How to Get Out of Payday Loan Debt with Payday Loan Consolidation?

Shubham Kumar Shubham Kumar
Nov 4, 2020 2 min read
How to Get Out of Payday Loan Debt with Payday Loan Consolidation?

Paying off payday loans with exorbitant fees is quite overwhelming. It is very difficult to
clear the loan because one can be trapped in the cycles of debts. An estimate of 12
million people take payday loans every year, and 80% of them are rolled over into
another due to the borrowerโ€™s inability to pay off the bill on time.

However, payday loan consolidation is a way to get out of the debt and get a new loan
with lower interest. With debt consolidation - payday loan debt help, a monthly payment
can be set that you can pay off over the year.

What is a Payday Loan?

Payday loans are short-term loans for a smaller amount, which is around $500. Here
the payments are due on your next payday. It is a bridge between paychecks and
having a fixed nature it can help people get their finances back on track.

Payday Loan Consolidation: How It Works?

A debt consolidation loan is a very low-interest loan; therefore, you can use these funds
to pay off your high-interest debts. Then you can repay the consolidation loan over time
without much trouble as the interest rates are quite low, and it gives you 12 to 84
months to pay off the debt.

How can you get a payday consolidation loan

  • You need to look for a lender who offers a debt consolidation loan
  • Youโ€™ll have to go through an online purification check, but it wonโ€™t hurt your credit
  • The lender then will review your credit reports and estimate the loan term,
    interest rate, and monthly payments you will qualify for.
  • Now you can apply for the loan but make sure that you can afford the monthly

Payday Loan Consolidation: Pros

Payday loan consolidation is the best way to get your finances back on track. The debt
consolidation loans offer many advantages that are as follows;

  • Flexible repayment timeline: Consolidation loans come with a repayment
    period of 12 to 84 months as against payday loans, which must be repaid on the
    next payday or within two to four weeks at least.
  • Lower interest rates: Payday consolidation loans come without an upfront
    charge as against payday loans. It makes it easier for you to repay the debt
    without falling into a financial crisis.
  • Predictable monthly interest: These loans come with a fixed interest rate until
    the loan is paid off. The fixed interest allows you to make a fixed payment
    throughout the lifespan of your debt.
  • No rollovers: As soon as you pay back all the money, your loan will be marked
    as paid off, and your account will be closed. If you require a new loan, you will
    have to reapply and redo the entire procedure to get the loan.
  • Required credit check: A debt consolidation lender usually confirms if you can
    afford the monthly dues before you get the loan. Hence, the procedure requires a
    credit check to verify your income source, credit reports and cash reserves.
    Again, it is a positive aspect as the lenders make sure that you can pay the loan
    off within the stipulated time.

Payday Loan Consolidation: Cons

Before signing off for the payday consolidation loan, you must also know about its
drawbacks to be able to make a healthy decision.

  • You may still default on the monthly dues: An irregular income source or any
    other hurdle might disrupt monthly dues. Missed or late payments will disrupt
    your credit score leading the loan consolidation lender to send your account to
    collection. So, try to plan the payments ahead to avoid any financial crisis.

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