Three Ways To Obtain A Payday Loan Debt Consolidation Loan
If you are looking out for a payday loan debt consolidation loan, you have basically three options – first, you can borrow a conventional loan on your own; second, you can hire a debt consolidation agency; and third, you can sign up with an agency that buys payday loans. With the rapidly growing number of consumers who are getting trapped into a vicious cycle of predatory payday debts, many financial agencies have started offering an array of debt relief services for such consumers. Following is a brief rundown on the pros and cons of the three options we just mentioned.
Borrowing A Conventional Loan On Your Own
The easiest way to obtain a payday loan debt consolidation loan is to borrow a conventional loan. In this method, you can either borrow a secured loan (such as, a home equity loan) or an unsecured loan (such as, a personal loan). The idea is to borrow a large sum of money that should be big enough to cover all your existing payday debts. When all your payday loans are paid off, you will have to handle just one loan account, which is much easier, especially when this new loan account charges you a comparatively very low interest and also allows you to pay back in small monthly installments. Your success with this method will depend on the very fact whether you make the repayment on this new conventional loan in a timely manner or not. If you start defaulting on this loan also, you will be pushed into a very serious debt problem once again. The risk is greater if you are borrowing a home equity loan or any other type of secured loan because the lender will sell of the property you put as collateral in case you fail to repay the loan. Therefore, you must do your maths much in advance. You must always have a repayment plan ready before you go for this option. Financial discipline and a strong determination to achieve a debt free life are the two key factors in this regard.
Borrowing A Loan From A Debt Consolidation Company
If you are having difficulty in borrowing a conventional loan, you can consider borrowing a payday loan debt consolidation loan from a debt consolidation agency. However, it is very important for you to understand that this method works differently than the first one. In this case, you do not receive money to pay off your payday loans. Instead, it is just an agreement among three parties – you, your creditors and the debt consolidation agency. As per this agreement, you pay a lump sum amount every month to the agency and the agency then disburses the payments to your respective creditors. The best thing about this method is that the agency mediates between you and your creditors. You just have to make a single payment to them every month while they do the rest of the job. In short, they deal with your lenders on your behalf. However, it is very important for you to keep in mind that payday lenders are legally not obligated to accept any such debt consolidation proposal. Therefore, you are strongly recommended to sign up only if your lenders give it in writing that they are ready to participate in the consolidation plan. The payday loan debt consolidation agency you are signing up with must be good negotiators because this method is going to work only if they can convince your lenders to offer an affordable repayment plan to you.
Borrowing A Loan From An Agency That Buys Payday Loans
The third option, which is not very common, is to borrow a payday loan debt consolidation loan from an agency that buys payday loans. There are many financial organizations out there that offer special loan programs for payday loan borrowers. The best thing about this method is that it requires you to just borrow a new loan, which works very much like a conventional loan, while the agency takes care of your payday debts. It means you do not even have to personally deal with your payday lenders. The agency makes a profit out of this method by offering you an equivalent amount of loan (the aggregate total outstanding balance on your payday loan accounts), but they negotiate with your payday lenders and settle the entire debt at a much lower price. The benefit for you is that you get an easy opportunity to convert your predatory payday debts into a single conventional loan. However, it is very important for you to keep in mind that this loan is a secured one, which means the agency requires you to put a property, such as your home, as collateral against the money you are borrowing.
Overall, as we can see, all the three options for a payday loan debt consolidation loan can prove to be very beneficial. It is just that you will have to show a great sense of financial discipline and pay off the new loan as per the agreement in a timely manner. If you fail to repay this new loan, it will damage your finances.