Choosing A Loan
What Are Unsecured Loans?
Easy access to instant cash funds. Unsecured loans can be your best friend if you need cash immediately. These types of loans requires no collateral to apply. So you don’t have to pledge an asset just to get started. Unsecured loans such as payday loans has been the top choice for cash assistance during emergency situations. It has high interest rates compared to other secured business loans, however, it is highly reliable and accessible anytime you need it.
Using an online lending platform, it will be a lot easier for borrowers to apply for a loan. In just a simple tap of a button, you have direct access to funds that otherwise takes a lot of effort if you acquire it using the traditional way. So if you ever find yourself in a pinch, all you have to do is to apply for it and get the funds you need right away.
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Payday Loan Consolidation | Multiple Payday Loan Debts Assistance
There are numerous financial institutions that provide borrowers assistance with consolidating multiple payday loans, each using various methods. Knowing the various methods financial institutions use to address different consumer financial situations is important for potential borrowers to be able to know the pros and cons of each financial plan. Debt settlement, debt negotiation, debt management, and debt relief are some of the different debt consolidation plans commonly being offered by lending institutions. Each of these plans have their own unique features designed to help debt problems of most borrowers. In finding the best financial solution to their financial problems, borrowers should take the time to familiarize themselves with the different plans being offered by the lending firms. Many of these firms often offer potential borrowers an in-house debt counseling. Other lending institutions, on the other hand, refer borrowers to 3rd party companies, debt attorneys, and credit counselors in order to help them find solutions.
With Our Payday Loan Consolidation Plan, You Will Be Able To:
- Enjoy lower monthly repayments
- Take advantage of reduced interest rates
- Enjoy waiver of rollover costs and expensive late fees
- Find freedom from collection agencies’ calls
- Avoid lawsuits
- Consolidate both installment and payday loans
How to Break Out of Payday Loans
- Create a spreadsheet of your expenses and reduce unnecessary expenditures
- Save more cash by owning or renting a cheaper home, or lessening auto expenses
- Get additional income by finding a sideline for nights and weekends
- Avoid going on expensive vacations or going out on invitations from family and friends
- Try renting out a room instead. This will significantly reduce household bills
Payday Loan Consolidation: How It Works
With payday loan consolidation, lending firms work directly with consolidation companies to cut down interest rates. These consolidation companies often also pay off a portion of the debts to reduce or eliminate additional fees. These consolidation companies also offer borrowers assistance such as counseling to help them deal with both their financial situations, as well as the collection agencies after them. Borrowers are then later placed on a payment plan decided to help them become debt-free.
Debt Consolidation: How It Works in General
Debt consolidation loans are designed to allow borrowers to combine multiple loans with high interest rates, such as payday loans and installment loans, into a single monthly payment with significantly reduced interest rates. The obvious benefit of debt consolidation loans is that it not only allows borrowers the benefit of paying a much lesser interest rate, it also allows them the benefit of being able to manage their monthly payments better. Through debt consolidation loans, borrowers can reduce their outstanding debts.
How Much Will the Monthly Payments Be?
Generally, monthly payments will be determined by the number of loans and the size of debt of the borrower, as well as the lenders they owe money from. Income is usually the most important factor as it reflects the borrower’s ability to pay off his debts.
Payday Loan Consolidation: Its Advantages
- Upfront payments are not required
- Interest rates are reduced significantly
- Previously paid fees are waived
- Lending firms do not take out cash out of borrowers’ accounts
- Easy monthly repayments are available for each payment plan
- Collection agencies are less aggressive
Disadvantages of Payday Loan Consolidation
- Borrowers are best off refraining from securing additional payday loans
- Spending needs to be controlled in order to pay off debts
- Assets can be risked as security
- Payback terms can be as long as several months
When to Take a Consolidation Program or a Consolidation Loan
With a payday loan relief program, borrowers are provided a monthly payment plan designed to tailor to their specific needs. This is regarded as a preferable choice as borrowers need not have to risk a collateral nor will they have any outstanding payday loans. With a consolidation loan, on the other hand, borrowers will have to secure their loans by risking assets they possess. Consequently, this option is less preferred. Borrowers may also opt for an unsecured plan but this will be at the risk of paying additional interest that may take an even greater toll on their finances.
Legal Consequences of Not Being Able to Pay off Payday loans
Although borrowers who fail to repay their payday loans do not risk being imprisoned, lending firms often exert pressure on the borrowers by either putting their debts with collection agencies or filing charges against them in court.
Consolidating Payday Loans
- Lending firms that turn up first in Google search results are likely to be the best, as providing payday loan consolidation is a highly competitive industry and the best lending firms heavily invest on trying to come up on the top search results.
- Borrowers are encouraged to read the information being provided by the lending firms on their web page, and see whether they provide enough details about paying off multiple debts
- Information request from any of these lending firms are not binding. Borrowers are encouraged to scrutinize how comprehensive the lending firms address their issues.
Getting Out of a Payday Loan Nightmare
In getting out of a payday loan, borrowers normally do not have many options. Borrowers can only either reduce their expenses or get additional income. Neither option is ideal nor painless, however. Getting a sideline, either by finding one over the internet or through the help of family members is highly recommended.
Customer Service: Why It’s Important
Crucial to a borrower’s decision in choosing a lending firm is the customer service that the firm has to offer. Exploring options to resolve financial problems is always a tedious task and being able to communicate freely with credit counselors significantly help borrowers become more comfortable. A reputable debt relief firm has a reputation for success and integrity and will provide borrowers with clear answers. Credit counselors from this firm are trained and duly certified by national or state organization counselors. Borrowers are encouraged to familiarize themselves with how credit counselors are being compensated. Counselors who receive incentives for selling additional services indicate a red flag. It’s important to find a credit company that takes their customers’ best interest at heart.
Many payday loan consolidation plans help borrowers settle unsecured debts, such as those involving unsecured personal loans, credit card bills, department store credit cards, unsecured debts, medical and hospital bills, certain utility bills, and accounts in collections. Some of these require a certain amount of unsecured debt as minimum, normally around $7,500 or more. Debt companies, however, usually could not help borrowers with car loans, secured personal loans, and mortgages. An efficient customer service goes far beyond than just helping borrowers pay off whatever existing debt they have, it also involves zeroing in on the root cause of the debts and how to prevent similar occurrences in the future.
Transparency: Why It’s Important
A lot of borrowers looking for solutions to their debt situations have been misled by false promises. Because of this, borrowers are better off dealing with debt consolidation companies that show transparency not only with their terms and conditions, but also with their practices. A good debt consolidation company must be willing to provide information needed to verify whatever guarantees or claims it offers their potential borrowers.
Checking a Company’s Transparency
The fastest way to check a company’s transparency is through checking their website. A company that provides transparency should have standard information available on their website. This includes the company’s physical address, phone number, operating hours, a list of its top executives, as well as how long it’s been in business.
Other important indicators of transparency include:
- Information on whether the company offers loans or just credit counseling and other programs such as debt settlement and debt management plans
- A list of all the fees, which should include late payment fee, monthly fee, and origination fee as well as all others associated with their programs, interest rates, and loans.
- Information on whether the company charges prepayment penalties, as well as the time frame involved in paying off debts
- The minimum credit score required, as well as the minimum amount of debt of the borrowers
- Information on whether the borrowers are provided with a personal counselor, and how interaction is facilitated.
A reliable company should have all this information easily available on its website.
Trustworthiness of Payday Loan Consolidation Companies
While changes can happen overnight in the lending industry, a company’s trustworthiness and longevity are important matters for the borrowers. For borrowers who either need help with managing their bills, or are struggling with their credit card debts, a company with good track record will help build trust and confidence. Payday loan consolidation companies who have been in the lending industry for at least 10 to 15 years have not only earned the trust of their customers, they have also developed rapport with them due to the fact that their performance have remained consistent as they provide borrowers with effective solutions. Majority of reputable payday loan consolidation companies are accredited by the Better Business Bureau (BBB). This information are crucial for potential borrowers to arrive at a final decision.
Rules and Regulations of the Federal Trade Commission
Strict rules have been enacted by the Federal Trade Commission involving for-profit companies running debt relief businesses. The Telemarketing Sales Rule or TSR has been enacted to protect consumers especially from companies offering debt consolidation services.
The salient provisions of the TSR include:
- Customers cannot be required to pay fees upfront, and the companies aren’t allowed to collect fees for their services until after having satisfactorily resolved or settled their clients’ debts. Both the creditor and debtor must agree to a settlement and the same must be put in writing. The borrower must have made at least one payment to the creditor before fees can be collected by the debt relief company. The company may collect a fee for each of the debt settled in situations wherein a customer has multiple debts; but none of these can be collected in advance of a settlement.
- Debt relief companies are required to provide information on the length of time it will take to get the results, as well as the cost of the service and the disadvantages of using debt relief services.
- Companies are to refrain from making unsubstantiated or false claims regarding their services, particularly about how much these cost as well as the number of customers who have received positive results.
Scams are prevalent in the debt relief business. There are several red flags that consumers need to know, including:
- The fact that some companies falsely claim to be non-profit but are actually for-profit
- Some debt relief companies offer guarantees to settle borrower’s debt with pennies on the dollar
- Some companies try to require fees for their services without any written agreement with the creditors
- Some debt relief companies use insistent sales pitches, asking potential borrowers to act swiftly on decisions that are supposed to require some time
- Some companies falsely promise a “quick fix”, despite the fact that all programs take between 2 to 5 years.
Options for Payday Loan Consolidations
While payday loans are efficient solutions for emergency financial situations, far too often these types of loan services become the root cause of bad debt cycles for many borrowers. In a study conducted by the Consumer Financial Protection Bureau or CFPB, it was shown that about 80% of these payday loans are usually rolled over in a span of 2 weeks; which means both the principal and interest, which usually represents about 300% of the APR or higher, have not been paid. Because of this, borrowers’ debts continue to grow. In the same research, it was also shown that about 50% of payday loans are usually rolled over for up to ten times.
What is the best solution?
For borrowers in these unfortunate loan situations, the best solution would be to consolidate payday loans, which means merging all existing loans into just one loan. Most debt relief companies have their eyes set on people encountering financial problems. But while the interest rates that they charge are considerable, there is much less than 391% APR, which is the rate normally attached to short term loans. With the help of debt relief companies, borrowers are given access to debt management programs, which means they can pay off their loans over a much longer period of time. Another option for borrowers is getting a cash advance using a credit card, in lieu of securing a payday loan.
Debt Counseling and Information
Seeking assistance from debt companies have significant benefits for the borrowers, especially in terms of the information being disseminated to the customers, who need to learn from experience in order to avoid problems of financial nature in the future. Non-profit organizations involved in debt consolidation are tasked with counseling and educating consumers about these topics. These institutions are mandated by the Internal Revenue Service to provide information about the services they offer, as a requirement in order to retain a tax-exempt status under 501(c)(3), on organizations. These debt relief companies normally offer credit counseling at no additional cost. During a credit counseling session, consumers’ finances are re-reviewed by the counselors with a specific focus on the source of the financial situations, how these can be solved with managing budgets. Information is then reviewed in accordance with the offer recommendations such as debt settlement or debt management plan, and even bankruptcy. Consumers who have questions about their certifications may contact the National Federation for Credit Counseling or NFCC.
Choosing the Right Company for Help
It takes research and awareness of his ongoing credit situation on the part of the borrower. Borrowers are able to find the best solution to their financial situation when they are aware of what resources are available to them and what is being provided in the debt program that they are in.
Getting Help from a Debt Settlement Specialist
There are situations wherein the borrower may be better off with a debt management program than a debt settlement, as when he has enough money to repay his loan but needs more time to get it paid off. If a borrower is trying to eliminate his debt, however, a debt settlement may be the appropriate solution. To arrive at the best option for debt solutions, the borrower must be well aware of what the various programs have to offer so as to avoid confusion. Borrowers are strongly encouraged to find a company that provides the exact type of program for debt consolidation that his credit situation warrants; one that will make him comfortable dealing with.
Relief Programs on Payday Consolidation
It is crucial for borrowers to know if they are dealing with a legitimate company, as well as if reducing their balance by means of a debt relief program is more practical than paying it off through a long-term loan with lower monthly installments. Borrowers with bad credit often favor debt relief programs since it’s more difficult to get an approval for another borrowing account that will allow them to combine multiple payday loans into a single loan with only one monthly payment.
Getting the Right Service
Finding the right service is more important yet more difficult than finding the right debt relief company. For borrowers with unrealistic expectations, legitimate companies may often seem to come off as scammers. A lot of times, borrowers choose inappropriate loan options.
Advantages and Disadvantages
These are the different advantages and disadvantages as well as the eligibility criteria laid out for loan consolidation and payday debt assistance.
- Payday Debt Relief Companies and Programs
For borrowers with payday loan obligations, debt relief programs are regarded as the most direct form of financial assistance. A debt settlement, on the other hand, happens when the lending firm agrees to accept from the borrower less than full amount due for his payment.
Borrowers may initially make regular payments to be given to the settlement company for the purpose of setting aside a modest amount which is to be held in an escrow account. This escrow account, in turn, will help improve the bargaining position of the borrower.
Debt Settlement Benefits
The beauty of a debt relief program is that it allows borrowers to eliminate his existing obligations for only a fraction of the money he already owes. In this program, the lending firm agrees to stop renewing the borrower’s payday loans, as well as the collections, and the rollover charge fees, and accepts partial payment of the borrower’s aggregate loan obligation. Borrowers are better off paying only partial of their full loan balance. Debt relief companies also assist borrowers in developing a debt management plan that will help borrowers manage their finances better in the future.
Debt Settlement Disadvantages
Because accumulating sufficient funds in the escrow account takes time, borrowers still accumulate additional rollover fees, which normally renew weekly or biweekly. Lending firms report forgiven debts to the IRS as income on the part of the borrower, which means borrowers may have to pay additional taxes. However, borrowers with low income are often charged with low tax rates. Settled debts may still impact negatively on the borrower’s credit score and consumer report. But because forgiven debts appear as late payments, this impact can be negligible and disappear from the borrower’s consumer report over time, usually after seven years from the date of his first delinquency.
With a settlement program, even borrowers with bad credit and have negative marks on consumer reports qualify easily as these programs require no minimum credit score. Qualifying criteria for settlement programs include a number of requirements. First, the borrower should owe unsecured obligations such as payday cash advances, personal loans, loans from credit cards, and others, amounting to more than $7,500. The borrower should also be behind his monthly payments for at least 3 months; and financial hardship is due to unexpected bills and/or loss of income. Borrowers are strongly advised to choose settlement companies with positive ratings from the Better Business Bureau or BBB. Reliable relief companies often display BBB’s logo on their website.
Borrowers may also refer to the list of approved debt management, debt education, and credit counseling companies of the federal government. Borrowers are also warned that a non-profit status only means that a company is enjoying tax exemption, but this doesn’t necessarily mean that the same is trustworthy.
- Merging Multiple Debts Into a Single Loan With One Monthly Payment
Through these loan options, borrowers are able to merge several payday loans from various lending firms into a single monthly payment-loan. Borrowers should be made aware, however, that new borrowings do not decrease their obligation’s principal balance. Borrowers may choose to merge his deferred deposit transactions in an installment loan with a longer term, or he can choose to transfer into a revolving account the principal amount. Each of these options have their own disadvantages and advantages.
1. Installment Relief
Long-term installment loans allow merging of payday loans from various companies into a single monthly installment. With this type of loan services, borrowers are to repay their loans through a fixed number of periodic payments in an installment contract. Each type of installment loans have their own unique repayment timeframes.
|INSTALLMENT TYPE||TIMEFRAME FOR REPAYMENT|
|Personal Loan||– Months|
|Payday Cash Advance||– Weeks|
|Automotive Financing||– Years|
Installment Loan Benefits
The most significant benefit of installment loans is that of lower monthly payments. Through these options, a balloon payment scheme is made available wherein the payment becomes due in full after the borrower’s employer has cut payroll. This can be bi-monthly, bi-weekly, or weekly. In this option, the borrower owes the full amount which renders the payment bigger.
Since the principal is spread over a longer term in long-term contracts, the monthly payments are also lower. These monthly payments can range from 6, 12, 24, 36, in number of months or more. Because this option allows borrowers longer time to repay their loans, payments are far easier to manage.
Another benefit of installment loans is the significantly lower interest rates. Borrowers should be aware that weekly payday installment loans charge rollover fees when the borrower is unable to repay the entire balance in full. While these rollover fees are usually relatively small, the annual percentage interest rate involved can be extremely high.
With long-term installment loans, borrowers need only pay one upfront origination fee, rather than having to pay per cycle. And while these loan options also charge periodic interest, the rate tops out for the least qualified borrowers at 35%.
Disadvantages of Installment Loans
While merging weekly payday installment loans allows borrowers much affordable monthly payments, these options do not decrease the principal balance of the borrower’s loan, but rather only restructures the original terms of the obligation.
This can be a disadvantage for borrowers who may run into another cash shortage problem, as there is no impediment in taking out one more deferred deposit transaction when a cash emergency arises. These situations will result in the borrower having to make both short and long-term installment payments.
Bad Credit History
Because lending firms normally ask for a copy of a potential borrower’s consumer report, borrowers with bad credit history do not usually qualify for new installment loans on long-term.
In applying for these loans, borrowers need to proof that their monthly income is sufficient to cover their loan’s monthly payments. Lending firms usually calculate borrowers’ debt-to-income ratio, which means those who are either between jobs or unemployed are generally excluded. Borrowers with bad credit have to prove they have sufficient income in order to qualify for any of these loan solutions.
Types of Installment Loans
There are a number of different types of long-term installment loans that allow borrowers to merge multiple payday loan obligations into a single loan of a single monthly payment. But while longer payment terms allow borrowers lower monthly payments, interest costs are higher in the long run.
Unsecured Payment Installment Loans
Unsecured payment installment loans do not require any type of collateral on the part of the borrowers. These types of loans require a single origination fee, and feature repayment periods ranging from 6 to 60 months, depending on the borrower’s eligibility. Applications could be done online.
Because this is a secured type of installment loan, this loan option requires the borrower’s vehicle as collateral. If the borrower owes less than the wholesale value of his vehicle, refinancing can be an option. Repayment period for these types of loan services range from 10 to 5 years. Application can also be done online, but verification may be required.
Because mortgages are secured installment loans, borrowers’ homes are normally required as collateral. With these types of loan services, refinancing of the mortgage or securing a second mortgage is made possible. Interest rates for these loan options are often the lowest, but the closing costs involved can be extremely high. Repayment period for mortgages can range anywhere from 10 to 30 years.
Borrowers may also merge numerous payday loans into a single loan with a single monthly payment through revolving accounts. This option allows borrowers to defer payment on a portion of their outstanding balance each month. Among the two most common types of revolving accounts are:
One option in combining multiple payday loans into a single loan is a credit card revolving balance transfer check. With this option, the borrower must have sufficient open to buy, which is the difference between the existing balance and the account limit. Balance transfer checks can be utilized to pay off all payday cash advances in order to prevent accumulation of more rollover fees. And while in this option, interest charges accumulate at a faster rate, the projected APR is still much lower than other alternatives.
Paying off revolving credit card balance, can, however, take years and end up more costly in the long term. Moreover, borrowers with bad credit are not likely to qualify for a new credit card account.
Home Equity Line of Credit (HELOC)
Another way of combining multiple payday loans into a single monthly loan is through home equity line of credit or HELOC. Through this solution, borrowers are able to open a revolving account by securing the equity with his home. During the draw period, which can last for up to a decade, borrowers pay off the deferred deposit balances by withdrawing funds from the HELOC account. During extended repayment periods, the same amount is to be repaid with interest. To qualify for a HELOC account, however, borrowers have to be a homeowner with sufficient income, equity, and excellent rating. Qualification of borrowers with bad credit history are highly unlikely.
Frequently Asked Questions
What Are Payday Loans?
For people who needs instant cash, payday loans are the most preferred choice. This type of loan can be acquired easily without going through any complicated process. You can have the funds immediately on the same day of application. However, payday loans can have higher interest rates compared to other types of loans.
What Are Guarantor Loans?
Guarantor loans, as the name suggests, requires a guarantor as a requirement. The guarantor is required to co-sign the loan agreement before it is awarded to the borrower. And if the borrower fails to make payment, the guarantor will have to take over either partial or full responsibility for the loan.
How Fast Can I Have The Funds?
The application process is incredibly fast and simple. It won’t take more than an hour for you to complete the process, from start to finish. All you have to do is to complete an online form and fill the details. Once done, have it submitted for verification and approval. You can have the results in as fast as 15 minutes. Once approved, the money you have requested will be deposited instantly to your account.
Is there any complicated requirements?
No. Since it doesn’t require collateral, applying for an unsecured loan needs no complicated paperwork or requirements. All you have to provide is proof of income or an employment verification that proves you can pay off the loan. You also need to provide your account information where the money will be transferred once approved.
What happens if I lie in my application?
It is not recommended to lie on your loan application. It would result to serious consequences once the lie has been proven. The lender has the full right to reject your application and void any agreement made between parties. You could also face criminal charges for fake documents or false identity.
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