Payday loans can be very useful for many people. Maybe you rely on your car to make money, but it broke down and you can’t afford to fix it. Or maybe you get an unexpected medical bill in between paychecks and just can’t pay it right now. In cases like these, payday loans can be an easy and quick way to get money now. However, payday loans are far from perfect. Because they are such high risk loans (since they don’t require credit checks), the interest rates can be as high as 400%, which means that often people have trouble paying back these loans. Many people resort to taking out new payday loans to pay back their old ones. The problem with this is that it just starts a cycle of debt that can seem impossible to break out of in most cases. That’s where dedebt.com can help. We can consolidate your loans for you, meaning that instead of having to pay off five or six different lenders, you’ll only have to pay into one account.
Consolidate Payday Loans
Payday loan consolidation isn’t for everybody. If you only have one or two payday loans, you’re loans add up to less than $500, and you have no problems paying them off, then you should be fine. However, if you have two or more loans, you’re loans add up to more than $500, and you struggle to pay them off or worse, need to take out more payday loans in order to pay them off, then loan consolidation could be for you. Not only can it consolidate your loans into one payment, it can also get rid of interest on your loan. In addition, it can also stop all of the pesky and threatening calls from lenders.
Steps in Consolidating your payday loan
- Get copies of your credit report
You will need your credit reports to know exactly how much you owe. The three credit reports from TransUnion, Experian, and Equifax may have some slight differences and that is why you need all three credit reports. You are entitled to one free report from each of the three agencies once a year. You can access these reports from www.annualcreditreport.com. This website is the only website that offers an official free credit report. They have been authorized by the federal government. With your credit reports, you will see your missed payments if any and other things related to your loan payments.
- Put together your outstanding debts
Remember that your total outstanding debt is important when you are considering debt consolidation. When you are checking your debt, you should not only look at your payday loans but also add all other loans. The total amount you owe will influence the options available to you. If your debt is more than $2,500 and you may get a debt consolidation card. This card has a grace period and this ranges from 12 to 18 months. You can use this to deal with your debt. Unfortunately, some payday loans do not qualify for credit card consolidation.
- Get a personal loan to consolidate your debt
The easiest way to get a personal loan is to contact banks and credit unions. It is recommended that you start from financial institutions that you already have a relationship with. That is institutions that you have a savings or checking account with. They may easily grant you a loan since you already have a relationship with them. You can also check online options. A lot of online lenders are willing to offer small loans to people with poor credit. You can also check out peer to peer lenders. This lending option is a little bit different from the services offered by banks. With peer to peer lending, private individuals are pooled together on a single platform. They are then allowed to lend money to individuals who need it at a rate. The borrower later pays the money back to the lenders. The borrower is not going to make individual payments; he or she will need to make a single payment to the website and then the cash will be distributed to the lenders. Although they may consider your credit score before giving you a loan, they are more flexible than traditional banks.
- Compare the rates
After you have checked the available rate, another important thing to do is to check the rates offered by the lenders. With loan consolidation, a low interest rate is crucial. If you get a loan with high interest rates, you will not be able to save anything in rates and it will be like getting a high interest rate to pay off your high interest rates. The idea of debt consolidation is to get a low interest rate so that when you pay off all your loans, you will be left with a debt that is much lower than the debt you consolidated. Your monthly payments should be smaller than what you paid previously. This is why you need to work with a lender that is willing to offer you a loan at the lowest rate. You cannot know the rates just by looking at one loan package. You will need to go over several loan packages to know the rates available. The process of checking out loan rates is called rate shopping. When you are shopping for rates, shop for the rates around the same time. When you shop for rates, lenders conduct credit checks on your account. If they conduct hard credit checks, it will affect your credit score. However, if you shop for rates within short periods, it will all be put together as one. After checking the rates of the various loan options available to you, you can now choose the lender to go with. You should also check the fees and the loan terms.
- Work on the loan payments
When you manage to get a personal loan to consolidate your loan, you will need to plan your payments. The first thing to do is to make a personal budget. Your budget should list all the basic things you will need for the month. Your budget should also include your necessities. Since you are trying to save enough money for your loan payments, make sure that you do not include luxuries in your budget. You should try to do away with as many luxuries as much as possible. You should forget about those trips to expensive restaurants and hotels. Try to reduce the rate at which you eat out. That will help you to save as much money as possible. The rate at which you shop on impulses should also reduce as much as possible. If possible do not go out with your credit cards. Begin to make payments in cash. It is harder to spend a lot when you make payments in cash. You can also get an extra source of money to supplement your income to make it easier for you to pay your loan. You can add a side job or work overtime to increase your income. It is important that you make payments regularly so that you do not incur late fees.
Alternatives to Payday Loan Consolidation
1. Debt Management Plan
You can also use debt settlement plan to get your debt under control. With a debt management plan, you will need to work with a credit counseling organization. The U. S Trustees program has approved some organizations for this purpose. It will be great if you can choose from the list. You will realize that most of the reputable credit counseling organizations offer their services for free. There is no need going in for a counselor that will charge you substantial fees. Once you get a credit counselor, you should do a bit of background review of the organization. There are lots of reviews about credit counseling organizations. Make sure you read them before settling for a credit counselor.
The next step is to meet with the credit counseling organization. During the first meeting, you will be asked to complete a form; you will submit your basic information when completing the form. After this, you will be assigned to a credit counselor who will then discuss the options available to you. The counselor will also talk about the fees involved. Note that you may meet with the credit counselor more than once. When you choose a debt management plan, the counselor will work with your creditors concerning your payment. When they approve your application, the counselors will contact your lenders to see if they agree with the plan. Once they agree, you will meet with the credit counselor to go over all the terms in the debt management plan. If you agree to all the terms, you will then sign the debt settlement plan. You will now make all payments to the credit counseling firm. From that point, all communications will be between you and the credit counseling organization. Your creditors will also communicate with you through the credit counselor. When you begin making payments, you will be making a single payment on every due date. Payments are usually made monthly. The credit counseling agency will then distribute the funds according to the plan.
When you begin a debt settlement plan, remember to make payments regularly. If a lender contacts while you are on a debt management plan, you can give them the contact and the name of the credit counseling agency you are dealing with. There is a high possibility that you have not included that lender in your listing.
2. Debt Settlement
Another option for clearing your payday loan is debt settlement. With this method, you will need to work with a debt settlement agency. An account will be created and then you will stop making all payments to your creditors. You will now be saving the cash in the new account. That account will be under your control. When you have saved enough, the settlement company will begin to negotiate with the lenders on your behalf. They will request that these creditors take a lower amount in place of the outstanding balance. Some creditors accept because they know that they may not get that amount if things get out of control and you decide to file bankruptcy. Unfortunately, debt settlement has a lot of downsides. Since you will stop making payments, it may accumulate lots of late fees. The lender may also get a debt collector to get the money and this can be really uncomfortable. Debt settlement also affects your credit score.
So if you feel like debt consolidation is the answer, or even if you’re on the debt, fill out our form at dedebt.com and get a free consultation to see if debt consolidation can help you!