There are also some drawbacks. For many caught in the payday loan trap, payday loan debt consolidation is one of the only forms of payday loan assistance that can help. However, debt relief from day loans is possible. Payday loan consolidation allows you to apply for a new loan, usually with a lower interest rate and a fixed monthly payment that you can repay over time.
A debt consolidation loan is when you apply for a personal loan that you use to pay your lenders. A new loan to pay off old loans. You are responsible for using that money to pay your lenders, and then you have to return the money to the new lender. Loan terms vary, some credit unions offer them, and you'll need a good credit score to qualify.
The advantages of using a payday loan consolidation program include escaping the payday loan debt cycle, having a single monthly payment in the future, and saying goodbye to the high interest rates and fees associated with payday loans. When payday loan borrowers are unable to repay the loan, they can open a new payday loan to repay the original loan (sometimes referred to as a “loan renewal”), incurring more charges and increasing the cost of the loan. Lending Club is a peer-to-peer lending platform that offers all types of loans, including debt consolidation loans. By consolidating, you also free yourself from the high-interest debt of your payday loans, which can save you money and make debt payments more affordable.
We've established relationships with some of the nation's largest payday lenders to help you get financial help. They'll complete your free debt and budget analysis, and then discuss with you the best options for getting out of debt. Money Fit is an award-winning, nonprofit national consumer credit counseling and debt relief service that has helped hundreds of thousands of people get out of debt over the past 25 years. Keep in mind that a personal debt still needs to be repaid, so it's important to have a debt repayment plan so your finances don't suffer further.
Unlike most payday loans, a personal loan designed for debt relief will give you some flexibility in the amount of the monthly payment, the term of the loan, and the other associated components. This is particularly true for payday loan consolidation companies that rely on negotiation with lenders. Obtaining a payday loan can be difficult because they come with three-digit annual percentage rates (APR) and short repayment terms. If you're struggling with payday loans, credit cards, and other unsecured debt, talk to a credit counselor to see if a debt management program is right for you.
There are several ways to consolidate your debt, including alternative payday loans, personal loans, and balance transfer credit cards. Now that you have a basic understanding of payday loan consolidation, let's take a closer look at how it works.