Payday loans are considered debt traps by many financial experts. This is not far from the truth considering the number of people whose finances have continued to nosedive after taking a payday loan. The conditions within which payday loans are released are so easy that you can get these loans in a matter of minutes without leaving the comfort of your home.
However, getting a loan is not much of an issue. Many people have basked in the euphoria of these loans until they are faced with the almost impossible task of repaying the loans within the agreed time.
Many people find it difficult to repay their payday loans because of the high-interest rates these loans come with. However, thanks to debt consolidation. People can get help paying their payday loans if they decide to consolidate.
What is Payday Loan Debt Consolidation?
As the name implies, debt consolidation is the process of paying off your payday loan with another loan. Some credit institutions offer people the opportunity to access loans with lower interest. With these loans, they can pay off their pressing payday loans and have extra time to repay their debts.
Debt consolidation comes with lower interest making them a viable option for paying off payday loans.
What to Consider Before Choosing a Debt Consolidation Company
There are many debt consolidation companies available for the individual to choose from. However, it is important to look out for the following before deciding to work with a debts consolidation company:
#1. The Quality of their Customer Service
A debt consolidation customer service personnel should be trained to provide answers to every question that you may have as regards the loan. If after interacting with the personnel, you still have doubts or do not feel at ease with the services that they promise to provide, you may as well trust your guts and find another place.
The debt counselors should be properly trained to give advice that would help you get out of debt. They must also be registered with state and national boards as this would help to put your mind at ease.
#2. Transparency
You should lookout for a company that is not secretive about its dealings. Some debt consolidation companies have many hidden charges and terms and conditions that may not be favorable to the borrower in the long run. However, working with a transparent debt consolidation company makes it possible to weigh all your options before deciding on whether to come on board or not.
Ensure you check out the company’s website to find out if it contains all the necessary information such as their contact details, track records, customer reviews, the timeframe of their debt program, as well as their eligibility. Doing so will help you make a more informed decision.
#3. Do they Have a Counseling Program?
This is one of the things most people seek to get a debt consolidation loan neglect. Education and counseling are compulsory requirements for all reputable debt consolidation companies. They not only help the debtor pay off their debts but also introduce them to strategies that will help keep them out of debt.
#4. The Interest Rate
What makes debt consolidation a viable alternative for paying off a payday loan is the low interest it offers. Before applying for a loan, you should know the total sum you owe including the interest rate. This means that if the interest on the loan you are being offered is higher or the same as what you owe, then it’s best to check out other companies.
When looking out for a debt consolidation company, bear in mind that no matter the amount that a company offers, there are several other companies where you can get the loan at a better rate. Having this at the back of your mind will help you accept conditions that are favorable to you and maximize the benefits of debt consolidation.
How to Avoid Debt Consolidation Scams
Whether you are trying to get payday loan relief, or pay off your debts fast, bear in mind that it is possible to run into scammers who are out to get your money without offering the needed services. Knowing the red flags to look out for while searching for a debt consolidation company will help you stay safe. What are the things to watch out for?
- If the company is a for-profit business: debt consolidation companies are required by law to operate as nonprofit businesses. This will help them prioritize the customers. If you however discover that the company you are signing up with is a for-profit company, you will need to exercise caution
- Demanding fees before negotiating with creditors: debt consolidation companies act as middlemen between their clients and the creditor. A reputable debt consolidation company will only demand fee payment after they have initiated and concluded negotiations with your creditors
- Aggressive sales pitch: a genuine debt consolidation company not only provides you with all the necessary information you require to make a decision but also gives you the needed time to do so. If a company pressurizes you to decide quickly without giving it much thought and research, then they may be out to scam you.
- Offering a quick-fix remedy: debt consolidation is not a quick-fix solution. It takes time and sometimes to clear your debt and reputable companies know this. While you may be encouraged to appreciate the possibility of coming out of debt, no reputable company will offer consolidation as a quick fix to your problems.
Conclusion
Debt consolidation can help you get out of debt fast. The tips above will help you identify and work with reputable consolidation companies that will help you start your journey to financial freedom.
