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Payday Loan Consolidation Options

Getting a loan is one viable way to deal with your debt. But if you’ve already exhausted your credit availability, you might think you’re out of options. You’re not. Consider a payday consolidation, which typically is for a smaller sum, though you can group them from multiple lenders to pay off a more substantial balance.

Having bad credit isn’t the end of the world, but it does limit your options for getting loans. That’s where payday loans come in. Of course, if your credit is in reasonable shape, you might qualify for a general personal loan or an installment loan to pay outstanding debts with lower interest rates and more manageable installments.

Debts are an unfortunate part of life for most people around the world. Whether your debt results from credit cards, medical bills, or something else, there is always a solution that can get you back to financial stability. Let’s look at some things to consider with payday loans.

Loans for Bad Credit

When you get a loan, you’re able to choose the right repayment period to fit your income. While payday loans may require more frequent payments than some other options, they can help you get rid of your outstanding debts by letting you focus on one sum to pay off piece-by-piece over time.

When you have significant debt – more than $20,000 – it likely will be challenging to secure one loan to pay off the total amount if your credit score is weak. Instead, try splitting the debt into two. Look for two trustworthy lenders to provide two loans that total your overall debt.

Deciding Whether or Not to go With Direct Lenders

If you need a payday loan to pay your debts, you will likely need to work with a connector rather than a direct lender. Typically, direct lenders are considered less reliable because they can’t provide loans in every state consistently. While this doesn’t completely rule out direct lenders, you should always explore your options to find the lowest interest rate from a reputable lender.

Working Your Way Back

Many lenders will not be able to loan you the amount of money you’re looking for if you need more than $20,000. What you can do is take the amount they offer to get started on paying down your debt, while simultaneously working to rebuild your credit health.

Some of the ways to build your credit include:

  • Making small payments to clear out balances.
  • Transferring high-interest balances to cards with more reasonable repayment terms.
  • Making your payments on time.
  • Paying more than the minimum monthly payment.
  • Working with your lender to get your rate lowered so you can pay your debt off faster.

By waiting it out and boosting your credit score and finances, you will be in a better position to apply for a loan again down the line. With better credit come better loans with better interest rates. At any given time, look for the loans that have the lowest interest rate for your particular credit-score situation.

Determining How Much Money You Can Get

The loan amount for which you will qualify is a direct reflection of your unique circumstances. Typically, you can owe as much as 200 percent of your annual income – before taxes and excluding mortgage debt. So, if you make $50,000 a year, you may qualify for debt totaling as much as $100,000, in addition to your mortgage.

Keep in mind, though, that these numbers can fluctuate wildly, so there’s no simple formula to identify precisely what you can get, but the 200-percent comparison is a start. If you owe tens of thousands of dollars, then you might need to look into getting loans from multiple sources. You want to choose the lenders that offer you the lowest interest rates so you can make headway with paying down your outstanding debt. The higher your debt total, the higher your interest rates will be.

A Look at Interest Rates

Interest rates tend to vary from lender to lender. One organization might offer you a 5-percent rate, while another charges you 25 percent. Keep in mind that the average personal interest rate is 10.6 percent on a 24-month loan, as of May 2019. The lower your credit score, the higher your interest rate will be.

Any time you apply for a loan, it’s crucial that you carefully research each lender and review the fine print on all documents. Some terms will boost interest rates if you don’t meet specific financial criteria, while others offer a lower interest rate only for an introductory period. Budget all of your expenses and know the amount you can afford to pay each month before you apply for a loan. You don’t bite off more than you can chew and end up making things worse.

Remember, the goal is to take back control of your finances and pay down excessive debt so you can live responsibly and with less stress. Stay smart and focused, and that goal will become your reality!

Writer

Vivaan Marsh is a professional writer, editor and an expert in personal finance. Her career as a professional writer stretch for over 11 years. One of her passions in life is to help everyday families with there financial problems, making their life a bit easier and explaining complicated topics in an easy way. Read more >

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