Today, I will talk about payday loan consolidation in detail.
In present times, payday loans are a staple of borrowing. That is why millions of people are stuck in the vicious cycle of debt. According to a survey, 12 million people take payday loans each year. And nearly 80% of the loans are converted into new loans because they are unable to pay off the bill.
Fortunately, paying off a payday loan is easy with payday loan consolidation. It will enable you to take a new loan, mostly, with a low-interest rate. You must set a monthly payment so you can pay it off over time.
Read on to know more payday loan consolidation.
What is a Payday Loan?
A payday loan is a short-term loan, typically for a small amount. In this loan, the due date for payment is your next payday. It is a useful bridge between paychecks. However, payday loans have a high-interest rate. This makes the loan unmanageable for some borrowers. According to a report, only 14% of people can repay their payday loans.
So, it is advised to take a new loan with a lower interest rate to repay the loan and get your finances back on track.
What is Payday Loan Consolidation?
For those who do not know, payday loan consolidation is a program that allows you to pay off short term loans through a line of credit or a larger loan. The main purpose of such loans is to decrease the cost of current debt, break the cycle of borrowing, and simplify payments.
Moreover, there are several ways to consolidate payday loan. It can include:
- Home equity loan- this is a secure loan that you can use for anything. You will have to secure it by your home. It offers a lower annual percentage rate.
- Home equity line of credit- it allows you to borrow any amount at any time without any obligation.
- Personal loan- it can be used for any expense. There are both, secured and unsecured loans. A secured loan is offered to all credit scores, while an unsecured loan is offered to borrowers with 585+ credit score. You have to check for pre-qualification before getting a loan.
- Balance transfer credit card- if you have a credit card and your issuer permits, you can move your payday loan debt to a credit card using a balance transfer. In this way, you will owe the credit card issuer.
How Does Payday Loan Consolidation Works?
The process of payday loan consolidation is simple. With the help of payday loan consolidation, you can take a new loan and use it for repaying your high-interest debt. Over the years, you can repay the debt consolidation loan. When it comes to repayment, the monthly payments are more manageable in comparison to payday loans.
When consolidating a payday loan, you must follow these steps.
Step 1- Choose the Best Way to Consolidate Payday Loans
There are plenty of ways to consolidate a payday loan. You must choose the best way for you. If you have credit cards, it is the quickest way to consolidate. Another fantastic way for payday loan consolidation is a personal loan. This is because of fast funding and approval. The cheapest options are the home equality line of credit and home equity loans.
Step 2- Pre-qualification Check
Depending on the lender and type of consolidation method you choose, you may or may not be able to pre-qualify. Checking for pre-qualification can prove to be helpful as it will provide a clear idea of what you should expect.
Step 3- Submitting the Application
The next step is to apply for payday loan consolidation. You will need to provide your personal and financial information.
Step 4- Getting Your Funds Approved
Getting approved for debt consolidation might take a few days or a month, depending on the method you selected.
Step 5- Pay Off Payday Loan
After you get the money, you should pay off the payday loan.
Benefits of Payday Loan Consolidation
If you want to pay off a payday loan and get your finances back on track, payday loan consolidation is an excellent way to do so. There are multiple reasons for choosing a debt consolidation loan. Here are some of the benefits.
- It has a flexible repayment term. For instance, a personal loan has a repayment period ranging from 12 to 84 months.
- Requires a credit check. The lender will verify your income, ask about cash reserves, and check your credit reports. You can get a debt consolidation loan even if you have a low credit score.
- The fee is lower. The interest rate of the loan is lower than of payday loan.
- The loan will have monthly payments. You must pay the payments until you pay off the loan.
- There are no rollovers. Once you have paid off the loan, your account will be closed.
When You Should Get Debt Consolidation?
There are several instances when a debt consolidation loan can come in handy. The following are some of the instances.
- You are in a monetary crisis because of payday loans.
- You have to keep your paycheck safe from payday loan lenders.
- You want to pay off your loans with a high annual percentage rate.
Payday loan consolidation is a wonderful way to get rid of payday loan debt. Since it has a low-interest rate, you can get your finances back on track without any trouble. This loan has a monthly payment, making it easy to repay off the debt. The duration of repayment is flexible.
When it comes to finding a reliable payday loan consolidation company, it can be a daunting task. This is because there are plenty of lenders; however, not all the lenders offer payday loan consolidation to everyone. We are an ideal choice for a debt consolidation loan. For over 20 years, we have helped our clients pay off their payday loans.
If you want to get more information or have any queries, please contact us through email or call.