If you cannot meet payments on your payday loans, it is possible to consolidate them. Choosing to consolidate payday loans will replace multiple payments with a single payment.
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Calculate Amount of Debt
Find out the outstanding balance on all your payday loans. Because several different types of consolidation loans exist, it is important to determine which one will be most suitable for you. The more you owe, the better your chances are of getting a consolidation loan.
Home Ownership and Credit Score
To obtain an effective consolidation loan, you need to get the money at a cheaper interest rate. If you own a home, a secured debt consolidation loan might be the way to go. Also known as a home equity loan, it can be used to pay off your other creditors. Also, check your credit score, which is another determinant of your interest rate: The higher it is, the more it can help in reducing your interest rate.
Contact Consolidation Company
Next, contact a debt consolidation company to help you consolidate your payday loans. Usually, a debt consolidation company starts you off with a free debt counselling session, which involves you talking with a debt counsellor about your financial problems.
Negotiate with Creditors
As a result of the free debt consolidation session, the debt counsellor can suggest whether you can go with a debt settlement (negotiate and reduce the outstanding debt, usually by 40 per cent to 60 per cent of the amount you owe) or go ahead with the debt consolidation program. If it is the latter, the company will negotiate with your creditors to determine a lowered interest rate on your debt and whether late payment fees can be reduced or eliminated.
Arrange a New Payment Plan
After negotiating with your creditors, you will be presented with an alternative repayment plan. It is designed in a way that makes you able to make monthly payments and get out of debt in a shorter time.
Benefits of Consolidating Payday Loans
With a debt consolidation program, not only is there a single payment in place of multiple payments per month, late fees are either reduced or eliminated and you get a better interest rate, thus accelerating the amount of time to get rid of the debt. Also, making payments on--and paying off--your payday loans through the debt consolidation program improves your credit.
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