Payday loan consolidation lenders have become very popular off late, probably because of the large number of consumers who are always on a look out for payday debt relief options. Short-term cash advances look like a lucrative loan program that offers instant cash in times of temporary financial emergencies. But, because of the huge rate of interest that are charged by these lending programs and because of the provisions like rollover of loan (on non-repayment) and because of lots of “hidden catches”, borrowers often are pushed very deep into debt problems. This way, a loan program that was supposed to help you in temporary financial emergency causes a seemingly permanent financial and debt trouble, getting out of which becomes almost impossible. Luckily, there are several debt consolidation programs available out there that have specifically been designed to help such borrowers. It is important to note that these programs may work differently depending upon the company you choose to go for. Following is a brief rundown on some of the different methods.
Debt Relief Program
Most payday loan consolidation lenders offer various debt relief programs, as per which, they work as a mediator between you and your lender. They negotiate with your lenders to make the terms a little more favorable to you, which often results in reduced interest rates and other fees. They sometimes also succeed in getting the penalty charges waived off. As a final arrangement, you are asked to make a single consolidated monthly payment to the debt consolidation company; the company then further disburses the payments to your respective creditors. You make payments in small monthly installments (just one payment per month) and watch your debt balance reducing fast.
Simple Consolidation Program
As per the consolidation program, the company does not do any negotiations to reduce interest rates and fees. Penalty charges are also not waived off. They simply work as a mediator to help you with the debt management. You make a single payment to them and they further make the payments to the respective creditors. This option can be suitable for those who just cannot manage their debts on their own.
Settlement Program
Many payday loan consolidation lenders also provide settlement programs, as per which, you are asked to make a one-time payment in full and final settlement of the debt. These programs can bring great relief to you, as the lenders agree to accept a reduced amount of payment in full settlement. Depending upon your specific financial situation and other related factors, you may have to pay anywhere in the range of 30% to 70% of the total outstanding debt you owe to your payday creditors.
Consolidation Loan Program
Some companies have started offering more innovative programs to help those who are looking out for a way to get out of the nasty cycle of payday debt. As per the consolidation loan program, payday loan consolidation lenders buy your payday loans from your creditors at a “discounted price”. This way, you now become liable to make the payment to the consolidation company and get rid of your liabilities toward payday lenders. The company then provides you the convenience to make the repayment in several small monthly installments. These companies do not even charge anything extra from you; they make their profit by buying your loans at a reduced price and then asking you to more. You still manage to get huge relief, as you eventually become liable to pay less than before on more favorable terms.
For the first three options, payday loan consolidation lenders charge a certain amount of fees, which is usually a certain percentage of the total debt they are managing for you.
