Can you consolidate your loans through payday loan relief? If you have accumulated debts, consolidation can be a good option.
How Does Consolidation on Payday Loans Work?
If you have multiple payday loans, consolidating is designed to combine them into a single loan with a lower interest rate. This makes it easier to pay off the total debt.
If this interests you, you can apply to consolidate your payday loans into a personal loan. If you are approved, you can then use the personal loan to pay off your payday loans.
Before deciding on doing this, make sure you review your finances and the fine print. Create a schedule for yourself to pay off the consolidated loan. You don’t want to get stuck in a cycle of borrowing and repaying over and over.
Benefits of Loan Consolidation
Here is how consolidation can help you manage your loan debt more effectively:
Typically, personal loans have lower interest rates than payday loans. Depending on the lender, a personal loan’s APR can be between 5% and 35%. This is considerably lower than the 400% APR some payday loans have.
Payday loans need to be repaid within two to four weeks. This doesn’t give much time or any flexibility.
Depending on your budget, a personal loan will allow you to repay between 12-84 months.
Consolidating your loans means you’ll make one single payment every month. That payment will remain the same price until your loan is completely paid off.
Ability to Repay
Banks will only approve you for a loan they believe you can repay. They care about the ability to pay it off. Therefore, a bank won’t let you get a loan you simply can’t afford.
Inability to Rollover or Renew Your Loan
When you apply for a personal loan, you apply for a fixed amount. You repay that amount, plus interest until it’s paid in full. Once it’s paid, the account is closed.
If you need more money, you apply for a new loan. This lessens the chance of borrowing more money than you need and increases your ability to pay what you owe.
Is Consolidation Right For You?
It’s easier to qualify for a personal loan than it is to qualify for a payday loan. However, the loan amounts may exceed what you need and you may not be able to get it as quickly.
Here are some things to consider:
Minimum Loan Amounts
Depending on the lender, the amount you can take out will vary. Usually, a personal loan minimum will be around $1,500. This is a higher amount than most payday loan minimums.
Do you need that much money? If not, you could end up borrowing more than you need.
The good news is, most personal loans don’t have any penalties for paying off you loan early. So, you can dump the excess amount right back into paying the loan.
Your Credit Scores
Getting a personal loan depends a lot on your credit history. Banks want to know you have good creditworthiness. Your credit lender will make a credit check before deciding if and how much they can give you for a loan.
It’s possible that if you don’t qualify for an unsecured loan, you could qualify for a secured loan instead. Ask your bank about your options.
Proof You Can Repay
You won’t be approved for a loan if you can’t prove you can pay it off. Make sure your income will cover the loan and that you don’t have debt that will compromise a new loan.
How Fast You Need the Loan
Unfortunately, if you need money immediately, you might not be able to get it with a personal loan. A day or two may be the quickest a lender can give you a loan, but most take longer.
What Are My Other Options?
If you don’t qualify for personal loans, there are few other options.
Home Equity Loan:
Sometimes, you can use your house to pay off debts. Taking out a home equity loan means your house is up as collateral. If you can’t make your loan payments, you risk losing your home.
Credit Counseling Organizations
Financial institutions fun organizations to help you with your credit. They provide free financial lessons to help you with repayment management.
They can also help you understand any options of reduced rates and penalty fees. Though, rearranging these can have a negative impact on your credit scores.
These programs work to negotiate a significant amount off of your debt. Payments are made to the debt settlement company. They withhold these payments until the accounts are in default due to non-payment.
This gives the settlement company leverage over the debtor, forcing them to accept a lump sum as a settlement. This can also have a negative impact on your credit scores.
Bankruptcy & Liquidation:
Bankruptcy helps you reorganize your payment plans. Liquidation deletes unsecured debts to pay the secured one. Both of these options require participation from your creditors.
Both of these options also have a serious and lasting negative impact on your credit history. These should be a last resort.
Payday Loan Relief
Facing payday loan debt can be exhausting. It can feel like there is no way out. Payday loan relief can help lessen your debt burdens.
If you’re able to consolidate your loans, you can re-establish your life. Let payday loan consolidation help you take back your financial freedom.
Ready to get started? Contact us today for more information on how you can get started with a payday loan.