee for the services. However, it is important to first find out how the company you are considering signing up with charges their fee. Do they charge their fee in advance or allow you to make the fee payment on a per month basis?

Always remember, even if you have signed up with a consolidation program, you still have the legal obligations to pay off the payday debts to your creditors. Therefore, you must monitor the progress carefully to find out that the payments are being made to the creditors in a timely manner and that the payday debt consolidation company is keeping all their promises and not doing anything against the contract.


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