What Is Payday Loan Consolidation and How Does It Work?

Payday loans can be a great idea to replenish your funds for paying bills. However, some lenders charge an overwhelming interest rate and additional charges. This is a difficult situation, especially if you are already struggling with debts that you can’t pay.

In the UK alone, millions of workers take out a payday loan every day. Most of them end up rolling over into a new set of loans because they can’t commit to paying within the due date.

This is where payday loan consolidation comes into the picture. It’s a better alternative to remedy a borrower from getting trapped in the debt bubble.

What is Payday Loan Consolidation?

Lenders allow a borrower to apply for a new loan with the lowest interest rate. Instead of paying it up on the next paycheck, the lender allows the borrower to pay it on a monthly amortization schedule for a lower fee. The borrower has more freedom to pay his or her debt over time.

How to Apply For a Payday Loan Consolidation?

  • Look for a lender that offers this type of loan.

There’s a ton of choices that you can find online. Check credible lenders that offer this type of loan and pick the one that offers the lowest interest rate. If you need to call them with questions, don’t hesitate to do so.

  • Submit all the requirements needed.

Don’t be intimidated if the lender will do a pre-qualification check and credit investigation. It’s part of the process and most likely will not affect your chances of getting approved. Just make sure that you don’t miss any requirements to avoid delays.

  • Assess if you can commit to the monthly payments.

Once your loan application is approved, the lender will discuss the estimated interest rate, loan term, schedule, and amount you need to pay for. If the deal sounds good, go ahead and sign the contract. But if you see that it’s something you can’t afford, look for another lender that can help your situation.

The Benefits of Getting a Payday Loan Consolidation

Here are the reasons why you should consider getting a payday loan consolidation instead:

  • Lower interest rates and fees.

To help yourself get back on track, applying for a loan with the lowest rate can help greatly. Lenders offer as low as a 1% interest rate and without extra charge or hidden fees.

  • Better payment terms

Instead of paying your loan immediately the next paycheck, this route offers a longer payment term that can go as long as 24 months. This also depends on how much you borrowed and your capability to pay.

  • Better tracking of payments

Since there’s a monthly payment schedule, it’s too hard for you to miss a single monthly payment. It’s too predictable and straightforward that you don’t have an excuse to miss your due date.

  • Zero rollovers

Once you’re done with paying your loan, it’s a done deal. Your account with the lender will be closed, and your debt will be marked as paid. If you ever need financial assistance again, you can always apply for a new loan instead. 

Key takeaway

If it seems like all hope is gone especially handling your financial matters, maybe you’re just not finding the right answers. No one is supposed to be trapped in a debt bubble for a long time. If you made a way to get in, you could also make a way to get out of it.

You can take advantage of payday loan consolidation as your last resort to free yourself up from your previous loans. However, it takes some time to finish paying it off; at least you know it’s going to be over sooner than later.

Author: Ruby

Ruby is a financial reporter and columnist based in Scotland. She has been featured multiple times in magazine covers sharing insights about household economics and credit management. She is also the author of half a dozen best-selling books on credit, wealth management, family business, and even a children's book that hones a child's interest and passion for entrepreneurship at an early age. Ruby continues to serve her readers with current trends and informative news in Finance and Business. Through the years, millions of people in the UK admired her work and contribution in educating individuals with personal finance.

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