Consolidate Payday Loans with National Payday Loan Relief
About 12 million Americans borrow payday loans annually, according to a report published by the Federal Reserve Bank of St Louis. Financial experts have attributed this number to a lack of alternative sources of income and poor awareness of the downsides of these cash advances. Another shocking statistic is that 80% of payday loans are rolled over or renewed because of the short repayment period. Typically most payday loans are due in two weeks or until the next payday.
But what is a payday loan, and why is it not your best option?
Understanding payday loans
A payday loan is a cash advance or an amount of money that a lender gives a borrower on the agreement that they will repay the loan from the next paycheck. This loan has a ridiculously high-interest rate and loan fees with a short repayment period.
Despite the downsides associated with payday loans, most Americans aged 25 to 45 survive on these loans. They are easy to access, with few application demands, unlike bank and credit union loans with several prerequisites. Moreover, payday loan lenders rarely report you to credit bureaus, so most customers see them as quick unsecured loans to solve emergencies.
How payday loans work
You can access payday loans from online lenders or walk into a local lender’s shop in a physical location. After filling the application and agreeing with the lender, they will disburse your loan amount either cash, check or a bank deposit. Different laws govern payday loan lending in different states, rolled out to protect borrowers from unscrupulous lenders.
Most payday loans are due for payment in fourteen days or until you receive your next salary or wage. The lender will ask you to sign a post-dated check or give access to your bank account so that they can deduct their money on the due date. The total amount payable is the loan, loan fees and the accrued interest.
The payday loan amount ranges between $50 and $1000. The figures depend on the state laws and the lender. For instance, you cannot access a payday loan above $300 in California. Other states have banned payday loans entirely, such as New York, West Virginia and Georgia.
Why payday loans are dangerous
Payday loans are a financial trap, but most borrowers don’t realize it until they are deep into it. You should consider payday loans as a last resort after exhausting other alternatives. Here are the reasons why payday loans are dangerous:
They have high-interest rates – payday loans have interest rates of up to 400%, a ridiculous deviation from a personal bank and credit union loan, which charge a maximum 16% interest rate.
Tough defaulting consequences
Defaulting on a payday loan can affect you psychologically and financially. When you default on a payday loan, the lender may take the following actions that will ruin your mental and financial well-being:
- Add fees that will see your debt skyrocket
- Hire a debt collection agency that will threaten you and destroy your credit report
- Take you to the small claims court
- Paycheck garnishment
An unending cycle of debt
You get trapped in a cycle of debts- the high-interest rates and short repayment period can overwhelm you, leaving you no other choice but to take a new loan to pay the first one. The cycle continues until you find yourself with multiple payday loans that throw you into a dark abyss of endless debts.
Short payment period
The repayment period for most payday loans is short. Most of the time, you will find yourself defaulting on the first loan, leading to high rollover fees or loan renewal.
Having Multiple Payday Loans
Taking a new payday loan while still servicing another is common among Americans, but some state laws have strict regulations on the matter. Most lenders enjoy it when you take more than one loan because they know you will stick with them for a long time. And given their high interests, they will make a kill in profits. State regulators have set rules that protect borrowers from such exploitative lenders.
When you default on a payday loan, the lender will roll over your loan or ask you to take a new loan. This traps you into a debt cycle, and over time you may find yourself paying up to ten payday loans at once. These multiple loans will include late fees, penalties and high interests.
What do I do if I am trapped in multiple payday loans?
One of the most prominent ways of escaping multiple payday loans is consolidating the loans. Payday loan consolidation helps you regain your financial freedom and gets you back on track after battling debts.
Consolidating Payday Loan Debt
Payday loan consolidation combines multiple loans into a single loan, usually with lower interest rates and a flexible payment method. The process reduces your interest charges, streamlines your finances and allows you more time to service your loan.
Multiple payday loans can be overwhelming, with several monthly payments, and calculating these figures can be demanding. Consolidating the loans into one loan makes it easier for you to plan your finances and how you will make the monthly payments.
There are three ways in which you can consolidate your payday loans. These include:
- Taking a personal loan from a bank or credit union
- Using a credit card
- Taking a home equity loan
Taking a personal loan
You can get a personal loan from your bank or credit union to settle all your payday loans. This loan should have a lower interest to avoid sinking you into deeper debt. In addition, the new loan should have a more manageable payment plan than the payday loan and an extended payment period. Typically, personal loans are payable within 12months to seven years.
Before taking a new loan, do your research to identify the lenders with the best deals. Also, scrutinize your income, budget and bills against several offers to determine which loan is suitable for you.
The interest rate, the payment schedule and payment terms should guide you to avoid taking a loan you cannot afford. This is because the bank or credit union can report you to credit bureaus if you fail to honour the monthly payment.
Remember that, unlike payday loans, debt consolidation loans require completing loan application forms and providing personal and financial data. The lender will ask for payslips, W-2s forms, tax returns, copies of identification documents, utility bills, etc. In addition, not all banks approve debt consolidation loans, so be sure to seek financial counsel from a reputable payday loan relief company.
Using a credit card
Another way to consolidate your payday loans is through credit card balance transfer. You transfer the payday loan balance to the credit card so that you can have only the credit card debt to worry about.
This is a viable method to get out of a payday loan cycle, but ensure the credit card has a 0% APR on balance transfers. Even if the credit card has a transfer balance, it will be cheaper to manage than a payday loan.
Taking a home equity loan
You can also take a home equity loan to pay off multiple payday loans. This gives you a chance to combine your debts into one loan and make your debt payment easier. Instead of focussing on several payday loans from different lenders, you are left with one loan with flexible monthly payments.
Before refinancing your mortgage, engage a financial expert or an attorney to learn more about your options. This is a risky option because if anything goes wrong, you could lose your home.
Advantages of payday loan consolidation
Payday loan consolidation helps you get out of debt faster and regain financial freedom. The following are the benefits of consolidating your payday loan:
Lower interest and loan fees
Personal loans, credit cards and home equity loans come with a relatively low-interest rate, especially if your credit score is great. For instance, a bank will charge an average of 9% on the loan amount, while credit cards charge approximately 16% on the loan amount. The lower rates save you money, thus hastening your financial recovery process.
Extended payment period
Unlike payday loans that are due in two weeks, banks and credit unions offer more extended loan repayment periods. Credit unions will give you six to twelve months, while banks give up to seven years to pay the debt. The longer the payment time, the less pressure on your income, budget and bills.
Manageable repayment schedule
Multiple payday loans with different interest rates and rollover fees can be hard to calculate and settle. Wrong calculations can cost you penalties or additional fees. You can predict the monthly payments with a personal loan, especially if the interest rate is fixed.
Improved credit score
When you take a personal loan to consolidate your payday loan debts, your journey of restoring your credit score begins. With flexible payment terms, it is hard to default on a loan. Paying your personal loan on time boosts your creditworthiness, and it becomes easier for you to secure a loan in future.
Our payday loan consolidation program
At National Payday Loan Relief, we are dedicated to getting you out of payday loan debts. One of the ways we end your cycle of debts is through our Payday Consolidation Program. Our team of debt settlement lawyers and financial experts will help you overcome your payday loan debt in easy steps.
The first step is to contact us for a free consultation. Our consultant will ask some questions and get an overall idea of what your current needs are. After understanding your debt situation, what and who you owe, the consultant will advise you on your options.
The next step is to explain how the loan consolidation works and how you will go about it. We will also negotiate with your lender and enrol you in the payday loan debt relief program.
Lastly, we will work something with your lender to reach a debt settlement agreement. These consolidation arrangements will result in an affordable monthly payment that will allow you to pay your loans quicker and cheaper.
We have been helping customers consolidate their payday loans for over a decade. Our expertise enables us to offer you the best service in debt settlement. When you work with us, we put all your outstanding payday loans into a single monthly payment that you can easily pay based on your budget.
Our Payday Loan Relief Program helps you get out of debt quicker without paying exorbitant fees. You will also learn how to pay off your payday debt through other alternatives through this program. Talk to our professionals today for a free, hassle-free consultation that will help you make informed financial decisions.
The program offers you the following benefits:
- Reduce the total amount you owe
- Make a low monthly payment
- Stop the automatic debits
- Avoid bankruptcy and lawsuits
- Boost your credit score
- Expert credit counselling help
At National Payday Loan Relief, we pride ourselves on providing the best payday loan consolidation option for you. Get in touch today and achieve your financial freedom.