Most of the people take out payday loan because they’re not required to undergo credit check. So, people with poor credit card can also apply for this loan. As borrowers are not required to undergo credit check, so they continuously take out loan. Most of the people default on payment as the interest rate on this loan is exorbitant. These people pile insurmountable amount of debt and complicate their financial situation. If you’re unable to manage your multiple creditors, then payday loan consolidation is a better option. In case, you’re not aware of consolidation program, you need to acquire complete information before enrolling in this program.
Important ways to consolidate your payday loans:
Here are two ways to consolidate your payday loan that can help to eliminate your payday loan:
Payday loan consolidation program: You can enroll in a debt consolidation program to eliminate your payday loan debt. In this program, the consolidation company may negotiate with the creditors on your behalf to lower the interest rate on the principal balance. Your monthly payment may reduce once your interest rate is lowered. However, the company may charge fee for rendering service to its clients.
Consolidation loan: In this consolidation process, you can consolidate your own debts by taking out a consolidation loan. There are two types of consolidation loan: Secured and Unsecured consolidation loan. If your credit report is blemished, then you can take out a secured consolidation loan. The interest rate on this loan is low as you use collateral against the loan. However, you need to pay back the loan on time to avoid creditors repossessing your asset. But you can take out unsecured consolidation loan only if you have high credit score.
Other ways to consolidate your debts:
Here are some other ways to consolidate your debts on your own:
Balance transfer: You can apply for a new card with introductory offer with zero or low interest rate. You can apply for a card with the help of a cosigner with good credit score. When you transfer balance to a new card, you can manage to lower the monthly payment. Make sure you pay off the balance before the introductory offer expires.
Home Equity loan: You can apply for a home equity loan to consolidate your payday loans. The interest rate on this loan is comparatively lower than personal loan. Before applying for the loan, make sure you have enough equity in your property.
Advantages of payday loan consolidation:
Here are some of the advantages of consolidation program:
1. Reduced interest rate on the principal balance
2. Consolidate your multiple bills into single monthly payment.
3. Eliminate late fees.
4. Lower the number of collection calls.
5. Avoid filing bankruptcy.
Therefore, you can effortlessly eliminate your debts when you consolidate your debts. The effect of debt consolidation on your credit report is negligible as you pay off the debt in full. Once you pay off your debts, you can regain control over your financial situation.