Payday Loan Consolidation Works If You Put in the Effort

Payday loan consolidation works only if you’re willing to. That means disciplining yourself by researching your payday loan consolidation options and following through in ensuring you pay off every cent.

Payday loan consolidation works by bundling many payday loans into one controllable payment. On one hand, this gives you a peace of mind for you to concentrate on other expenses. On the other hand, payday loan consolidation works in adding to your debt pile. If you have poor financial management and haven’t researched your options, payday loan consolidation could dig you a deeper financial hole.

“You’re getting symptomatic relief, not a credit cure,” Chris Viale, president of Cambridge Credit counselling Corp., a nonprofit credit counselling agency based in Agawam, Mass, told CNBC.

Here are a few ways payday loan consolidation works, and how each way could work for or against you.

Sign up for a consolidation loan.

One way payday loan consolidation works is by taking out a consolidation loan, which will let you bundle several payments into one. This lets you make one monthly payment with only one lender and gain better control over the interest rate.

A consolidation loan does not mean your debt goes away; consolidated debt is still debt you owe. Speak with financial institutions and credit unions about how payday loan consolidation works. Organizations offer different interest rates and policies. Above all, make sure the cost of the new, bundled loan will actually be less than your current, multiple debts.

A consolidation loan’s interest rate determines how fast you can pay off the debt. The higher the rate, the higher your monthly payments will be and the longer it’ll take to repay off the debt. If you have good credit, you should qualify for a low-interest consolidation loan. On the other hand, a poor credit score will hurt your chances.

Find a payday loan consolidation company.

The right payday loan consolidation company can make payday loan consolidation work. The company negotiates with lenders on your behalf for a lower payback balance. All you have to do is repay in monthly manageable amounts.

You should research a payday loan consolidation company before teaming up with one. See if they offer free counselling when they speak with you about how payday loan consolidation works. Ask family, friends and neighbors for business referrals. Read customers’ reviews.

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