Payday loans are short-term cash advances that are often taken out against your next paycheck. The interest rates on these loans can be extremely high, and they typically carry a long repayment period.
If you are struggling to pay back your payday loan, then you should consider consolidating them into a single loan. This way, you can repay the entire amount at once, rather than paying off each individual loan over time.
Consolidate your payday loans into a single loan. Pay off the entire balance at once instead of repaying each individual loan.
If you feel overwhelmed by your payday loans, you are not alone. Payday loans are solutions to short-term monetary shortfalls, but they often lead to long-term distress. An effective way to combat the burden of these loans is by consolidating your payday loans.
Read on for 13 reasons why you should consider consolidating your payday loans.
1. Lower Fees
Payday loans have significantly high-interest rates. The interest fees often range between APRs 300% to 400%! Most people opt to reduce the high-interest rates by opting for credit card loans.
However, these loans also attract a 20% to 30% APR range, which is also high. Consider consolidating your loan into a personal loan to reduce the interest rates. Depending on your lender, you could reduce the interest rates to 5% to 30%.
Personal loans also attract low origination fees, usually 1% to 5% of your total loan amount, which is significantly lower than credit or payday loans.
2. Predictable Payments
When you have a single payday loan, you will likely apply for more loans to develop a bridge between paychecks. This results in having multiple payments every month to stay on top of your debts, which can be challenging.
Consolidating your loans means combining them into a personal loan, whereby you will be required to make a single payment every month. The interest rate is often fixed, meaning that your monthly payment will stay the same until you clear the entire loan.
3. Reduced Stress
Trying to navigate numerous payday loans on your own can be overwhelming, scary, and stressful, so you should consider consolidating them into a personal loan. Consolidating your loan requires working with a loan assistance company like Real PDL Help, which will offer support and guidance throughout the loan period and even create a loan repayment plan that works for you.
With a personal loan, you are also likely to receive fewer emails, phone calls, and letters from your lenders, which helps improve your wellbeing and reduce stress.
4. Flexible Repayment Plan
A payday loan is a short-term loan in which the repayment is due within the next payment day, usually between two to four weeks of borrowing. This makes it difficult to pay the loan within the provided timeline.
Consolidating the loans provides you with different repayment plans, ranging from 12 to 84 months. This allows you to choose a repayment plan that works for your budget.
5. Mandatory Credit Check
While a mandatory credit check appears like a disadvantage, it is beneficial to your loan repayment in the long run. Before a debt consolidation lender lends you money, they must ascertain that you can afford the monthly repayments. They will inquire about your cash reserves, verify your income source, and even check your credit report. This helps determine an ideal amount to lend based on your repayment ability.
On the other hand, payday lenders do not perform credit checks. They will work with you even when you have a negative credit score. This means you may get stuck with a loan that you cannot handle.
6. You Cannot Renew Or Rollover Your Loan
A payday loan may appear like an easy and quick solution when you need fast cash. However, they attract huge interest, and most borrowers opt to pay the additional fees instead of the entire amount, then roll over the debt. This is not the case with personal loans, as they are installments loans.
With a personal loan, you borrow a fixed amount and then repay it with interest in fixed monthly installments until the entire debt is cleared. Once you have paid the loan in full, the account is closed. If you need more money, you have to apply for another loan.
In addition, a personal loan cannot be renewed by only paying the interest and failing to pay the principal.
7. You Get An Education About How Payday Loans Work
If you want to stay out or stop the payday loan cycle, you should consider consolidating your loan. Payday loan consolidation necessitates working with experts from Real PDL Help, who often host webinars and provide financial workshops and online materials as part of their debt management program.
These programs will educate and help you understand how payday loans work and offer insights on how you can get rid of your debt once and for all!
8. Better Control Of Your Finances
Payday loan consolidation provides you with a single easy-to-pay monthly payment plan to get out of your debts. This puts you on the path toward regaining complete control of your finances, allowing you to make choices that help you support your loved ones without worrying about loans or harassing lending companies.
9. Reduced Or No Late Payment Charges
If you extend your payday loan even by a single day, your lender hits you with a late payment charge, increasing your loan burden. However, when you work with a loan consolidation service company, they could negotiate with your lenders to waive the late repayment charges or reduce them to minimize your burden.
10. It Prevents Damaging Your Credit Score
While payday loan lenders will not check your credit score to lend you money, defaulting on your payment will make them send your account to collection. This will appear on the credit report, hurting your credit score.
A payday loan consolidation helps you create a flexible monthly payment plan based on your budget and monthly income. This allows you to effectively pay your loan on time without defaulting, improving your credit score and making you viable for higher loans.
11. Save Money
Consolidating your payday loans helps you get a plan to get out of debt faster, reduce interest rates, and eliminate late payment charges. This enables you to save money, putting you on the path toward financial freedom.
12. Prevents Wage Garnishment
Thanks to the high-interest rates and additional charges that occur when one takes out a payday loan, most borrowers find themselves defaulting on payments. This results in your lender suing you, and the court may authorize wage garnishment.
Wage garnishment is a legal process that mandates your employer to withhold a portion of your income and use it to repay your loan. Consolidating your payday loans can help you avoid wage garnishment by providing a reasonable payment plan that enables you to clear your debt. It also reduces the chances of a lawsuit.
13. It Prevents The Filing Of Chapter 7 Bankruptcy
When overwhelmed with the burden of multiple payday loans, most people result in filing for chapter 7 bankruptcy to offset the debt. Chapter 7 bankruptcy is a legal process that entails selling your assets and distributing the proceeds to your lenders. This does not only hurt your credit score. It also makes it challenging to qualify for loans a few years after discharge.
For this reason, you should consider consolidating your payday loans to make your debt more manageable and avoid losing your property or denting your credit score.
Endnote
Payday loan consolidation can be the solution when drowning in debts. It combines all your payday loans into a single personal loan, allowing you to enjoy low-interest rates and a flexible payment plan, avoid wage garnishments and filing for Chapter 7 bankruptcy, gain control over your finances, and save money.
Seek payday loan help today for support and guidance to stay on top of your debt.
