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Debt Consolidation for Payday Loans

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In the last couple of years, the debt consolidation loan has appeared as a great option for those who have got trapped in various kinds of debts. In most cases, it has been found that people tend to misuse different financial tools and as a result ended up being drowned in enormous piles of debts. Before, it was credit cards, and now a new kind of debt is killing the financial existence of people.

How Does Consolidation of Debt Help?

There is a way to help you out of this kind of trouble. You can look for a debt management company to supply you with a payday loan debt service. Once you contact the debit consolidation company, they will get in touch with the cash advance company on your behalf. Their job is to get the loan company to give a nod to a consolidated repayment amount which is beneficial to you. This amount will be lower than the amount you were required to pay earlier. The consolidation loan amount will have a lower interest rate calculated and will give you a lower monthly payment amount.

The interest rates charged by payday loan stores can vary from state to state, but a rate of 15-17% for two weeks is quite common. This translates to 390-440% per year, which is an overwhelming amount of interest to pay on a loan. The lenders claim that these amounts are fair, as they are necessary to cover the overhead connected with running a business and to account for a significant number of borrowers who fail to repay the loans. This claim might be true, but that high of an interest rate can make the “convenience” of a payday loan quite dreadful. Many borrowers are rather low paid blue-collar workers living from paycheck to paycheck. People who are a “bit short” one week may also find themselves short again on their next payday. If they fail to pay back their payday loan, the interest continues to accumulate with possible additional penalties, such as returned check fees applied as well. It is quite universal for the loans of $300 or so turn into debts of several thousand dollars, particularly if the borrower compounds the problem by borrowing money from a second payday loan store to pay the loan from the first one.

By the way, by doing research and comparing the best debt consolidation businesses in the market, you will be able to decide on the one that meets your specific financial situation, with additional benefit of the cheaper interest rates being offered. Nevertheless, it is wise to go with a trusted and reputable debt counselor before making any binding decision. This way you will save time thanks to expert advice coming from a seasoned debt advisor and also save money by getting better results in a shorter period of time.

Are you asking yourself if there is a debt consolidation plan for payday loans? If this is the case, it is better to see your debt as a whole and think what you can do to eliminate it. If you are taking payday loans only because they are the only ones that will lend them to you, you should start working on rebuilding your credit. You are not alone in these shoes; with the current market millions of people will be rebuilding their credit in the future.

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