What Is Payday Loan Consolidation?

Payday loan consolidation from DimeBucks allows borrowers to consolidate all of their existing payday loans into one single loan. It will enable them to save money on fees and interest rates. However, they must be careful when choosing a lender because some lenders charge high fees and interest rates.

How Does Payday Loan Consolidation Work?

Consolidating your payday loans can be done in two ways: You can either pay off the entire balance at once or make smaller payments over time. The first option will require that you have enough cash to cover the total amount owed. If not, then it’s best to choose the second option. In this case, you would need to make small monthly payments until the total balance has been paid off.

What Are Some Things To Consider When Choosing A Lender For Payday Loan Consolidation Services?

When looking for a lender to help with payday loan consolidation services, there are several things that you should consider.

First, look for a company that offers low-interest rates. This will help you save money that would be paid when using a company that provides high-interest rates. Second, find out if the company charges any fees for its service. Various companies have fees they charge for their services besides the interest rates. Ensure to ask about this before applying. Finally, check whether the company guarantees that the borrower will be able to repay the loan.

What Is the Difference Between Payday Loan Consolidation and Debt Settlement?

If you choose between payday loan consolidation and debt settlement, consolidation can be better. According to the National Federation for Credit Counseling, debt settlement can represent a “much greater” danger than debt consolidation. 

Why? Because debt settlement organizations demand high costs and the process can harm your credit, you should avoid it.

Debt settlement businesses negotiate on your behalf with your creditors to pay less than you owe. However, there is no assurance that debt settlement will work, and you may be worse off than before. 

Debt settlement companies frequently refer to their services as “debt consolidation,” although the two are not synonymous. Debt settlement entails paying less than you owe on a debt; debt consolidation entails paying down your other loans as agreed and making one monthly “consolidated” loan payment until the new, lower-interest loan is paid off.

Does Payday Loan Consolidation Hurt My Credit?

A payday loan does not usually appear on your credit report, but a payday consolidation loan does. The consolidation loan can either help or hinder your credit based on how you handle it.

You should expect a tiny but temporary drop in your credit score when you first apply for a payday consolidation loan. The lender’s request to see your credit report or score is recorded as a “hard inquiry” on your credit report. Because the payday consolidation loan reduces the average age of your accounts, it may lower your credit score.

Your scores, on the other hand, may improve over time. Making timely payments on the consolidation loan, maintaining low balances on other credit accounts, and avoiding frivolous credit applications can all contribute to this rise. You can save money and make your debt payments more manageable by merging your payday loans and releasing yourself from their high-interest debt.

Alternatives to payday loan consolidation

Consult a legal aid attorney.

Payday loans operate in a legally murky area, but certain attorneys will work with you to battle the payday lenders and minimize your debt. A knowledgeable attorney can explain your debt settlement options and the best method to resolve your payday loan situation.

File for bankruptcy under Chapter 7

This should only be used as a last resort. Before pursuing this path, consult an attorney. Chapter 7 bankruptcy is a legal procedure that permits you to have some or all of your debts discharged. It necessitates adhering to a stringent legal process and might end in asset seizures or wage garnishment. 

It almost certainly involves court appearances. Bankruptcy is governed by state law. Thus your options vary by state. Every year, over 800,000 Americans file for bankruptcy. Bankruptcy is usually reported to the credit bureaus; thus, it will harm your credit score. As a result, only utilize this option as a last resort.

Consult a credit counselor for assistance.

Some people have dedicated their entire careers to fighting payday loan lenders and assisting consumers in becoming debt-free. Credit counseling services are what they’re called. 

Credit counseling firms specialize in a wide range of personal finance topics, including credit card debt, mortgages, student loans, unsecured loans, etc. 

However, one of their primary areas of interest is payday loans and assisting people in breaking free from the fatal payday loan cycle. Be careful to check if your credit counselor has any experience with payday loan consolidation. They can make a significant difference in your financial circumstances.

Request a longer repayment period.

Both storefront and online cash advance businesses know that borrowers may not repay them in full. That is why the rate of interest is so high. So it’s not a bad idea to call your lender and request a repayment plan with lower interest rates. They’d rather have half of their money than none at all, in their opinion.

What Are The Benefits of DimeBucks Payday Loan Consolidation?

An DimeBucks payday loan consolidation plan can certainly help you if you’ve fallen into the payday loan trap.

Here are some of the advantages of debt consolidation.

Flexible repayment terms

Unlike most payday loans, a personal loan from DimeBucks for debt consolidation will provide you some freedom in terms of the monthly payment amount, the loan’s term, and other factors. Most payday loan borrowers will realize that a debt management plan is pretty inexpensive compared to payday debt.

Fixed monthly payments

Most people are unaware of what happens if they default on a payday loan, which is unsurprising given that the tiny print is so complex that even some of the world’s greatest lawyers struggle to understand it. Late fines, hefty interest rates, and rollover choices are nearly impossible to comprehend.

A good credit consolidator will arrange everything into a much easier plan to grasp when merging your loans into one. They will provide you with a lot more easy monthly payment plans in which you will only have to pay a certain sum each month.

Reduced interest rates

The interest rates on payday loans can be costly. These loans frequently carry APRs of 300-400 percent! With a typical credit card APR of 20-30%, it’s simple to see why so many people fall into this trap.

When you employ a credit consolidation agency, your interest rate is often reduced by 6-30 percent. Over the life of your loan, you’ll save hundreds or perhaps thousands of dollars.

Unlike payday loans, which often require repayment within two to four weeks, personal loans have a range of repayment durations ranging from 12 to 84 months. You can select the term that best suits your budget.

Can I Work With a Lender Instead of a Consolidation Company?

A lender may refuse to cooperate with a payday loan consolidation firm and instead insist on dealing directly with you (the borrower). However, the lender risks hindering efforts to recover debt repayments by refusing to deal with the consolidation business.

The lender’s only other option is to file a case in court, and lawsuits are costly. Suits take a long time as well. As a result, the lender is more inclined to cooperate rather than refuse to deal with the consolidation company.

 What Kinds of Debt Can Be Consolidated?

When it comes to what can and can’t be merged utilizing a debt management program, debt is divided into secured and unsecured.

Secured debts are those for which you receive something in exchange for your payment. So you receive a house and a car for your mortgage and auto loan. On the other hand, unsecured debt has nothing attached to it that can be taken away if you don’t pay. 

Your credit card business grants a credit line in good faith based on your credit score because you borrow the money with no collateral. If you don’t pay back what you owe, the creditor won’t be able to seize any of your property to satisfy the bill. Instead, they must file a civil lawsuit against you.

Any debt that isn’t secured by collateral can usually be merged. We may be able to work with the debt collector to have the account included in your debt management program, even if you haven’t kept up with the payments and the account has been charged off by the original creditor and sent to collections.

Luke Pitt