Payday loan consolidation: Ends multiple pdl debts and saves money

How does payday loan consolidation work?
What will be your new monthly payment?
Payday loan debt consolidation pros and cons
Why consolidation program is the best payday loan debt solution
Compare pdl debt settlement, consolidation program & loan
Can you go to jail due to legal or illegal pdls?
CFPB: Proposed laws to end pdl traps and save borrowers
4 Tips before you get assistance with payday loans online
Payday loan consolidation FAQ

This debt relief option comes in when you’re struggling to pay high-interest pdls even after making your best efforts. Payday loan consolidation program helps you pay off cash advance loans and get control of your finances yet again.

When you should go for it

You want to get rid of high APRs
You want to save your paycheck from pdl lenders
You want to get out of pdl cycle

How does payday loan consolidation work?

Having problems with online and storefront pdls? If yes, then try to consolidate payday loans as soon as possible. But before you make a final decision to consolidate payday loan debt, let's check out how this process actually works:

Here, a payday loan consolidation company offers a payment plan you can afford. The consolidators work closely with your lenders to bring down the interest rates and possibly waive off all the additional fees and extra charges. Most companies that consolidate payday loans will offer a free counseling where your current financial situation will be evaluated properly. This will help you get a payment plan, which is affordable.

How much do you have to pay every month?

Your new monthly payment amount will depend upon:

How many lenders are ready to reduce interest rates
How many outstanding loans you have
The amount you can afford to pay

How much can you save?

Payday loan debt consolidation pros and cons

Pros

No advance fees
Don’t have to pay high-interest rates
Don’t have to pay late fees and extra fees
Don’t have to endure automatic debits
Only one pocket-friendly monthly payment plan
Less collection calls & chance of getting sued

Cons

Need to avoid pdls in future
Need to act as per consolidator’s advice
Your collateral is at risk in secured loans
The loan term can be long

Payday loan consolidation FAQ

Why consolidation program is the best payday loan debt solution

Typically, you can get payday loan relief in 2 ways:

1
Consolidation program

This payday loan debt relief option is a better choice since you get a monthly payment plan that fits your budget. You don't have to manage multiple payday loans or put assets at stake anymore.

2
Consolidation loan

This is not a good payday loan debt solution since your asset is at stake. Yes, in case of a secured consolidation loan, you've to pledge collateral as security. If you want to go for the unsecured option, then be prepared to pay higher interest rates.

Compare PDL Debt Settlement, Consolidation Program & Loan

Comparison	Settlement	Consolidation program	Consolidation loan
What it does	Reduces total debt	Lowers interest rate	Transfers debt to another lender
Payoff term	2-4 years	2-5 years	1 -30 yrs
Mode of payment	lump sum payment	monthly payment	monthly payment
Requirements	Save an amount before negotiation	Make monthly payments	Collateral
Credit score	Drops initially	Improves gradually	Improves gradually
Verdict	Best when you’re wondering how to pay off multiple payday loans through a lump sum payment.	Best when you want to get out of debt by making single monthly payments.	A good option when you can pledge a security as collateral.

Can you go to jail due to legal or illegal pdls?

Neither authorized payday loan lenders nor illegal lenders can send you to jail when you don’t make a payment. While they can’t send you to jail for pdls, but they (authorized lenders) can sue you at court. There is a risk of default judgment when you lose the case.

CFPB: Proposed laws to end pdl traps and save borrowers

The consumer watchdog Consumer Financial Protection Bureau (CFPB) has proposed new rules in March 2015 to bring an end to payday loan debt traps. The proposed rules aim to save consumers from debt traps mainly in 2 ways - prevention and protection.

Proposed rules

Lenders have to verify if borrowers can pay off the loan along with interest, fees and principal amount.
Lenders need to check the borrower's’ income, financial liabilities and borrowing history.
There has to be a 60-day cooling off period between payday loans.
Lenders can issue the second pdl within 2 months when borrower’s financial situation has improved.
Once a lender issues 3 consecutive loans to a borrower, he can’t issue a new loan in the next 60 days.
Lenders need to offer reasonable payment plans to borrowers.
Payday loan lenders can’t keep borrowers in debt for more than 3 months in a year.
Maximum 2-3 rollovers would be allowed followed by a compulsory 60-day cooling-off period.
Lenders need to suggest a way out of debt before offering second and third loans in a row.
The way out of debt will include: (a) the principal will drop with each loan (b) the lender would offer “off-ramp” for the third loan so that it could be paid off without extra fees.