It is difficult paying off several high interest loans at the end of the month. If you have several payday loans, it will definitely be difficult for you to pay them off since they mostly have high interests. You will also have problems getting a new loan because of the numerous loans. There is no need to stay in debt because there is a way to get out of debt in a few years. This process can even take as low as six months for you to be debt-free. You can go in for a payday loan consolidation.
What is a Payday Loan Consolidation?
Payday loan consolidation is not like getting another loan. Instead, you will be putting your loans together and making a single payment to cover all the loans. The good thing about this is that the interest rate on the loan will also be lower. All these are possible if you get a payday loan consolidation, however, it depends on the offer you get. You should do your calculations to make sure that you will be saving on interest rates before proceeding with the consolidation.
The process of Payday Loan Consolidation
The only reason why payday loans are recommended is that they help you to save on the interest you have to pay and help you to pay off your debt. If the loan consolidation cannot help you achieve this, there is no need to go for it. This is why it is important to be cautious when you want to consolidate your loan. Here are the steps you can follow.
1) The first thing to do is to list all your debts. The list should include the monthly payments you make for each loan and the interest rates.
2) The next thing to do is to look at loan consolidation options. Do not limit yourself to unsecured loans only. If you have a property that you can use as collateral, you can also check secured loan options. They usually have lower interest rates since they are less risky to the lender.
3) Limit your searches to reliable loan consolidating companies. To make things easier for you, check the Better Business Bureau’s list of lenders. It will be great if you can settle on the A-list lenders.
4) When you settle on a lender, a representative from the loan consolidating company will negotiate with your creditors on your behalf. In most cases, the payday loan lenders can reduce the interest rates on the loan making it easier to pay them off.
Advantages of Loan Consolidation
Loan consolidation comes with several benefits. They include the following.
– Less stress
When you consolidate your loan, you will reduce the stress caused by debt collection calls. No lender will call you to remind you to repay your loan. You will not be the one to negotiate the loan since the loan consolidating company will do that on your behalf. This means that you can relax as the company works on your loan consolidation.
– Lower monthly payments
After loan consolidation, you will not be making high monthly payments since everything has been renegotiated and the interest rates are now lower. This means you can save on interest and you will have more cash for yourself at the end of every month.
– More focus
Since you will now be making a single payment at the end of every month, you can focus on making payments. There will be no need to keep track of numerous due dates since you will be making only one payment. There is a lower possibility of missing your due dates as well.
You May Also Consolidate Your Student Loan
Many Americans are carrying huge debts. These are usually debts they accumulated while in school. Student loans can also be overwhelming but the good news is that you can consolidate this loan as well. However, there is a limitation. You can only consolidate federal education loans. Private student loans cannot be consolidated. The first thing to do is to look for a reliable student loan consolidation company. You can check with the Better Business Bureau to find credible companies.
How to Find a Good Student Loan Consolidating Company?
There are several loan consolidating companies but not all of them are worth considering. Some of them may even land you in deeper debts.
Check if the company is registered.
A reliable company will be registered under either the Association of Independent Consumer Credit Counseling Agencies or the National Foundation of Credit Counseling. You should also check for reviews from other users.
Check Out Their Message to Prospective Customers
A reliable loan consolidation company will not only talk about their offers. They will also be concerned about their reputation. Such companies do not put out just any kind of information. Their advertisements do not focus on sales as well. They are interested in proving that they are reliable. They do not promise beyond their efforts. It is advisable to stay away from companies that give outrageous promises. Some companies will promise to help you clear your debts in less than six months. Loan consolidation takes at least six months; some can last for more than 3 years. Loan consolidation does not take away your debts; you will stay pay them but the interest rate will be reduced.
Check Their Method of Communication
Untrustworthy loan companies are usually aggressive and will you to sign up right away. Most of them do not give you the chance to think it through. Professional loan companies will take time to understand your financial needs. They will explain the options to you. Some of them will even go ahead to inform you about the risks associated with the loan options. They will give you the opportunity to ask questions and make your choice. Consolidating your loan is a huge financial decision and you cannot go back on your decision after you begin the process. It is therefore important to work with a company that will help you to make the right decision. Avoid those lenders who tell you that consolidating your loan is the ultimate solution to your financial problems. Most times, we end up in debt cycles due to overspending. Hence, the solution to your financial problems is clearing the root cause. The best thing you can do after loan consolidation is to adjust your lifestyle so that you do not accumulate more debts. Credit counseling may help you to maintain an affordable lifestyle.