10 things you need to know before consolidating a payday loan

1. Quick Access

We all know how annoying and unbearable debts can be. You realize that it’s hard to repay all the debts that you have. One type of debt is payday loans. You are expected to repay a payday loan when your next paycheck comes your way. It’s a short-term loan which requires you to pay the whole lump of cash all at once. Reason for taking up such a loan could range from being broke in the middle of the month before the next payday or due to an unexpected financial emergency. While loans could be lifesavers up to a certain extent, it could ruin your life too.

2. Payday cycle

Take help of a debt consolidation plan

Take help of a debt consolidation plan

So you may be wondering, how one actually gets into a big debt crisis, so big that it would need payday loan consolidation. For instance, you may take up a small payday loan, hoping that you will be able to repay it immediately once you get your next paycheck. Suddenly, an emergency hit. Perhaps you also need to pay your kids’ school fees, or have a medical bill which your insurance does not cover. So you take up another payday loan. Both loans are expected to be paid back when you get your next paycheck.

However, you realize that you cannot afford to repay both. Thus, you roll over the loans. Rolling over typically gives you a little more time to repay with paycheck you get the following month. However, there is a catch. The interest rate for the rollover amount will increase and so will the fees you have to pay.

Subsequently, your debt increases. You are stuck with the lender and having to repay large sums of money. Due to the rollover, you can’t keep up with the loan payment. The increasing amount of debt is about to stifle you.

Lenders love this situation. You need to get out of this situation with the help of a debt consolidation plan. Hence, you should consolidate payday loans and use that to your advantage.

3.  Outline your financial goals

To get out of the debt, you first have to know your financial goals. You have to plan where you want to be, where you are currently and how you want to get to your target. You should sit down and analyze your financial situation carefully.You to look at all your income sources, then compare them to what owe your lenders. Doing this math will help you establish your financial status.

4. Consolidation

 Consolidation

Consolidation

Having established your financial situation, it’s time to start thinking about the solutions. Typically, you want to get out of debt as soon as possible. Payday loan consolidation is one of the best ways to get out of recurring debts and increasing interest rates. However, it is important to be specific about what you actually want. There are 3 main types of debt consolidation companies.

1. Debt consolidation companies: they give you a loan to pay up all your debts and then you repay them slowly.

2. Debt management: these act as third parties who try to re-negotiate the interest rates that you are paying for your current debt.

3. Debt settlement: they are also third parties, but they negotiate to lower the principal balance of your debt.

This means that you have to be very precise with the type of plan you want.

 5. Research

Having decided the type of consolidation plan you want to embark on, you need to look at specific consolidation companies. It is always advisable to allow yourself as many options as possible. You could decide to pay them a visit and try to get all the details on the type of consolidation plans they offer. By giving yourself enough options, you have flexibility.

6. Review

countercheck the credibility of the company

counter check the credibility of the company

You mostly want to rely on the companies that care nonprofits. You have to look at what actually fits your current financial situation and can help you out of the payday loan debt trap. Nonprofits are the most suitable companies, mostly because they are not after making money from borrowers.

Whatever awesome adverts you may have seen, remember that what you see may not be what you get. Thus, it is always important to countercheck with financial authorities to confirm the credibility of the company you are interested to work with.

7. Interest rates

The annual percentage rate of the payday loans is about 300%. This means that the interest rates are quite high. While deciding on consolidating your payday loans, you have to look at the interest rates of every consolidation company. See if it fits your financial goals. The lower the rate, the better. Go through all the options you have until you find the best one.

8. Fees

lower the fees, more advantageous it is for you

lower the fees, more advantageous it is for you

It is important to look at the fees that come together with the consolidation loan you choose. You could be talking about fees that are incredibly high, so you need to look for the lowest fees among your choices. The purpose of the consolidation loan is to let you improve your financial situation while you pay off your consolidation loan. Thus the lower the fees, the more advantageous it is for you.

9. Terms and conditions

A consolidation loan definitely comes with a contract. Signing it will let you be bound by whatever terms which are stipulated in the contract. The terms include things like the time of repayment, the interest rates, and the penalties if you don’t pay up. You have to look for terms that are as flexible as possible. Also, you have to negotiate for breathing space, for if you leave the whole responsibility to the lender, he may decide to suffocate you as you try to look for a way out of the debt situation. This could leave you in worse situations that you were initially.

10. Doing the math

The most important thing is simple to keep up with the numbers. For a good loan solution, you have to weigh the possibilities and make a sound financial decision. It’s all about knowing your numbers and taking them into consideration before making any Payday Loan debt consolidation decision.

Installment loans basics

What Are The Fundamentals Of Installment Loans?

More often than not, people are caught financially strained during a financial crisis. It is not uncommon to wake up to exorbitant bills, income taxes or unexpected medical bills.Your first instinct may be to seek financial aid from lending institutions, which may turn out to be a good option.

The money lending process could be fraught with pitfalls and you to be informed to make a sound decision. There are many traditional forms of lending which you can seriously consider and choose the one that meets your needs. You should also check the repayment period of the loan, how flexible it can be, all costs involved, its interest rate to make sure that you approach a trusted lending website or store.

Most installment loans have fixed interest rate

Most installment loans have fixed interest rate

Most people often choose installment loans. Installment loans online include any type of loan that is required to be paid back over time with scheduled repayments or a series of installments rather than in lump sum. This staggered payment is an advantage for individuals who cannot afford to pay back the loan in one whole lump sum. Installment loans may take the form of auto loans, personal loans or even mortgage loans. There are differences between payday and installment loans and depending on the length of time you want to borrow for you should know the difference.

Most installment loans have a fixed interest rate. This means the interest charged over the term of the loan does not change and remains the same as it was at the time of borrowing. Due to the fixed repayment amount, it is easy for the borrower to sort out his finances to make repayments  promptly.

Installment loans are either secured or unsecured. Secured loans are those that have collateral attached to them. In the event that the borrower defaults payment, the lender has the right to sell the collateral to to recover the outstanding amount. Secured installment loans include mortgage loans and auto loans. When requesting for an auto loan, your car is used as collateral while for mortgage loans, you put down your house as security. There is another type of loan where you can actually use your car as collateral, these are called title loans and you can check out our section on these if you want to drive your car and have a loan.

Unsecured loans do not have collateral attached to them. Such loans are determined by the borrower’s credit score and proof of income. If the borrower has a bad credit score, then chances of securing a loan are small. Consequently, unsecured loans always come with higher interest rates compared to secured loans. This is because the lender faces the risk of non-repayment from the borrower. Personal loans are one example of unsecured loans.

simple & fast process

simple & fast process

Most people like to apply for Installment loans as they have a simple and fast approval process. Applying for an installment loan is quite easy. The borrower fills out an application with the lender. The lender then takes the borrower through the terms of the loan, repayment schedule and the payment amounts.

The lender then advises the borrower to make higher down payments and take out a loan for a longer term to enjoy lower interest rates and lower monthly repayments. For the borrower to qualify for the loan, the lender reviews his creditworthiness to determine the amount of credit to extend. In addition to interest charges, borrowers are expected to pay other fees such as application fees, processing fees, loan origination fees and potential extra fees such as late payment fees.

Nowadays, borrowers can also apply for installment loans online. Online installment loans are quite easy to qualify for. You must have a checking or savings account that has been open for at least one month. This is because online loans are transferred directly into your savings account. Secondly, you must be at least age of 18 years to be eligible for an installment loan. Thirdly, you must have a steady and regular income as this guarantees that you are in a position to make repayments promptly.

Lastly, when requesting an installment loan online, you must provide a valid Social Security Number or Individual Taxpayer Identification Number.

Installment loans and bad credit

Installment loans & bad credit

Installment loans & bad credit

Most people have a messed up financial past which adversely affects their credit score which makes convincing a lender to lend them money quite hard. Installment loans save you from this hassle as it approves payday installment loans online for borrowers with bad credit and even those with no credit. Installment loans can be used to repair credit for people with installment loans for bad credit as they create a history of prompt repayments over time.

Merits and demerits of installment loans

Installment loans are an option for many due to the benefits they bring. They are fast and are obtained at substantially low-interest rates than other forms of lending such as payday loans. Installment loans are flexible especially when they are long-term as they are tailored best to match the borrower’s ability to repay the loan.

Despite the merits, the borrower is at risk of losing his property in the event that he defaults payment. In this case, his credit score is also likely to get hurt. If you want to keep reading check out this 10 Things you need to know about installment loans