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Millions of people find themselves trapped in the vicious cycle of payday loan debt every year. High interest rates and fees escalate debt of borrowers within a few months. Thousands of borrowers get financially exhausted after paying high interest rates months after months. Their bank accounts become empty and borrowers are charged overdraft fees, their accounts are assigned to debt collection agencies, and credit score gets into a downward spiral. Unless they get help of debt relief programs, it’s almost impossible to eliminate payday loans.
How does payday loan consolidation work?
Are you having problems with unsecured lines of credit like 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.
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 should you get payday loan debt assistance?
- When you want to get rid of loans with high APRs
- When you want to protect your paycheck from pdl lenders
- When you’re in financial crisis due to bad payday loan debts
How much can you save?
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
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
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 | Payday loan debt settlement | Payday loan debt consolidation program | Payday loan debt 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 |
| Best way to get out of payday loan debt | 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. |
How can OVLG give you best payday loan debt assistance?
OVLG gives payday loan debt assistance in the following ways:
- 1 The financial coach of OVLG explains how to consolidate payday loans and policies like fee structure, the dedicated CRA who will negotiate with your creditors, and the No Result Refund Policy.
- 2 The financial coach asks if you want to be a client of OVLG after clearing all your doubts regarding how to clear payday loan debts.
- 3 The CRA collects all the information from you including your name, name of the lender, date on which the loan originated, loan term, mode of payment, the amount you have paid till date, the outstanding balance, payment you made till date.
- 4 The CRA will analyze your payday loan debt problems minutely. They will check if your loans are legal.
- 5 If your loans are legal, then the CRA will determine the maximum interest you need to pay.
- 6 If the loans are legal, then the CRA (Customer Relationship Associate) will determine the maximum interest amount, which you need to pay, and if the loans are illegal, the CRA will ask you to pay only the principal amount. Get more information on payday loan assistance
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5 Lifestyle changes for getting out of payday loan debt
- Create a monthly budget depending on your financial situation. Cut expenses where you can like shopping and restaurants.
- Downsize to just one vehicle or smaller home and free up some cash.
- Use your free time to make more money and clear your payday loan debts quickly.
- Downsize your social life if you end up spending more every month.
- Get a roommate since this would help you share your household expenses and free up cash to pay off your payday loan debts.
The best payday loan debt advice for you
The best payday loan debt advice for anyone is to avoid fast cash as much as possible. If you need money, then look for alternative sources of lending like:
- Friends and family.
- Credit union.
- Banks who give out personal loans.
Advices
Can you go to jail due to legal or illegal payday loans?
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 payday loan debt 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 for getting out of payday loan debt.
- 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.
Proposed rules
4 Tips before you get assistance with payday loans online
If you want to go for the payday loan consolidation online option, then check
- 1 If the company has a valid physical address
- 2 If the company has good online reviews
- 3 If the company has budget-friendly fee structure
- 4Check out the state payday loan laws carefully
How to choose the best debt consolidation company for payday loans
- Type the phrase 'payday loan debt consolidation company' in Google.
- Go to the official website of the company.
- Check out the review section and the fee structure.
- Decide if you want to take payday loan debt assistance from this company.
How to pay off payday loans in installments
Payday loans are short-term loans that you need to pay off with your next month’s paycheck. You have to pay off the loans in 2-3 weeks time. Most people refinance their loans. But sometimes, even the most responsible borrowers face a situation where they can’t pay back on the due day.
What is the solution to this problem? If you can’t pay off your dues on time, then there is no immediate worry for you. You won’t get debt collection calls. But your outstanding balance would increase gigantically due to the high-interest rate.
Extended repayment plan (EPP) gives you a relief in this situation. It helps you pay off payday loans in 4 equal installments without added fees and interests.
If the payday loan company is a member of the CFSA (Community Financial Services Association of America), they can’t compel you to repay loans. They can’t threaten you to make payments instantly. Rather, they should give you time till the next four paydays to payback your lenders. They can’t charge you additional fees for this.
If you have borrowed a loan from a CFSA member, then you can ask for the Extended Payment Plan. After you submit your application, you’ll get several weeks time to pay off loans. You’ll get a new statement where you get a modified loan agreement. You have to pay off payday loans in 4 equal payments, spread out over the next four paydays. You won’t be charged extra new fees and interests for the delay.
You can make payments in cash or you can opt for the ACH debit. It’s up to you. But whatever your decision is, you need to inform the lender in advance. Most lenders won’t allow you to change the payment mode after you have signed the new agreement.
Check out the website of the payday loan company carefully. Find out if there is a CFSA logo on their website. If the company has a physical address, then it’s better to visit the office personally. A blue oval logo should be displayed in their office.
If the CFSA member agency doesn’t agree to give you an Extended Payment Plan, you can call 888-572-9329 between 9 and 5 Eastern time. This is the CFSA hotline number. You can also register a complaint at the CFSA website.
You can apply for the EPP only once in a year with each payday lender. That’s all. Plus, check out the state payday loan laws since they vary from state to state. You should always follow the state law.
Also, remember that you can’t borrow another payday loan till you have paid off the entire due amount in full.
The consequence can be disastrous. You can be charged an Extended Payment Plan fee and other charges. The lender can increase payment on the outstanding balance. So always try to pay off the loan as per the new payment plan.
Video Transcript: Payday Loan Consolidation: How it helps you to pay off debt
Are you paying high-interest on payday loans? Would you like to get rid of your debts and save money? If so, then payday loan consolidation is exactly what you need.
The first thing to do is to find a trustworthy consolidation company and if it’s a law firm, that’s really good.
Next, you are going to want to attend a session with a debt counselor and decide if you want to join a payday loan consolidation program.
You will need to share important details with your counselor. Details such as:
- 1. Name of your state
- 2. The name of the payday loan company
- 3. When you took out the loan
- 4. The principal amount, fees and interest rates
- 5. Payment method
- 6. The amount paid till date
- 7. And, the current amount claimed by the lender
Afterward, the company will ask its attorney to check if the lender is licensed in your state.
Now, if the loan is illegal, the consolidation company will arrange it so that you only have to pay the principal amount.
And, if it is legal, the company will negotiate with the lenders to reduce interest rates and to arrange an affordable repayment plan for you.
