Is Payday Loan Consolidation Legit?
It’s hard to get out of the payday loan debt trap once you’re in it. Your bank may be auto-drafting your consolidating payday loan debt. This can lead to high Non-Sufficient fund fees. You might also find yourself taking out more payday loans to pay your bills. The original amount of your loan will therefore increase. Your financial situation will therefore cause more stress for you and your family.
Payday loans have high APRs (about 400% for a standard two-week payday loan), therefore consolidating into another kind of finance will save you money. Personal loan origination costs are also much cheaper than payday loan origination fees.
Longer repayment periods and more predictable monthly payments Short-term payday loans must be returned in two weeks, but personal loans and payday alternative loans, for example, allow borrowers months or years to repay the debt, often in equal-sized payments. Borrowers will have greater budget certainty as a result of this.
How can a payday debt consolidation loan help?
The only way to stop money bleeding is to stop a payday loan borrowing more loans. However, that may seem daunting and can also affect your budget. Consolidating your debts can help in this situation.
A payday consolidation loan company can help you create a budget and combine all your loan payments into one amount. Then, they negotiate with your payday lenders to get you some debt relief options. Their job is to relieve you of anxiety and help you take control of your finances.
How payday loan debt consolidation works
Payday loan help begins the loan consolidation process with an assessment of your income and debts. This allows us to develop a budget that is manageable, understandable, and easy to stick to.
The best payday loan consolidation company should have decades of experience in the industry and should also be familiar with all possible tactics lenders might use for payday loan help borrowers who need multiple payday loans.
Do your research to ensure that you work with a reputable debt consolidation company. You can check their credit scores ratings with the Better Business Bureau to make sure there are no complaints. Also, you can read online reviews to see how long they’ve been in business.
Read the red flags
- Avoid working with companies that require an upfront payment. According to the Federal Trade Commission, it is against the law for payday loan debt relief companies to request an “advance payment.” They can only charge after there has been a successful settlement and the borrower has made a payment toward their revised monthly payments plan.
- Don’t work with any payday loan company promising to eliminate your debt. It is almost impossible to get your entire debt forgiven, except in extreme circumstances like death or disability. False promises are made by companies that promise to make your debt disappear.
- Nonprofits that offer to consolidate payday loans should be avoided. FTC exposed so-called nonprofits that funneled funds to for-profit companies. It is not surprising that victims who aren’t suspicious are more likely to trust non-profits. Make sure you do your research to verify their legitimacy.
- There are no bad apples, but working with a trusted loan consolidation company can give you confidence and help you get your finances under control. Many companies offer a free consultation.
Frequently asked questions
Are the services tailored to each client?
Debt consolidation is not meant to be a one-size-fits-all plan. Your advisor should work with you individually to create a plan that is tailored to your budget and debt.
What information will the debt consolidation company need?
While you don’t have to give up your bank account or social insurance numbers, understanding your monthly income and expenses can help create a plan that will help you reach your long-term financial goals.
Will the debt consolidation company contact payday loan lenders on my behalf?
Yes, the company can intervene to try to stop the collection calls and negotiate a solution with your payday lender.
Does a debt consolidation company teach about finances?
Yes, all debt consolidation companies have financial education programs. This is important to ensure that your budget will not become a problem in the future.
How much does a debt consolidation company collect in fees?
There should not be an upfront payment. However, it is important to read the fine print so that you don’t get surprised by any additional costs.
If you are working with a predatory lender consolidation company, it will immediately give a credit report to the Federal Trade Commission.
Many trusted personal loan consolidation companies can help you get out from the payday loan debt trap, give you peace of mind, and teach you how to manage your finances.
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