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 piled 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 type 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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