Payday loans are easier to obtain whereas harder to get rid of. One effective way through which you can pay off your payday debts conveniently is through payday loan consolidation, which works just like a normal debt consolidation program.
Payday loans are short-term loans (also known as paycheck advance), which have to be cleared by the next payday, as the name suggests. Due to the high interest rates charged by the lenders, the payday loan amounts multiply with time and threaten to gobble up your savings. And since these loans are easier to obtain, people tend to secure them in urgent situations, and gradually get trapped in the payday loan cycle.
You can sign up for the payday consolidation program since it will reduce your anxiety over repayment of your accumulated dues. It enables you to merge all of your payday loans into single monthly installments at lower interest rates.
Can payday loans influence your credit score?
Inability to repay your payday loan accounts will have an adverse affect on your credit score like any other loans. Thus, it is better if you consider paying off your dues on your own or through consolidation program.
6 Steps involved in a payday loan consolidation program
To get going with a payday loan consolidation program, you will have to go through the following steps:
- Counseling session as first step – Your financial status will be analyzed in the counseling session. The payday loan consolidation company will then figure out an appropriate repayment plan, befitting your wallet.
- Negotiation and reduction of debt– The company will start negotiating with your creditors after you sign the agreement, and try to eliminate the penalties and late fees imposed on the actual loan amount.
- Direct dealing with creditors- You will no longer need to be bothered with the creditors’ reminders or harassment calls by the collection agencies, as the company starts dealing with them.
- Direct payments to the company – You start paying directly to your payday loan consolidation company in a single monthly installment, which is lower than what you had to pay previously for all your payday loan accounts.
- Distribution of payment – The company will forward and distribute your monthly payments amongst your creditors. You don’t have to make any payments to the creditors directly.
- Dues get eliminated – You get rid of all your financial woes as you continue with your monthly payments and over time, all your payday loans will be cleared.
To sum things up, payday loan consolidation provides a stable support to your solve your financial woes. However a consolidation company can only assist you, while the decisive power remains in your hands upon which path to follow to improve your financial state.