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 life savers 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 roll over, 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.

Payday loans vs installment loans

There are many different types of loans for borrowers to choose from. Car title loans, mortgages, consolidated loans, payday loans, personal loans and loans from insurance policies are all examples. Many of these loans are considered installment loans because the borrower pays the lender back in scheduled monthly payments. A payday loan is usually made in one repayment amount by the borrower’s next paycheck. That’s the main difference between any type of installment loan and a payday loan. However, is one better or worse than the other?

  • What is a payday loan?

What is a payday loan

What is a payday loan

Payday loans are a relatively new invention that came into existence in the early 1990s. Originally, payday lenders began exclusively as small shops where borrowers could visit them personally to apply for quick cash. Today, while those physical shops still exist, many payday loan transactions are done online from the comfort of one’s very own home.

Taking out a payday loan is one of the fastest and best ways to get instant cash. No matter what your emergency is, requesting a payday loan will get you the needed amount of money in no time. Since the service is really fast and easy to get approval for (you usually get no credit check payday loans), payday loans have very high-interest rates which are higher than conventional bank loans. That’s because payday loan lenders take a risk in not seeking collateral from borrowers, only asking for basic personal information and lending money to applicants with bad credit.

With payday loans, the borrower usually borrows an amount of money that he is confident of repaying on his next payday. Being late in repayment will result in hefty penalties.

  • Payday loans advantages

There are many advantages of payday loans.

1. Very easy to obtain

Just about anyone with a stable job can apply for a payday loan.

2. Really fast

All you have to do is fill out an application and in a few minutes, you will be approved and have the cash you need. The loan amount can also be transferred to your bank account.

3. Very convenient

Payday loan companies are located throughout most cities and are really easy to find. Nowdays, there are many online payday loan services. This means when you are ready to take out a loan, there is always going to be one available somewhere near you.

4. Always a last resort option

When there seems to be no way to get out of a difficult financial situation  payday loans are always there as a last resort option. Since their terms are relatively lenient, payday lenders will provide instant cash  even when no other options are available.

  • Payday loans disadvantages

It’s expensive

It’s expensive

There are a few downsides to payday loans that are worth considering before taking out a payday loan.

1. It’s expensive

The interest rates of a payday loan are known to be some of the highest. For many borrowers though, the convenience and speed of being able to obtain money with a fast payday loan when it’s needed is enough to make up for the high interest rate that comes with one.

2. Scams

There are some scam lending companies, so it is important to know you are dealing with a qualified and legitimate lending company before taking out the loan.

3. Borrowing can become cyclical

It’s important that you do a careful financial planning to prevent lagging behind on your repayments. It’s easy for you to fall into a debt cycle that only gets worse over time.

  • What are installment loans?

installment loans?

installment loans?

An installment loan is a loan in which the principal and interest are repaid in equal installments at scheduled intervals (usually monthly). Installment loans are considered to be less risky and cheaper to borrow than payday and title loans. The repayment terms of an installment loan can be as short as a few months or as long as 20 years. Installment loans are usually secured by the personal property of the borrower.

Installment loans have been around much longer than the 90s. They were initially offered only by small, independent lenders, but eventually were adopted by most major banks.

installments at scheduled intervals over an agreed period of time.

Installment loans typically grant borrowers much larger amounts than payday loans. For $1,000 to $10,000, borrowers can approach installment lenders for a loan to pay off recurring bills, home mortgages or medical expenses.

Installment loans are usually repaid over a long period of time which can be as long as 30 years. When taking out an installment loan, the borrower must use a lending institution that operates in the same state where he is staying in as all installment loans are serviced locally.

Similar to payday loans, you can get Installment loans for bad credit or installment loans with no credit check at all.

Installment loans are fast as they take only one business day for the money to be deposited into the borrower’s bank account.

  • Installment loans advantages

Similar to payday loans, there are a lot of installment loan advantages such as:

1. Predictable monthly payments

When you take out an installment loan, there is a fixed interest rate. Your payments will always be the same because the interest rate is already set up at the time when you take out the loan. You will know exactly how much to pay every month.

2. Longer terms

The repayment terms of an installment loan can be as long as 20 years or even more.

3. Easy and fast

It’s very fast to get your hands on the money when you take out an installment loan. Usually, you can get the money deposited directly into your account in just a couple of days after being approved for the loan. Otherwise, you may get the loan amount in cash.

  • Installment loans disadvantages

There are some disadvantages in installment loans that are worth careful consideration before signing up for one:

1. High interest

Even though the APR (annual percentage rate) of an installment loan is not as high as that of a payday loan, it’s still going to be high. After making the payments in full, you can even end up paying more than you would with a payday loan.

2. Penalties for missed payments

If you fail to make your payments on time, it can cost you a lot more than you thought.

3. Personal property risk

There are types of installment loans that require you to put up your personal property as collateral.

  • Payday loans and installment loans differences

Payday loans and installment loans differences

Payday loans and installment loans differences

Both payday loans and Installment loans are considered to be “high-cost, small-dollar” loans. Usually, they come with high interest rates and are extended to people with rather imperfect credit scores or with a specific income level. Even though the two types of loans are similar, there can be some big differences too.

1. Payday loans range from $100 to $1500; installments loans range from $150 to several thousands of dollars.

2. Payday loans are short term and are to be paid back within 30 days. The shortest tenure for installment loans are a few months.

3. Payday loans are repaid through a post-dated check; installment loans are directly withdrawn or paid using a check each month.

4. Payday loan’s APR can be as much as 390%; APR on an installment loan ranges from 25 to 100%.

5. Payday loans are unsecured; installment loans are usually secured but can be unsecured too.

6. Payday loans can be rolled over when it’s due (plus new fees); installment loans can be renewed every few months (with additional fees and interest).

  • Which loan should you get?

There are a lot of things to consider when deciding

What Happens if I Am Unable to Payback My Payday Loan?

Unable to Payback Payday Loan?

Unable to Payback Payday Loan?

Payday loans can be a great way to get a quick influx of cash when an emergency, such as a broken down car or a medical bill, hits. However, because people tend to take out payday loans online when they are already having financial troubles, sometimes it can be difficult to pay them back.

Although you should try and pay back any loan as soon as possible, payday loans are unique in several ways. For one, since payday loans tend to be in small amounts and for a short term, the interest rate can be very high. This might sound worse than it actually is. Yes, the interest on the $500 loan will be significantly higher than the interest on a banks $10,000 loan, but that is because the original number is already much smaller.

Generally, if you cannot pay back a payday loan on time, one of two things will happen. The first is that your lender will try and withdraw the agreed upon amount from your account and, if there are insufficient funds, this could cause the bank and your lender to charge you fees. To avoid this, you can almost always talk to your lender and have him extend the loan for a small fee.

Although it is not ideal to not pay back your payday loans, in most states, your lender will not be able to sue you or garnish your wages, and in no instances can you be sent to jail for not paying back a loan of any kind. Still, just like any loan, payday loans should be paid back in the agreed upon fashion. Before taking out a loan, be sure to look at the terms and agreements so that you know exactly what you are agreeing to.

Since payday loans generally don’t have much more of a risk than any loan, and since they are a good way to get cash quickly in an emergency, you can use gadcapital.com to find a payday loan lender today! Just fill out our online form and get connected with lenders now!