a Guide on Debt Consolidation and Payday Loan Relief
Debt Consolidation and payday loans are subjects of interest to people that seek personal financing. Payday loans are short-term in nature, and allow people to borrow money to meet unforeseeable expenses until the time they receive their next paycheck. At a glance, payday loans same like a quick solution to temporary cash flow problems however, the way they are structured fixes consumers in a vicious cycle of repeatedly paying fees for renewal of the loan. As a result of this, consumers of payday loans usually pay higher fees compared to the original sums of money they borrowed. People can break free of this vicious debt cycle by consolidating debt from payday loans into a personal loan. Personal loans have numerous advantages over payday loans for instance predictable monthly payments, lower rates and fees and flexible loan terms.
Debt consolidation is an excellent option for people seeking to recover from accumulated payday loan debt or other debts for that matter. Debt consolidation loans work by combining various high interest loans e.g. payday loans and other unsecured debt into one loan with lower interest rates. This significantly reduces monthly interest charges, helping people pay down their debts much quicker. People seeking to escape the trap of payday loans should definitely look into consolidating their payday loans into personal loans. If your personal loan application gets approved, funds from the personal loan get channelled to paying off the payday loan, thus leaving you to repay the personal loan according to the agreed terms. In your quest to eliminate payday loan debt, should always review your finances prior to applying for any personal loans to enable you have a plan on how to stay debt free. Lack of proper planning could make you get caught up in a vicious cycle of borrowing and debt repayments.
Debt consolidation into personal loans is key to effective debt management. Arguably the most obvious benefit of payday loan consolidation is lower fees. Compared to payday loans, personal loans often come with lower interest rates. Payday loans typically have fees equalling annual percentage rates of about 400%. Depending on the lender, interest rates for personal loans are much lower, typically ranging between 5% and 36%.
Unlike payday loans, personal loans involve predictable monthly payments. After consolidating several payday loans into a single personal loan, you will be required to make a single payment every month to repay the debt. Until the loan has been fully paid off, the monthly payment stays the same. Personal loans also have more flexible repayment terms.