Payday loans may have saved you on the very first week that you got them, but be honest, ever since you have been stuck in their vicious cycle. It is not your fault. That is what they are designed to do. Paying back the 1 hour or 30 day payday loans with your next pay check inevitably leaves you short for the following week so you have no choice but to draw again on a payday loan. Here we will talk about payday loan consolidation and after you’ve thought it over you may recognize this as a way out of that vicious cycle.
Debt consolidation loans are basically just a personal loan, however instead of being for the purpose of purchasing something, its purpose is to consolidate all your debts into one easy loan. Having several debts floating around can get confusing for even the most organized person and can result in accidentally missed payments or even over payments leaving you short on cash. Credit cards, online payday loans and other similar types of loans generally have very high interest rates and fees for each individual loan. With a debt consolidation loan you will usually have a better interest rate than a credit card and won’t be doubling up on fees since you just have the one loan.
Consolidating your payday loan or loans will have more benefits than you can immediately recognize. Here are some of the major ones:
1) With a payday loan consolidation you’ll find that you monthly bills are reduced. This is because you are making one repayment per month on just one loan, instead of lots of smaller repayments on several loans. This alone can benefit your day to day living immensely as you see more money left over each week. Or alternatively you could choose to keep the repayment amounts the same as you are currently making and see your debt cleared completely even quicker.
2) Easily approved loans such as payday loans generally have very high interest rates and exorbitant loan fees. Each time you renew that payday loan you are charged the fees once again. Because the cycle continues week to week you continue to pay the fees week to week. Often times the fees you are paying can surpass the initial amount of the payday loan. With payday consolidation loans you won’t have to renew the loan all the time and pay regular fees. There will likely be a one off application fee upon drawdown but that should be it (not including fees for missed payments, refinancing etc)
3) You will find it much easier to create and stick to a realistic working budget. Factoring in just one payment for all your debt is much more motivating than seeing several different payments come out to different creditors. That alone gives you the motivation to stick to a budget, and when you see it working that motivation will only increase more.
4) The freedom you feel once you pay off your payday loans and perhaps credit cards is amazing. Sure you will still have a debt against your name with your payday loan consolidation debt, but now it is manageable. You don’t have to worry about creditors knocking on your door. The most important thing once you’ve consolidated your debt is to be sensible. Don’t make the same mistakes twice. Don’t accept any credit until your consolidated loan is completely paid off as lenders won’t allow you to consolidate again until this is done.