If you’re like thousands of other Americans, you may find yourself in the unfortunate predicament of having taken out multiple high interest payday loans while getting hit with penalties and other fees for not making all your payments on time. You may have also been forced to take out even more loans to pay off existing ones but still can’t seem to get out of the trap you currently in. If this describes your current situation, you should consider consolidating your payday loans. In this article, we’ll talk about what payday consolidation is and how to go about it.
Payday loan consolidation simply offers a way by which all your existing loans are combined into a new loan under new terms. Instead of making multiple payments to all your different lenders, you make a single, consolidated payment towards the new loan each month at a much reduced interest rate. Your monthly payments are typically going to be much smaller and more manageable. You can choose to consolidate on your own or, if your situation is more complicated, through a specialized debt consolidation company. Regardless of how you consolidate, you need to decide whether you are going to consolidate your debt using a secured loan (where you have to put up something as collateral like your home) or an unsecured loan. Secured loans have the advantage of offering you a much reduced interest rate, but if you have good credit, you could get a decent rate even for an unsecured loan.
If you choose to work through a debt consolidation company, the company will take on the task of dealing with all your existing creditors and come up with a new consolidated loan for you. Ideally, you’ll then be completely shielded from collection calls and won’t have to worry about your current creditors at all since the debt consolidation company will do all that for you. They’ll collect consolidated payments from you each month and disburse them to your creditors. There are, however, certain things you need to be aware of regarding such companies.
First of all, you need to do all your due diligence on the debt consolidation company you sign on with. For starters, make sure they are legitimate and have your best interests at stake. Some are either scams or really in it just to make more money for themselves and don’t really care about your financial future. To weed out such companies, check to make sure that the firm you intend to business with is accredited by the National Foundation of Credit Counselling (NFCC). You should also contact the Better Business Bureau (BBB) to make sure that there aren’t a bunch of complaints about them in the past. It is also a good idea to make sure that the company is financially solvent and has insurance for funds they receive from clients. That way you know that payments you make are well protected.
Next, you need to carefully look at the plan that’s presented to you. Make sure it is customized to fit your needs and you understand all of its terms and conditions and the fees you will be charged each month. Ask lots of questions if things are unclear and sign a contract only if the terms are reasonable and you can afford the payments each month.
If you’re caught in a web of high interest payday loans and all seems lost, you need to take action today. Don’t let things get from bad to worse or take out even more payday loans to pay off existing ones. We hope that after reading our article you will consider consolidation as an option and work towards paying off those nasty payday loans as soon as possible and be well on your way to being debt free. Cheers to a strong and successful financial future!