Payday loan debt consolidation - Way out of payday hell !!
Rate This Article:
Average: 4.5(4 votes)
Rated 4.5 by 5004 members
Have you taken out payday loans and now in search of a suitable solution to get rid of them? If yes, then you can consider payday loan debt consolidation.
How payday loan consolidation can help you out
Get rid of payday loan trap
Lower interest rates on your debt
Late fees and over limit charges – reduced/waived off
Single monthly payment – budgeting becomes easier
Do not have to manage individual creditors
Avoid harassing creditor/collection phone calls
How payday loan debt consolidation affects credit
When you opt for payday loan debt consolidation, there is a possibility of positive impact on your credit. This is because through this method, you are paying off your debts in full and “Paid in full” status is updated in your credit reports. This affects your credit report and credit score positively.
Payday loan laws vary from one state to another. Here are some parameters based on which the laws usually vary:
Payday loan laws are not universal in every state. Here are certain payday loan laws based on which you can determine whether or not your payday loan is legal.
State legal status – This determines whether or not payday loan is legal in your state
Loan specifications – There are certain laws regarding the maximum amount, loan term, etc. which need to followed
Interest rate cap on small loans – In some states, there is a limit on interest rate; lenders cannot charge more than that amount
Debt limits – Even if payday loan is legal in your state, there might be limitations on the number of loans you can take out at a time
Limits of collection – You should know the collection fees amount and whether or not criminal action is prohibited
File your complaint and get information – There is some regulatory board in every state where you can contact regarding any problem
How you can tackle illegal payday loans
You can follow these steps if you are sure that your payday loans are illegal.
Close your bank account linked with your loan - Ask your bank to close the account linked with your payday loan and open a new one. If the policy of the bank is to not close the account till a certain time period, then opt for putting the account on deposit only status till the time you can close the account.
Notify lender that your payday loan is illegal - Notify your lender that either your payday loan is illegal in your state or it does not follow the laws properly; for example – you are paying more on interest.
Pay only the principal amount - If you have not yet paid back the principal, then inform your lender that you are willing to do so but on your terms and conditions. However, if you have paid more than the principal amount, then you can demand a refund of overpayment. This is because, you need to pay only the principal amount if your loan is illegal.
How to consolidate legal payday loans
There are 2 ways to consolidate legal payday loans, which are given below :
Payday loan consolidation program
Additional information - With the help of debt consolidation, you can consolidate your payday loans along with other debts, such as, credit card debts. You can replace your multiple bills with a single monthly payment and have better control of your finances.
By signing up for counseling session, your provided details (Name, Email ID and Phone No.) will be forwarded to the company advertising on the DebtCC. However, you have no obligation to use their services.
Some creditors and collection agencies refuse to lower the pay off amount, interest rate, and fees owed by the consumer.
Creditors/collection agencies can make collection calls and file lawsuits against the consumers represented by the debt relief companies.
Debt relief services may have a negative impact on the consumer's creditworthiness and his overall debt amount may increase due to the accumulation of extra fees.
The amount which the consumer saves with the use of debt relief services can be regarded as taxable income.