We all know that the quickest solution is not necessarily the best solution. Payday loans are often viewed as a quick fix when you need cash fast, but their short repayment dates and high interest rates often result in additional fees and unrealistic terms which keeps consumers in a cycle of debt. One way to break free is to consolidate your payday loan debt into a single, lower payment with a more reasonable repayment schedule.
How to Consolidate Payday Loans
In the simplest of terms, payday loan consolidation is designed to combine high-interest payday loans and other types of unsecured debt into a single loan with a lower interest rate. This will allow you to pay less each month and ultimately pay down your debt more quickly. As a reminder, the first step when deciding to consolidate your payday debt is to find a reputable loan consolidation company. Once you do, you can weigh the pros and cons for your specific financial situation.
When to Consolidate My Payday Loans?
Generally, reputable debt counselors will advise to consider a consolidation at the first instance of feeling the stress of an upcoming due date. If that moment has already passed and you are experiencing late fees and/or penalties, then it would be more than likely advantageous to consider a program to consolidate payday loans along with other unsecured debts.
Benefits of Consolidating Payday Loans
There are several benefits to consolidating your payday loan debt into a single, lower monthly payment plan which should help you manage your finances more effectively.
Lower Fees: Payday loans are known to have extremely high interest rates. In fact, a payday loan can have fees that equal an APR of over 400%! Interest rates for consolidation loans are much lower, typically ranging from 5% to 36%, depending on the program.
Flexible Repayment Terms: Unlike payday loans that usually need to be paid within 2-4 weeks, when a borrower consolidates typically the program will allow for a much longer repayment period. The loan will generally need to be paid back in a term between 12 and 84 months, depending on what works best for your budget.
Predictable Monthly Payments: When you consolidate your payday loans, you’ll be making a single monthly payment to repay your debt. There won’t be any surprises as that payment will stay the same until your debt is paid in full.
Your ability to pay is a factor: Unlike payday loan lenders, reputable debt consolidation companies that extend programs to consolidate payday loans care about your ability to repay the loan. The consolidation company will conduct an evaluation and determine your affordability, so both parties will have confidence that the loan will be paid back on time without over stressing the borrower. In summary, it is likely that you’ll be granted a new repayment plan that you can afford.
The consolidated loan is not renewable: Most payday loans are renewable, allowing you to pay only the fees without paying down the balance, which sounds as bad as it is! When you consolidate into a repayment plan, your balance is a fixed amount of money to be paid back monthly with interest. Once your loan is paid in full, your account is closed. If you need more money, you would need to apply for a new loan.
If you qualify to consolidate your payday loan debt into a repayment program, this action may be the best solution to get out of undesirable debt and on the path to financial freedom.
BSI is a BBB rated company with an A+ rating. We are a non-profit payday relief and loan consolidation company with a national reach. We invite you to contat us for a free evaluation of your current payday loan debts and learn how you may benefit from our consolidation program.