How Can You Consolidate Your Payday Loans?
It has already been discussed that payday loans can be tricky if not dealt with care and perspicacity. One payday loan can quickly lead to another and very soon, you can become addicted with the idea of taking small loans to take care of your everyday needs. However, if you are not careful, you may have to end up double the amount you had borrowed in a span of just about a year maybe because it is one of the most expensive ways of borrowing money and has a very high annual percentage rate (APR).
The problem is that not enough precautions are taken before issuing a payday loan. There are very few credit checks unlike what you see for auto or home loan or even student loan for that matter. The borrowers also don’t exercise caution always because the amount seems small to begin with. But if late payment or rollover fees get added on every payday, then the debt keeps growing and soon a stage comes where you just want to run away from your life and take a break. Even if you had an impeccable credit history before you took a payday and then added more and more, the shape of it can get distorted in a matter of mere months! It becomes almost impossible to recover.
The problems look bigger than they probably are because payday loans are not the only things to worry about for most people. Most people have to pay taxes, rent or a heavy mortgage fee every month, apart from paying the EMI of the auto loan that they had taken. They also take care of utilities like energy bills, medical bills, school fees, etc, things which one can’t do without. These fast loans give you the name of a bad credit.
Payday loans are often misused
Payday installment loans are short-term loans and should be used as such. It is meant to help you ward off an immediate financial crisis and when the next paycheck arrives, you should be able to pay off the entire amount including the fee. Say, if you need to make a car repair suddenly, you may not have been prepared for it. So, you take a loan, say in the middle of the month, but you are confident that on the payday of next month, the amount can easily be debited from your bank account and you can still have enough left to take care of all your other priorities.
But, sometimes people make useless purchases even when they know their financial condition is not great and then take a payday loan to pay that. So, on the next payday, they realize either they don’t have enough to pay off the entire amount or if they do, they won’t be in a position to take care of other priorities. So, they rollover the loan and this soon becomes a trap. People who exercise good fiscal prudence won’t require a payday loan under normal circumstances. You should also try to avoid taking one as much as possible.
Payday loan consolidation
Not all payday loans or lenders allow payday loan consolidation. Some do. You will have to find out from your lender or consult a free debt management counselor. In case, your lenders allow payday consolidation, see if you can club all your credit card bills, medical bills also into one consolidated account. You can then ask for a favorable debt management or repayment program which increases the loan repayment tenure and/or reduces the interest rate or provides a debt settlement deal. You may need to consider guarantor loans if you cannot qualify for a consolidation on your own. In any case, consolidation reduces headache as you have to deal with one account and also reduces the value of financing it.
Cashco Financial, for instance provides an installment loan product they call a Flex Loan. You can use a flex loan to quickly consolidate any debts you have and then easily repay the flex loan over time with affordable installments. According to Cashco, each on-time payment on a flex loan will improve your credit score as well.
Even if payday loan consolidation is not possible, you should look for a debt management program if things go out of hand. Keep the lender in the loop and try to fix the problem by reducing expenses and paying off the bills on time.