One thing is typical with payday loans – they ultimately lead to a debt circle. Many people have taken out a payday loan to take care of urgent financial expenditures. However, it becomes almost impossible to pay back these loans in the long run.
The reason for the inability of most payday loan debtors to pay back their loans is simple – these loans usually come with high interest. However, payday loan consolidation has proven to be a reliable way of paying off such debts and attaining financial freedom.
How Payday Loan Consolidation Results in Financial Freedom
Being in debt can limit individuals from attaining financial freedom. Beyond what you earn, it is impossible to achieve financial freedom with recurrent debts. With a payday loan, debtors can take out a single loan and use it to clear so many other smaller loans. This comes with so many benefits.
What makes a payday loan your sure ticket to financial freedom?
#1. The Interest Rate is Relatively Low
When placed with the interest debtors have to pay on a payday loan, debt consolidation is more economical. On average, payday loan lenders charge between 15 – 20 percent on each loan. Therefore, it is not surprising that many of the borrowers end up defaulting and accumulating more debts.
However, if a debtor successfully gets a debt consolidation loan, the interest may be as low as 7 – 10 percent. This makes it possible for the borrower to save and pay off their debts faster.
#2. Helps Streamline your Finances
Taking out a debt consolidation loan to pay off a payday loan makes it possible to pay off debts faster. It can become quite challenging to keep to payment dates with several loans to pay back. This will harm your credit score.
However, having a single loan to pay back not only streamlines your finances but also gives you a clearer picture of what you owe. It also ensures that you don’t miss your payment date. Not missing such dates can help to improve your credit score and, by extension, your financial standing.
#3. Possible Reduction in Monthly Interest
Taking a debt consolidation loan means that you can renegotiate your repayment plan. Unlike a payday loan whose repayment cycle is usually within two weeks, a debt consolidation loan offers you a longer repayment timing. The benefit is that the loan repayment is spread across different months, making it possible to pay a lower amount monthly.
Additionally, you can pay more than the monthly minimum. Doing so will help ensure that you complete the payment within a shorter time frame, thereby getting out of debt faster.
Bottom Line
Financial freedom is attainable but becomes almost impossible if caught in the quicksand of payday loan debt. If you find yourself battling with payday loan debt and wondering how to get out, debt consolidation is a reliable alternative. You can get out of debt quicker and progress faster on your financial freedom journey through debt consolidation.
