Are you burdened by debt? More and more of us are, in these tough economic times that we find ourselves in. Fortunately, there are steps you can take before the debt becomes overwhelming. Payday loan debt consolidation is one of the most viable options.
What is it?
It's important to start with the mechanics of loans till payday. Payday loans, or cash-advance loans, are short-term loans with high interest rates. Ironically, such loans are to help you survive financially between paydays. Basically, fast cash loans are for emergency situations when you need extra cash before your next payday. These loans have their pros and cons.
One of the potential drawbacks is that the interest can make your debt situation exponentially worse f you don't repay the debt one payday after taking out the loan. If interest has pil ed up from multiple payday advance loans, then one of your options is to consolidate payday loans. This type of consolidation combines your balance from different cash advance loans, into a single debt.
Advantages of Consolidating Payday Advance Debt
There are several, including the following ones:
- one monthly payment
- lower monthly payments
- lower interest rate
- fewer (or no) fees
- easier management of your finances
As a side note, it's important to note that there's nothing "magical" per se about payday debt consolidation. In other words, you'll still need to make your monthly payments consistently, in order to pay off your debt. That said, in a word, the main benefit of this type of debt consolidation is: "convenience."
Instead of dealing with several creditors, interest rates, and so on, you only have to deal with one. How will it help? Making your repayments more manageable will increase the likelihood of paying off your payday loan debts sooner rather than later.
Types of Payday Loan Debt Consolidation
Here are some of the main varieties:
1. Debt Consolidation Program
The goal is to reduce the interest rates on your various loans. As we all know, high interest rates can be devastating to our ability to repay our loans. Companies that specialize in debt consolidation will negotiate with your creditors, in an attempt to lower those interest rates. The end result is a single interest rate that will likely be significantly lower than the average interest rate that you're currently paying on multiple cash advance loans. That's good. Instead of paying several interest rates to different companies, you'll pay one rate to one company. It's that simple!
2. Consolidation Loan
This type of loan requires you to make a single monthly repayment to one company. The main difference between this t ype of debt-consolidation for payday loans, and a debt consolidation program is that a consolidation loan will have a longer repayment period. As you might expect-that results in higher interest rates. Still, a consolidation loan might be a better option for you if you're unable to afford higher monthly payments.
Which type of payday loan debt consolidation is best for you? It depends. It's important to consider your current payday loan situation, and your general personal finances. An expert can help you to make the right decision about whether to choose a debt consolidation program, or a consolidation loan so you can get rid of those debts.
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