Payday loans are short term loans which are normally paid back within a few weeks. The tenure of a payday loan is normally 30 days or less. Payday loans normally go up to amounts of around $1000.
The repayment of payday loans is normally done via a single payment. The lender usually takes a post-dated check from the borrower. The amount on the check reflects the principal and the loan fee. The lender may also ask the bank of the borrower to provide it with the right to deduct this check amount if the borrower does not make the repayment on time.
In order to avail of a payday loan, the borrower needs a working checking account and source of income.
Payday loans come with very high fees. If for some reason, you are unable to repay back your payday loan on time, then at the end of the term, your payda loan rolls over and another fee gets added existing outstanding balance.
This rollover system is prevalent only in certain states in the United States. But the fees get added existing balance are quite significant. They can amount to the equivalent of 700% APR. Compare that fee with credit cards, which offer credit at 30-35% APR.
Hence, payday loans can be 10 to 20 times more expensive than credit card debt. Borrowers who have no other source of cash end up going for expensive debt like payday loans because they have no other option.
If you are someone who is already facing a cash crunch, then you know how fast the fees and expenses can add up. Things can go out of control and your financial difficulties can become worse with increasing expenses.
Payday loan consolidation merges of all your payday loans into one monthly payment. Afterwards, money is paid by the debtor directly to the payday loan consolidation company who subsequently pays the lenders you owe money to.
The main advantage of payday loan consolidation is that the whole sum that you owe including your monthly payments are drastically reduced.
Debt consolidation is a process in which the borrower combines multiple loans into a single loan. By combining various payday loans into one personal loan, the borrower simplifies his/her life by making one monthly payment instead of multiple payments. By combining the payday loans, the borrower can also reduce the interest cost.
A debt consolidation loan involves the conversion of unsecured debt into secured debt. Secured debt means that the borrower has to provide some form of collateral. The collateral could be a house or some personal asset.
Hence, opting for debt consolidation is actually more severe in the event that the borrower cannot repay back the loan. At stake are the borrower’s house (or personal asset which has been pledged) and his/her family’s well-being.
In the fear of the lender taking over the borrower’s assets, some borrowers tend to max out their credit cards in order to repay the payday loan. However, such borrowers end up paying extremely high-interest costs and even risk bankruptcy.
Payday loan consolidation can help reduce a payday loan borrower’s monthly installments, and in some cases, the total amount owed. Payday loan consolidation works by bringing together multiple payday loans of a borrower and combining them into one loan.
Payday loan consolidation simplifies the life of the borrower as he/she has to only make one monthly payment to the loan consolidation company. That company then pays out the relevant installments to each individual payday loan company from whom the borrower had originally borrowed.
Payday loan consolidation will not have any negative effect on a borrower’s credit score. Payday loan consolidation companies do not share information with credit bureaus. Hence, the debt management program of the borrower will not show up his/her credit report.
Payday loan consolidation can, in fact, improve your credit score in the long run if you make your repayments on time and pay off your loan. So, there is potential upside to consolidating payday loans and getting out of the payday loan cycle.
When you consolidate your payday loans into a single loan, you have to make your payments to the payday loan consolidation company that you are working with. That company will then make individual payments to your original payday loan lenders.
When you research payday loan consolidation companies to work with, make sure that you find companies that will pass on your payments to individual lenders immediately. Some companies tend to hold on to your payment money before ultimately making the payments to individual lenders. Make sure that you know what the consolidation company is committing to with regards to making payments to your original payday lenders.
It is very much possible to negotiate with your payday lenders and try to get them to give you some relief through the reduction of the outstanding amount owed or through the reduction in the interest rate on your existing payday loans. The payday loan consolidation company will reach out to your payday loan lenders and try to work out some solution. The quantum of relief will depend on the agreement that the consolidation company reaches with your lenders.
If the amount that you save through debt consolidation is up to $600, then that won’t be regarded as income. However, if the loan amount that you save exceeds $600, then the IRS will view amounts in excess of that threshold as income and you will be liable to pay tax on such income.
Is it possible for a lender to sue me after I enroll in a debt consolidation program and begin making repayments through that program?
Technically, a lender can sue you before or after you enroll in debt management plans. However, if you are making repayments and if the lender is receiving payments, then the incentive to file a lawsuit will go down. Lawsuits cost a lot of money and the lender will be somewhat reluctant to pursue that path, especially since you (the borrower) are making regular payments.
Bankruptcy is generally considered to be a very severe event. The record of a bankruptcy filing remains on your credit report for seven to ten years. Post the bankruptcy filing, the borrower will be compelled to comply with a strict budget for three to five years. Plus, in the event of bankruptcy, any attempt to avail of a loan may require the borrower to request authorization from the court.
Debt consolidation is a relatively less severe option. With consolidation, you can simplify your monthly payments into one single payment and you may also have a shot at getting your interest rate reduced. Your outstanding loan amount may also go down and your credit scores could improve in the long-run if you make timely repayments.
If you are unable to make your payments via the payday loan consolidation program, then you have the option of canceling the program and exiting it at any time. However, please note that if you cancel the consolidation program, then you will be responsible to make individual repayments to each of your payday lenders.
It is possible for a lender to refuse the option of working with the payday loan consolidation company and instead demand direct dealing with you (the borrower). However, by refusing to work with the consolidation company, the lender is also complicating efforts to receive loan repayments.
The only other option for the lender is to go to court with a lawsuit and lawsuits are expensive. Lawsuits also take a lot of time. The lender is, therefore, likely to co-operate and work with the consolidation company rather than refuse to do so.
Yes, payday loan consolidation can stop wage garnishment because the consolidation company will negotiate a settlement with the lender. Such a settlement will not involve any wage garnishment.
GreendayOnline has a simple and transparent fee structure. Our fees are aligned with the results that we can bring in for you:
As soon as you enroll in our payday loan consolidation program we send out cease and desist letters to all of your lenders.
We inform the lenders that from now on, we are going to be the primary contact for the outstanding payday debt. We prioritize the stoppage of harassing phone calls and work on pushing lender away from your bank account.
This is the beginning of the end regarding your debt problems. Your financial situation should improve fast with our financial services.
If you enroll in our program, then we try to negotiate the best possible rates and debt amount for you. The final quantum of reduction in interest rates and outstanding payday loan amounts depends on a case-to-case basis. However, to get some idea of what we are capable of, please have a look at our customer satisfaction page (insert link) and you will learn how we have helped customers save thousands of dollars through our payday loan consolidation services.
The duration of the program depends on the amount of debt that you have to pay and the amount which you can repay each month. However, on average, our consolidation programs can run for any duration between 6 months and 18 months. So, depending on your particular situation, you can look forward to becoming debt-free in a few months.
Once you begin the payday loan consolidation program, you only have to pay us the monthly payments. We will then repay each of your lenders as per the terms of the loan consolidation program which we have agreed with you.
We need your debt amount to be at least $600 in order for you to be eligible to work with us.
After enrolling in your consolidation program, how much will my monthly payment go down by?
While the reduction in the monthly payment will vary on a case-to-case basis, you can be almost certain that your monthly payment will go down quite significantly. You could very well be looking at the possibility of paying something like 10% to 30% of your original monthly payment amount. So, we are talking a fraction of what you were paying earlier.
We can work with the consolidation and repayment of payday debt.
What should I do if my lender still calls me even after I enroll in your consolidation program?
As pointed out in another question above, we work with lenders and inform them that we are the direct point of contact for the outstanding debt. However, in the event that the lender still keeps calling you, and in the event that the lender refuses to deal with anyone else but you, you have no option but to speak with the lender.
Many a times, such lenders insist on directly dealing with the borrower. We try to negotiate with such lenders, but in rare cases, things do not work out. In such cases, the lender will probably offer you some options for repaying the loan which is owed by you.
GreendayOnline can begin the consolidation process for you right away. In fact, it can be done today itself! Simply call us or fill out a request form (insert link to form) online and we will be with you right away.
Yes, you can call GreendayOnline to know the current status of your account. We will also be sending you monthly statements which will give you the loan repayment details.
We do not require you to close your checking account. Our consolidation program does not have such requirements. However, you can close your account if you want to. It is completely your call.
Simply head over to our website and fill out a request form (insert link to form). It only takes a few minutes and we will ask you for some basic information. Once you submit the information, our experts will evaluate the data and then get in touch with you to work out a debt relief plan. You can also give us a call and ask for assistance.