While it is challenging to consolidate or eliminate payday loans, many experts recommend one of two methods to try. They include the two options below. You can also learn your legal rights when it comes to payday loans, and what lenders can or can’t do when it comes to collecting on or issuing these types of short term loans to consumers.
Consolidate your payday loans using another source of financing
The first option is to take out a different type of loan in order to consolidate your salary advance or payday loans. There are a couple different approaches to take. This option will involve you taking out a personal loan, using your home equity or maybe use a zero or low interest rate credit card cash advance. While this can be difficult to get approved, as many borrowers may not have the best credit scores or ratings, if you are successful this in effect will work like a standard debt consolidation loan.
So you will need to receive the lower interest rate funds from another source, and this will allow you to pay off (or consolidate) multiple payday loans at usually a lower interest rate. If you can do this it is critical that you pay off the new consolidation loan as fast as possible in monthly installments. If you can qualify, and are committed to paying off the new loan in installments, this option will definitely help you.
Enter into a payday loan consolidation program
This second option is similar to a credit card debt consolidation program. There are numerous payday loan consolidation companies, such as Langhorne and DDS, that will work closely with your lenders in order to lower the interest rates and possibly waive any fees that you have on your current payday loans. Most of these organizations will provide you with a free initial consultation. This will make your payments affordable and save you money. In addition, if you have missed payments and have been hit by fees, the companies will negotiate with your lenders to reduce or eliminate all those fees and extra charges. Also, read how debt settlement works, and you can try to settle payday loans as well.
The best outcome to expect from this form of consolidation program option is that the payday lender will come to terms and agree to accept a single monthly payment from you. They will then apply it towards your outstanding debts. Or it may be
that you will need to pay the company you are working with on a monthly basis, and they will then in turn disburse the funds to your payday lenders.
While each option has pros and cons, experts tend to say that working with a third party or credit counselor to set up a payday loan consolidation program is the better route. It tends to be lower risk and more successful as the consumer if working with a third party (the credit counselor) who can help steer them onto the correct path. So using a formal program is generally better for people when compared to taking out new, additional loans as that can otherwise perpetuate the repayment cycle. The programs established by another company will also usually offer better repayment terms and lower interest rates.
Pros of these programs.
- Normally the initial consultation is free Get a lower interest rate on your loans You will have a lower monthly payment on outstanding debts Usually any late fees, over limit fees, or other charges are reduced or eliminated Make just a single payment each month to one company Stop collection calls and letters being sent to your home Making just one monthly payment will simplify your finances and help you with budgeting The accounts that are paid off will help you improve your credit scores and ratings End the cycle of multiple salary advance and payday loans
The key to being successful is that no matter which option you select, you need to be diligent and follow thru with it. So the deciding factor is really the borrower themselves. The individual needs to be committed to paying off their debts and improving their financial situation.
The bottom line is that many experts say that payday loan consolidation programs and companies offer many borrowers and consumers their best option to get out of the cycle. Studies show that the success rate is higher when adhering to that approach. Many consumers would agree as well.
State payday lending laws
It is also very important to know your rights when it comes to payday loans. Most states have laws in places that set the maximum interest rate that a lender can charge, the maximum fees, and terms of the loan. They will also regulate how often and when any collection calls can be made to you. Click here to learn more on the laws in place for payday lenders.
Category: Payday loans