A payday loan is offered to customers who are in terrible need of cash before their upcoming payday. As the name of this loan suggests, the lender expects to be repaid in full as soon as the debtor has received his next paycheck. Nevertheless, there are many individuals who are unable to repay this debt, causing the need to take out yet another payday loan.
Sadly, this financial need leads to a vicious cycle of taking out payday loans and rolling them over. Ultimately, if you find yourself in this payday loan trap, you may find that your debts have significantly increased and you’ve fallen victim to some extremely high interest rates. This is often happening with the majority of people who turn to payday loans.
Can Payday Loan Consolidation Companies Help?
Once you find yourself in this situation, it would be wise to consolidate your loans into one single payment that you can easily manage on a monthly basis. While this may seem like an easy task to accomplish, you will find that it can be quite difficult to find a legitimate payday loan consolidation company that will help you escape from the cycle of payday loans.
Finding Legitimate Help with Debt Consolidation
Sadly, most payday loan consolidation companies are also trying to take your money using shady, and sometimes illegal, collection practices. In order to avoid working with shady businesses and instead find legitimate consolidation companies, here are some helpful answers to some common questions you may have about payday loan debt consolidation.
Do you have to pay an upfront fee to the debt consolidation company?
Although this may be the requirement of some debt consolidation companies, you should remain very cautious if a payday lender requires an upfront fee. Pay close attention as there are some debt consolidation companies that will explain this fee is required for insurance purposes, application fees, security deposits or one of their other services.
In contrast to questionable companies that immediately ask for fees, a legitimate company will be more interested in helping you meet their basic eligibility requirements.
Does the payday loan consolidation company help only debtors who have bad credit?
There are many payday lender companies that will only deal with people who are in a weak financial position. This results in a situation where the person has several payday loans that need to be consolidated into one easy to manage and affordable payment. Keep in mind that, whether your credit is fair or bad, a legitimate company will investigate your information on their own, rather than approve your application based solely upon the information that you provide.
Usually, this type of investigation includes a credit check. It is possible to be approved for a payday loan consolidation loan even if you have bad credit, but the terms and interest rates may be less favorable. Payday loans are extremely risky for both the lender and the debtor, but you should try to avoid lenders who are aiming their services toward people who have bad credit.
Is the consolidation company offering you a secured payday loan?
You should be aware that there is no such thing as a secured payday loan so if you are offered such a thing, this is a solid indication that the company is not a legitimate one. Additionally, despite the increasing popularity of payday loans and payday debt consolidation, no legitimate lender will ever ask you to supply a precious asset as a guarantee for payment of your loan.
If you need to request a secured loan to consolidate your debts, this option would come in the form of a mortgage or home loan lender. According to a warning from the Federal Trade Commission, consumers should pay close attention to these types of lenders, typically known as “predatory lenders”.
Is the lender compelling you to act immediately?
You should be very careful if the payday loan debt consolidation lender asks you to do something ‘immediately’ in order to get their approval. For an example, a shady consolidation company might ask you to wire or send money right away to secure their services. This is a good indicator that you should avoid this company.
Is the company asking you for very much information?
Of course, every payday loan debt consolidation company is going to ask you for specific information needed to set up your account and assist you with your finances. However, you should pay attention and be leery of companies that ask for too much personal information.
A legitimate payday loan consolidation company would generally only ask for information regarding your income, employment status, checking account numbers and some basic personal information related to your case.
have you checked the lending company’s contact information?
Any legitimate payday loan debt consolidation company will willingly provide customers with its location and contact information. You should check the validity of the company by calling to speak with a live person. While not ideal, you can also send the company an email to confirm that this is a real business.
You can also check with the Better Business Bureau and search for recent customer reviews online to see what others have had to say about the consolidation company. This is due to the fact that most illegitimate companies will provide only fake details in the hopes that customers will not try to contact them.
Final Thoughts on Consolidating Your Payday Loans
Don’t be too hard on yourself for getting in a jam. as this type of financial problem happens to a lot of people. The best thing to do is find a reputable payday loan debt consolidation company to help you end this expensive cycle.
Today, there are many reputable companies that offer payday loan debt consolidation. If you know what to look for, and what to avoid, you should have absolutely no trouble finding a legitimate consolidation company to help you get your finances back on track.