Refinancing? Here’s How Payday Loan Debt Consolidation Can Help You.
Becoming delinquent on payday loans can trigger an avalanche of compounding problems. High-interest rates, excessive fees, and dwindling credit scores are all financial consequences of not repaying a payday loan on time.
When a consumer finds themselves in such a position, payday loan debt consolidation may be the answer. By combining and refinancing existing debt, many consumers can successfully crawl out from under their debt mountain.
How Payday Loan Consolidation Makes Financial Sense
When consumers need a quick loan or an influx of cash, some turn to a payday loan lender. Although not often the best choice, many consumers may find it their only choice.
Once the loan has been approved, there is usually a 2-week window to pay off the loan. Additionally, there is most likely a fee per $100 borrowed. These loans are generally manageable, often at most $500. But, if not paid on time, the interest, charges, and fees can exponentially increase.
The consumer soon finds themselves on the hook for paying back thousands of dollars, often when their original loan amount was only a fraction of the final total. This isn’t intelligent money management and doesn’t make much financial sense.
With loan consolidation, the consumer can move all debt into one payment, one interest amount, and a longer window for repayment. All of which can contribute to a much rosier financial picture.
Enjoy a Lower APR
One of the most significant burdens of repaying payday loans, or any loan for that matter, is the interest added to the original loan amount. For example, if a consumer is paying $15 as interest and service fee for a $100 loan for two weeks, they are, in essence, paying nearly 400% APR.
Compared to most credit cards, which have between 10% and 30% APRs, it becomes clear that payday loans can wreak havoc on overdue consumers. Consider that the interest can also become compounding if repayment drags on. Some states can even see consumer APRs for payday loans as high as 600%. These unreasonable rates and fees effectively keep consumers trapped in never-ending payoff scenarios.
Spread Your Payments Over a Comfortable Period
Another mechanism working in favor of the payday loan industry is the payoff time frame of two weeks. In truth, most consumers who apply for payday loans are not in excellent financial standing and are likely to miss or default on a payment. Allowing a relatively short time frame for repayment gives lenders the upper hand, which is part of their business model.
Creating a loan consolidation repayment plan allows consumers more time to repay the loan. Added time can make all the difference for an already stretched-thin consumer.
Additionally, when setting the conditions of the loan consolidation, a specialist should assess the consumer’s financial standing and design a payment schedule that will work for them and the consolidation company.
It’s a Stress-Free Experience
When consumers find behind their loan repayments, they’ll often receive calls, emails, or other communications from the payday loan company or a related collections agency. The calls can be relentless, and some may even be borderline threatening, all in an attempt to recoup their loan.
Working with a loan consolidation company should be a stress-relieving process. The goal is to help the consumer and the payday loan company find common ground on the loan payoff.
Whether restructuring payments, reducing APR, or helping to close out the remainder of an old loan, the loan consolidation company wants to help resolve the situation with the best possible outcomes for everyone involved.
Create More Flexibility in Your Finances
As mentioned above, when consumers pursue a payday loan, their financial situation is often less than stellar. When payday loan fees and interest rates begin to climb, the consumer is in an even worse financial situation.
Using a loan consolidation, consumers can develop financial flexibility and freedom. A successful loan consolidation should be able to manage a consumer’s outstanding payments and balances without completely wiping out their monthly income or revenue.
Additionally, using the loan consolidation process can successfully teach and train consumers about how best to manage money through careful planning and consistent financial practices. Some individuals just need a solid plan but need help to create one.
Loan consolidation focuses on personal responsibility and remaining within the boundaries of reasonable spending practices. Once the process is complete, many individuals can transfer aspects of the consolidation process to their everyday financial lives.
Protect Your Credit Score
A credit score measures how successfully a consumer can pay back a loan or credit debt under normal timeframes. A favorable credit score, in turn, shows banks, credit card companies, and lending institutions that this consumer can be trusted with loans and credit.
When a payday loan is defaulted on, credit scores tend to plummet. Missed payments and rising interest rates negatively affect other credit and loan companies. Once an individual’s credit score goes down, they are less likely to be able to secure loans or credit with reasonable terms, and they find themselves stuck in the payday loan trap with few options left.
It can also take quite a while to build a credit score back up, too. Fortunately, paying off old debts is one of the best ways to rebuild a credit score. Debt consolidation can be one of the best ways to repay loans and restore credit scores.
Overstep the Risk of Falling Into a Debt Cycle
One of the worst moves a consumer can make regarding overdue payday loans is to continue to pay late fees and rising interest rates. In a short time, they will likely be able to make headway in repaying the principal amount. Once the fees and interest rates are compounded, the consumer faces a seemingly never-ending debt cycle.
Choosing loan consolidation helps consumers to avoid falling too deep into a debt cycle that they won’t be able to escape. Managing debt by strategically paying it down helps to give individuals their lives back.
Get Expert Assistance In Handling Debt Collectors
Sometimes, allowing a third party to advise on the next steps can make all the difference in the outcome. A third party can consider all variables without feeling emotional about the process. They can also make recommendations based on their experience with past cases and outcomes.
For debt collectors and payday loan companies, a third party also represents an earnest attempt by the consumer at settling past debt amounts. They are much more likely to work with a company whose primary goals are to see debt amounts erased and their businesses repaid.
Payday Loans Provide Flexibility to Your Immediate And Long-Term Finances
By applying for loan consolidation, consumers can see their money working for them once more. Getting financials back on track also works for the short and long term.
How Payday Loans Improve Your Immediate Finances
When consumers are saddled with overdue payday loans and fees, they consistently pay more than they’re earning and fall further and further behind in everyday financial situations.
Consolidating loans and debt can help streamline the payoff process and give consumers additional flexibility in their finances. Even having a bit extra each month that’s not going to past due loans can provide consumers with a financial positive to focus on.
How Payday Loans Improve Your Long-Term Finances
The other side of the financial coin looks at the long-term effects of choosing loan consolidation. By resolving debt, consumers can rebuild their credit scores and can start putting some money into savings.
Once loans are paid off, and credit ratings improve, financial opportunities will become more available. Once a debt is not looming over, legitimate loans or mortgages can come into play.
How to Seek For the Appropriate Payday Loan Debt Consolidation Help?
If you’re struggling with repaying a payday loan or loans, it’s time to consider better options. With loan consolidation, Real PDL Help can assist customers in wrapping all of their debt concerns into one manageable package.
The first step is to contact Real PDL Help to organize a free consultation about your current debt situation. Real PDL Help can begin negotiating with payday lenders or collection agencies by assessing what debt is present and the total amounts.
Then, a reasonable payment schedule will be developed to meet the needs of the creditors and the consumer. With Real PDL Help, our primary goal is to successfully resolve payday loan debt and return citizens to financial freedom. See how we can help you today.