Payday loans, also known as cash advances are fast becoming a rage, but can lead to more than an unexpected bill. Lenders have become increasingly flexible when it comes to the way they look at the consumer and what type of loans they can issue.
Before you sign on the dotted line for a payday loan, there are some things you should know.
Lenders do not like to wait for payments from their customers. Since so many people lack reliable incomes, the company has the right to demand immediate repayment on the principle of the loan. If you end up in this predicament and cannot afford to pay the loan back, you will be facing late fees, increased rates and other charges that you did not expect.
A payday loan consolidation program can get your loans back under control, because it allows the lender to offer you a fixed rate of interest on the principal amount of the loan. The lender will continue to hold your loan at a single monthly payment that is secured by your personal property. This means that if you default, you will be held responsible for any damage done to your property.
Some companies use a credit check to verify your income and determine your eligibility for the program. These programs provide an added layer of protection for you, because the lender will verify you have enough income to pay off the loan on your own. Once again, this gives you extra peace of mind.
Understand How Payday Loan Consolidation Works
When you are trying to decide what type of program to take out with your current payday loan, it is important to understand how each works. Depending on the length of the term you choose, and the circumstances that led to the initial lender, each may have a different set of terms. This means that what one lender may consider acceptable could be deemed unacceptable by another. In addition, a lender will have different minimum requirements for you to qualify for a specific type of program.
One of the most common types of payday loan consolidation program is one that gives you the option to pay all of your debts at once. This will allow you to quickly consolidate the debt into one monthly payment that is lower in interest. However, there are limitations for this program as well.
You must have a maximum credit limit for the amount of the loan that is acceptable for the consolidation. You cannot have more than the allowed amount for the loan in order to receive this type of program. Additionally, the monthly minimum due for this type of program is generally higher than the same type of program without the limit.
If you want to be able to pay all of your debts with a payday loan consolidation program, you can opt for a short-term loan program. This allows you to make one lump sum payment, which is typically a little higher than the required minimum. However, the monthly minimums are typically lower as well.
Payday Loan Consolidation Fees
There are fees and additional charges that will apply when you pay off your loan. Some of these charges can be explained on the loan paperwork that the lender provides. For example, the fees to pay off your loan may include an extension fee, which is calculated on the balance of the loan.
The extra fees associated with this type of program are not as high as those involved with a traditional loan. It is possible to pay a substantially lower amount for a short-term loan and still be required to pay a fee. Make sure that you understand what your options are before signing on the dotted line.
Once you complete the consolidation of your debts, you will be left with a single loan that is much easier to manage and pay off. If you are working with the lender to find the best deal, the agency should be ableto inform you of the advantages of such a program. If the loan agency does not go into greater detail about the benefits, make sure you know exactly what you are agreeing to.
Take the time to talk to the person who helps you with your short-term or payday loan consolidation program to make sure that you understand all of the details. before signing up for the program.