Payday Loan Consolidation
How Do Payday Loan Consolidation Companies Work?
The idea is to convert loan repayments into a single monthly payment that fits your budget so that you can get out from under the burden of penalties and interest that keep piling on. Some payday installment loan settlement companies offer to consolidate loans.
How do I start the consolidation process?
We start the process by allowing you to fill out a free online application that will ask for information about what sort of help you are looking for.
Once that step is completed, a representative will review your file and put you in touch with suitable businesses in your area.
If this sounds like a process that you want to utilize then start by filling out the free online application right here.
What is payday loan consolidation?
Payday loan consolidation is the process of consolidating multiple payday loans carrying a high-interest rate into a single (often lower) payment merged loan.
Payday loan companies negotiate with lenders of all the individual payday loans to lower the interest and charges for the borrower. The companies work to remove fees altogether if possible.
Are the repayment plans flexible?
The good thing about payday consolidation is the fact that the loan company will first analyze what you (the borrower) can afford to pay back every month. A repayment plan will be made which can be sustainable as per your personal cash flow. You won’t be given a repayment plan which you cannot meet.
The borrower can expect significant debt consolidation management plans for relief from multiple pdl which seemed beyond reach in spite of the borrower’s best efforts.
Payday loan consolidation assistance should be sought by those who want to get rid of high APR loans, save their paycheck money going to pdl lenders, and save themselves from a financial crisis.
Can you consolidate payday loans?
Yes. A borrower who is facing difficulty in paying back his/her payday loans can look at some debt relief by consolidating multiple loans.
The borrower has to reach out to a consolidation company, who will look to consolidate your loans as well as reduce interest rates and the monthly payment for you.
How do I start settling my debts?
There are two ways in which a borrower can get debt relief through consolidation. The borrower can either go for a consolidation program or replace existing payday loans with one consolidation loan.
A consolidation program will mainly look at reducing your monthly payments while a consolidation loan will combine multiple loans into one single loan. However, a consolidation loan will require you to put up some assets as such as your car as collateral.
In both consolidation cases, the credit score of the borrower improves gradually. This is very different from a payday loan debt settlement event in which the borrower sees a drop in his/her credit score, at least in the short term.
Payday loan debt settlement involves making a lump sum payment to the lender and settling the debt permanently.
Which company will help me with my plan?
Once Onepayday has put you in touch with firms in your area it will be your choice of which one to hire. The process will be similar to any of them as they all operate in the same manner. First, they will go over all of your liabilities with you to get a clear picture of how much you owe and to which companies you owe it to.
After those calculations are complete, your chosen business will discuss your monthly income and expenses with you to determine an amount that you can begin to set aside.
You will then start depositing this pre-determined amount in a savings bank account that will be opened in your name by the consolidation company. This will be the start of reducing your obligations and satisfying your credit counseling.
How Can Companies Help Restructure and Settle my Borrowings?
Once a certain amount of money has been deposited into the savings account, your chosen company will begin to reach out to your lenders to negotiate with them. They will negotiate your principal balance as well as your monthly payment.
- Debt settlement programs aim
Ultimately, the goal of this company is to consolidate your loans and allow you to make a single monthly payment that will go toward paying off all of your debts and regaining a good credit score. The key is having the lowest possible balance to pay off – and that’s how the negotiators help you.
Choosing to get debt assistance is a benefit to individuals who are struggling for just this reason. They will make a cash flow analysis of your delinquent amounts owed, then see how they can merge those payments into something more manageable with lower interest rates.
These firms have contacts with lenders and have most likely made agreements with them in the past. They know how much of a reduction to ask for on your balance and they know how much they are likely to get. This is something you as an individual would not be able to accomplish on your own.
How much can the borrower expect to pay every month?
There is no fixed formula that can derive a monthly repayment amount that payday loan consolidation would require.
The amount of repayments that the borrower will make depends on multiple factors like the number of outstanding instant cash loans, the willingness of lenders to reduce interest rates, and the amount that the borrower can afford to make every period given his/her prevailing financial situation.
Timeline of Paying down Your Payday Loan Debt
Generally speaking, the process can last anywhere from 6-18 months from start to finish. Some of the variables that can affect the length of your payback period are,
1) The amount of debt you have
2) How many lenders you owe
3) Your monthly income and your monthly expenses
Once the 6-18 month process is over you can finally be free of your payday liabilities. The good news is that in most cases the interest on your loans (that often hurts the most) will stop accruing once you start a payment plan.
That means no more phone calls, letters, emails or any other form of debt collection because your lenders will know that you are in the process of paying them back.
If you have more questions about the plans please feel free to call our toll free number above or fill out an online application today on our website so that we can put you in touch with a representative to help you. It costs nothing and we will not ask for any payments.
When should I Use payday loan consolidation?
While there isn’t a certain equation that can tell you whether or not you need us you can ask yourself a few questions that may help guide you to an answer.
First, is your debt something that you can see yourself coming out of in the next 2-3 months on your own? In other words, does your current income allow you to make the necessary repayments so that it won’t be hanging around much longer than 3 months?
If not, then you better give a call or get in contact as we may be able to help you. Another question to ask yourself is: are you constantly dealing with phone calls, emails and letters from your creditors demanding payment? If so, you can relieve some of that stress by utilizing us to put a stop to those things.
What are the Pros of payday loan consolidation?
There are plus points and minus points of consolidating payday loans. Let us look at the benefits first. The most significant one is the lower fees and interest rates. Consolidation companies negotiate with your existing lenders to bring down your APR and monthly outflow.
Secondly, consolidation loans can have a more flexible payment plan than a payday loan. Payday loans are generally expected to be repaid within two to four weeks. A consolidated loan will give the borrower more leeway with repayment expected within a few months to a few years in some cases.
Thirdly, since a consolidated loan combines multiple payday loans into a single loan, the borrower only has to make one repayment. Payday consolidation loans simplify life for the borrower.
Fourthly, payday consolidation lenders evaluate the borrower’s ability to make repayments before designing a debt relief plan. This is very important because it reduces the chances of the borrower being handed a loan which he/she cannot repay back. The goal of consolidation is to get you out of debt problems.
What are the Cons of payday loan consolidation?
Payday consolidations loans are not without faults. Some minus points about payday consolidation loans are as follows:
Payday consolidation loans are long term. Hence, there is no quick fix to a borrower’s debt problems. The borrower needs to stay disciplined and make repayments consistently in order to get the full benefit of debt relief.
A payday consolidation loan can require the borrower to put up collateral. Since multiple pdfs are being combined into a single loan, the lender of that consolidated loan will ask for some form of collateral. Hence, the borrower has to put up some asset (or assets) as collateral.
Any forgiven debt will get reported by the lender of that debt as income for the borrower. Hence, even though a pdl borrower may be getting some form of debt relief, a new tax liability gets created. However, borrowers who are having trouble with payday loans are probably not earning very high incomes. Hence, the taxes owed to the IRS may also below.
Can a payday loan borrower go to jail for not repaying the loan?
No, a pdl lender cannot take you to jail for not paying back the loan. However, the payday loan lender is well within his/her rights to take you to court and sue you. At that point, you are always at a risk of the judgment that the court delivers. The judgment could go against you.
The other thing to watch out for is the fact that the pdl lender will report your name to the state’s regulatory agency. This regulatory agency will then share your information with other payday advance loan lenders and you will have a tough time availing any sort of loan. Lenders and banks may start viewing you as a defaulter.
What are some tips for selecting a pdl consolidation lender?
In order to select a reputable payday loan consolidation company, first check the company’s physical address. If possible, go to that address and verify if the company’s office exists. Next, look at the lender’s fee structure.
It should be somewhat similar to other lenders. Any extremes should be further investigated.
Also, read the reviews of the consolidation lender online. Try to get feedback from people who have actually used the lender’s services. Also, check if the payday loan consolidation company is a member of the BBB or Better Business Bureau.
Lastly, make sure you read your state’s laws regarding payday loans. You might find it interesting to know that some states have actually banned payday loans. Such states consider payday loans to be fraudulent. So, make sure you are on the right side of the law.
What is the importance of customer service?
The payday consolidation company that you work with should have high-quality customer service. This aspect is important because you have to work closely with the consolidation company and you want to be able to get along with the consolidation team.
Personal finance is a sensitive topic. Speaking frankly about financial problems is not an easy thing to do. Hence, you need to feel comfortable with the payday consolidation company in order to express all your problems freely.
The payday consolidation company should have a credit counselor. You should try and speak with the credit counselor, if possible, before signing onto any agreement.
How to gauge the transparency levels of payday consolidation companies?
Transparency is key to building trust. One of the most significant elements of superior customer service is trust. You want to work with a company that is transparent and honest in its approach. After all, you may already be in debt trouble and cannot afford to face more trouble from scams.
Transparency can be checked by verifying that the company claims and what it actually does for its customers. Every company can have a decent website with positive things written on all the pages. But, you need to still verify if all of that is actually true.
There are a few ways to verify the honesty and transparency of a payday consolidation company:
First, you should check the number of years that the company has been in the consolidation business.
Second, you should find out who the top executives of the company are and do a background search on them.
Third, you should make a note of all the fees that the company claims to charge. Then, you should call and ask for their fee structure to be sent to you over email. You do not have to ask the company to send you the fee structure for every single service that they offer.
You can just pick one which you think you will avail and do a cross-check to see if the company does what it says. Actions have to match the words.
You can ask the company if you will be assigned a personal or dedicated credit counselor. You should find out how you will be allowed to interact with that counselor. If a counselor is indeed going to be assigned to you, then you know that the consolidation company is serious about helping you get out of debt and holding your hand through the journey.
What are some lifestyle changes that can help get out of payday loan debt?
There are some good financial habits that you can follow to get out of pdl trouble. Firstly, you should create a monthly budget as per your income and expenses. Try to create a budget that is as efficient as possible.
Cut down on all expenses which are not absolutely necessary. A few years of sacrifice can take you a long way towards good long-term financial health.
Secondly, try to find some spare time in which you can take on extra projects to earn extra income. The more you earn, the faster you can get out of debt. Repaying your pdls should be your focus.
Keep a check on your social life. Going to clubs, eating out, and spending money at various places will simply increase your expenses. If you are trying to save money, then splurging on social events should not really be a priority for you, at least in the short term.
Vacations are great and they refresh you mentally. But, going on expensive holidays can blow a hole in your finances. Sometimes, you are restrained enough to not go on vacations during financially difficult times.
But, family invitations and peer pressure can make you give in. You have to be strong and resist such pressures for the short-term in order to set your house in order.
Whether you own a house or are renting, you can always look towards finding a roommate and sharing your monthly living expenses with that person. You do not have to stay with a roommate all your life, but you can make adjustments for a few months or years.
Are there any payday loan consolidation scams that I should be aware of?
There have been plenty of scams associated with debt relief companies and consolidation lenders. Some companies have claimed to be “not for profit” when they, in fact, were for profit. Some companies entice prospective customers by offering to settle their debt for pennies which are financially unfeasible.
Companies that seek charges and fees before doing any work or even before signing an agreement/legal document with your existing lenders are highly suspect.
How else can payday loan consolidation companies help borrowers?
Payday loan consolidation companies can help borrowers settle credit card debt, medical and hospital bills, unsecured debt, personal loans, even certain utility bills, and department store credit card debt. They basically deal with a range of unsecured debt.
Consolidation companies will usually be unable to help a borrower with mortgages, car loans, and secured personal loans.