Taking a payday loan assist you in taking care of emergencies. Nonetheless, taking out multiple loans at the same time can be unmanageable. Most people use consolidation loans to solve their debt problems. Therefore, it is also possible to consolidate payday loans.This is can be done through taking out a bigger loan to pay out multiple debts. If you had multiple payday loans, you can consolidate them into one big loan and make a single payment at the end of every month.
Consolidating cash advance loans
The first step to consolidate your payday loans would be to take out a personal loan, use a low rate, zero credit card cash advance, or use home equity. Though this may be difficult to get since most lenders refer to credit scores and reports when offering personal loans, if successful, it works like a standard debt consolidation loan. You apply for a low interest loan to pay off your multiple or huge cash advance loans.
The second step would be joining a payday loan consolidation program. This is quite similar to the credit card debt consolidation programme. Many payday loans consolidation companies offer this service. Such companies work with your payday loan lender to ensure that your interest rates are lowered and any additional fees on the cash advance are waived. Additionally, if you happen to have missed some payments, the payday loan consolidation company negotiates with your lender to eliminate or reduce the extra charges that might have been incurred.
The best thing about the payday consolidation programs is that, the lender will accept a single monthly payment that they apply towards reducing your outstanding payday debts. You may be required to pay the payday consolidation company monthly and they disburse the money to the payday loan lender you are working with. Though this method may be quite expensive, experts say that consolidating a payday loan through a third party is always better as compared to taking out additional loans that can later prolong your payment cycle.
Payday loan consolidation tips
- If you own a home, consider a secure debt consolidation loan, which is taking out a home equity loan at a lower interest rate. However, this is an ideal option to debtors with thousands of dollars in payday advances.
- Consider using accredit card that has no annual fees and offers a zero percent introduction rate to pay off loans. You can have one monthly charge and less fees and interest rates.
- You could also consider taking out an unsecured loan from a payday consolidation loan lender. This may be an ideal solution since you do not require a collateral. However, you must have a good credit history to qualify for this loan type.
- If you run out of options, you could consider taking a loan from a friend or family member. Offer to have everything filed in writing and to pay a reasonable interest rate that should be less than what lenders would ask for. Paying a reasonable low interest rate is better as compared to incurring additional fees from the payday loan lenders.
Through taking out a payday consolidation loan, you no longer have to make multiple payments to each lender each month. All your payday debts are consolidated into one big loan and you are required to make just one payment at the end of the month. However, the fees you pay will be determined by the amount of debt you have, the period the programs takes and the quantity of work that lenders will have to do. Nonetheless, consolidating payday loans is always safer, less demanding and expensive.
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