Is It Time For Payday Loan Consolidation?


Recent graduates who become stuck in a cycle of payday loan debt may want to consider payday loan consolidation as a solution. Oftentimes, students will take out big loans while in school without giving any thought to how they will pay these loans back. They will then take out smaller payday loans to help pay back their larger student loans which they find they cannot afford. This creates a vicious cycle of taking out more loans to pay off previous loans which never ends. You must remember that payday loans are not an immediate source of relief so you must be careful not to take out more loans than you can pay off. Consolidation helps you out of the payday loan cycle so that you can have better control of your money.

Consolidation loans

Payday loan consolidation is similar to debt consolidation in that companies will work with you and your lenders in order to lower interest rates on loans to make them more affordable. If you have any missed payments, your dues are either erased or minimized as a way to reduce monthly payments. Consolidation programs work by taking a single payment from you (the lender) and they disburse this payment to your payday lenders. This helps to make your debt more manageable because you are only making a single payment, rather than multiple payments each month.

Consolidation loans are beneficial because they offer you the chance to combine multiple payday loans into a single monthly payment. You will also get the chance to lower your monthly installments, making your payments more manageable. However, with lower payments, comes a longer payment plan so be sure to pay as much as possible each month to avoid accruing interest. Because you will be paying more in total interest and the term is longer, a payday loan consolidation program is more beneficial when compared to taking out payday consolidation loans. Here are a few of the benefits:

  • Reduced rates on your payday loans.
  • Your monthly payments are affordable.
  • You make a single payment each month.
  • Late fees and over-limit charges are reduced or waived.
  • You can avoid creditor or collection calls.
  • Paid-off accounts have a positive impact on your credit.
  • Don’t have to manage individual creditors and different payments.
  • Budgeting becomes simpler as there is one fixed monthly payment.

What Payday Loan Consolidation Companies Can Do For You

Most payday loan collectors are not licensed to lend money and therefore have no legal right to collect payment by force. Payday consolidation companies know this and will help you get these lenders to reason with you on your own terms. The first step is to:

  • Stop all direct deposits with your employer.
  • Close the bank accounts after verifying the laws in your state.
  • Get your paycheck, go to a check cashing place, cash it and buy money orders. Pay your other important bills.

These steps will help you gain control of the situation. Now the lenders will begin trying to contact you by e-mail or phone but you do not have to respond. They have lost control of the situation and have no right to harm or harass you in any manner. Now you can bargain with them.

Some states have a law that these lenders are not legally allowed to charge interest. You should verify if this is true in your state and then proceed to pay off the principal amount only. Your defense here is that the original loan agreement was based on your bank’s direct deposit. However, if you have closed your account, the loan agreement should have been terminated. Now all you have to pay is the principal amount.

Taking Control Of Your Debt

Payday loan consolidation offers you a chance to take control of your debt. If you are feeling overwhelmed or harassed by bill collectors, contacting a loan consolidation company can help get control of the situation. They can make your debt more manageable and stop harassment from collection agencies. If you feel you are in over your head, consider talking to a consolidation company.

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