What is payday loan consolidation program?
Under a payday loan consolidation program, your existing debts are readjusted by the help of a consolidating company which deals with the lenders to relax the rates and fees. At the same time, you make a single payment per month (combined) towards all the debts, and the company takes care of the rest.
What is the exact process of a payday consolidation?
When you are troubled with multiple debts, and not keeping up with the payment, you risk being in a debt trap. In this situation, payday loan consolidation is the best solution towards simplifying the paying off process and get rid of high rates and additional fees.
In order to do that, you have to contact a payday loan consolidation company which would offer you an affordable payment plan. To find such a company, you can just apply with 12MonthsBadCreditLoans (we connect you with best consolidators- you choose “the best” according to you). The company works with all of your lenders to bring down the interest rates, and possibly discount all the additional fees to decide the consolidate fee. These companies offer free counselling sessions where they examine your debts and current financial status before preparing payment plan. Now you don’t have to directly deal with any of your lenders to get pay relief.
What is the appropriate time to go for a payday loan consolidation program?
If you are having some financial issues, especially because of a number of payday loans and rollover complications, or you think the interest rates of the loans are high, then you could approach a consolidation company to start the procedure.
What would my new consolidated monthly payment look like?
The consolidation company decides the new monthly payment on the basis of the lenders’ approval of lowering the rates, the number of loans you are indebted with, and your monthly income. It would be affordable, nonetheless.
Could you summarize the pros and cons of this debt consolidation program?
The negatives of a consolidation process are that you are limited to avail new payday loans until the outstanding debts are paid. Apart from that you would be guided by the consolidator, so you have to abide by that. The monthly payments would be made affordable, that also means it would be a bit longer to get debt free.
In terms of positives, you get lower interest rates with very less or no additional charges on debts. You only have to make a single monthly payment for a couple of years, and do not have to be bothered by frequent reminder calls. Neither there would be any automatic debits from your account. It is a planned budget, so you will have no issues as long as you have the stable income.
Is consolidation program better option than loan consolidation?
A consolidation program is basically advised for unsecured loans. In that case, your consolidator plans a monthly payment that does not put pressure on your income status. In case of a loan consolidation, for unsecured loans the rates are higher, and for secured loans you have to put collateral as security. Therefore, consolidation program is better.
Do I risk jailed punishment for not paying off payday loans?
The answer is NO! Direct payday loan lenders cannot send you to jail. However, they can take legal action through court which can be financially costly for you. They have full right to sue you, if you default a loan. Therefore, it is best to avoid any legal complication, and pay monthly payments on time. You also can choose a debt consolidation program, if you want things to be easier.
Is there an alternative to consolidation to become debt free?
Yes, there is an alternative! There are Extended Payment Plans (EPPs) provided by many lenders to the borrowers which involve simply returning the principal amount without interest or charges. However, not every lender has this provision. If your lender providers such an option, you can directly come to an agreement with an EPP without going for a payday loan consolidating agency.
How is it different than PDL (payday loan) Debt Settlement and Loan Consolidation?
Let us give you the answer through this comparison table –
|Debt free processes||Debt Settlement||Loan Consolidation||Loan Consolidation Program|
|Primary Function||Reduces debt amount||Replaces the lender by transferring debt||Reduces interest rate and other fees|
|Time Taken to be Debt Free||2-4 years||1 -30 years||2-5 years|
|Payment Method||Single payment||Monthly payment||Monthly payment|
|Security Requirements||A saving of a certain amount||A collateral as security||No additional requirements|
|Impacts on Credit Score||Initially drops, but recovers fast||Eventually recovers||Eventually recovers|
|Reason to choose||When you have money to pay off multiple debts with a single payment||When you have a collateral, but want longer time to pay back the debts||When you don’t want to put collateral, but pay lower and single monthly payments|