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
- Better control of your money
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.
How to know whether or not your payday loan is legal
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 interest more than that amount
- Debt limits – Even if payday loan is legal in your state, there might be some 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.