With Covid-19 on everyone’s neck, most Americans have found themselves at the mercy of payday loans. National payday loan relief says, “Payday loans are controversial. As much as they give you an easily available supplement to your salary, they are risky and expensive. The risky part is that they can trap you in a never-ending cycle of debt.
Are you drowning in payday loan debt? All is not lost. Debt consolidation can help you get out of deep water before you drown.
What is debt consolidation?
Debt consolidation involves taking out a new loan to offset all of your existing loans on a fixed repayment schedule. This process is one of the hassle-free ways to work towards financial freedom, especially if the new loan is cheaper and with lower rates.
It stands to reason that making multiple loan payments per month can overwhelm you. Sometimes you can even lose track of some of them and miss the payment. This attracts penalties and hurts your credit score.
To get around the problem of multiple loans, you should consider debt consolidation. You can take out a new personal loan from a bank, credit union, or online lender. You can also seek the services of a loan relief and consolidation company, which has specialized expertise in debt consolidation.
5 Reasons Why You Should Consider Debt Consolidation To Offset Payday Loan Debt
There are several advantages to consolidating payday loans, including lower interest rates for the new loan and a simplified payment plan.
Combine all debts into one
Obviously, paying off multiple loans at once can overwhelm you. As well as meeting deadlines and making sure you send the correct amount to each creditor, you risk missing some payments. This can lead to harassment from creditors or a negative credit rating.
Debt consolidation consolidates all your debts into one. This gives you only one loan to think about. It also gives you a single lender to deal with, and in the case of a consolidator, you even get additional financial advice.
Lower your interest rate
Debt consolidation can reduce the interest charged by lenders on your new loan. Normally, lenders look at your efforts to offset the existing loan, and if your credit score is good, you earn a lower interest rate. Lower interest rates save you money in the long run.
Even if your credit score is a bit tarnished, a consolidator can negotiate a better interest rate than the previous loan. Plus, a consolidator, like National Payday Loan Relief, can offer payday loan relief that not only lowers your rate, but also lowers the total amount you pay in the long run.
Improves your credit score
Do you know 35 percent of your credit score depends on your loan repayment history? Yes, it’s true.
With just one debt to think about, your chances of missing payments dramatically decrease. Consistent, on-time payments will boost your credit score, making you more likely to get better loan deals when you need them.
Suppose you have a payday loan, a car, and a credit card? Consolidating these loans into one pays them all off, so you just have to pay off the new loan. This has a positive impact on your credit score based on your loan repayment history.
Reduces your monthly payments
When you consolidate debt, the lender offers new rates, payment terms, and most likely lower monthly payments. This usually happens when you take out a loan that is spread over a longer period.
For example, if you had a payday loan that requires repayment every two weeks, taking out a loan with a two-year repayment period may cause you to pay lower monthly payments. The longer period gives you time to save money for other things like utility bills and personal development.
Custody of aggressive lenders
Getting calls from different creditors every now and then makes you feel like you’re torn in all directions. It can also embarrass you with family and friends; some creditors go to your contact list and start calling them to remind you of your debt. Pretty embarrassing, isn’t it?
Taking out a new loan to consolidate all your loans saves you from harassing phone calls and nagging emails. A consolidator can also take over responsibility for your payday loans, preventing lenders from accessing your bank details.
Debt consolidation is a good way to lift yourself up and get out of payday loans and other types of loans. You could end up paying lower interest rates, monthly payments, and an overall loan amount. Also, consolidating all old loans into a new, more flexible loan can increase your credit score because you will be focusing on one loan.