Nobody plans to get caught in a loan trap, especially in payday loan. Not to mention carrying over a debt to the start of a new year with no repayment plan.
A payday loan debt is one sure way to spoil a credit history. It doesn’t just stop at getting you trapped in a debt cycle. It further ruins your chances of getting help with loans in the future.
If you need help with Payday loan debt towards the end of a fiscal year, or perhaps you are struggling with a bad credit history, it is advisable to opt for a payday loan consolidation.
That said, here’s why payday loan consolidation could help kickstart your 2023.
What Does Debt Consolidation Mean?
Debt Consolidation means rolling multiple debts into one single payment. When you consolidate various Payday loans, the interest charges automatically capitalize. This means it’s added to the main loan.
How To Consolidate Your Payday Loan Debt
To consolidate your Payday loan debts, you can either sign up for a Payday loan relief program or follow a do-it-yourself consolidation plan.
In a Payday loan relief program, you’ll work with a loan agency representing you to your lenders. The agency negotiates with your lenders to work out consolidation arrangements.
Here’s what they do:
- They negotiate to reduce the interest fees on your loans.
- Give you an extension to repay the loan.
- They may choose to pay your debt, becoming your new lender.
You’ll then make monthly payments on a long-term basis until you complete your payment.
To follow a Consolidation plan, you must first apply for a consolidation loan and get approved. Once approved, you will receive the amount of cash you need to settle your debt. Then you begin paying back the new loan you borrowed depending on the agreement.
You can also use a home equity loan to consolidate your payday loans. Home equity is security to secure a loan that you can use to pay off your payday loan debts.
Benefits of Payday Loan Consolidation
Consolidating your payday loan debts can help you in so many ways;
Saves You Money
All payments, including interest fees, are rolled into one payment when you consolidate your loans. Hence, there won’t be any more accruing interest fees.
Pay Off Your Debt Faster
When there is less interest charge on your consolidated loan, it becomes easier to pay in the short term.
Helps Build Your Credit
Consolidating your loan is more like opening a new account. This increases your available credit while your total debt remains the same. Hence, an increase in your available credit increases your credit score.
Conclusion
A payday loan might seem the easiest way out of a financial fix, but don’t fall for it—it is a debt trap.
Thankfully, with payday loan consolidation, you don’t have to stay stuck in the Payday loan trap. You can consolidate your loans and confidently start the new year with the right loan attorney.
