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What you need to know about payday loan consolidation programs
Payday loan debts enable an individual to cater for the expenses that they have. This amount is expected to be paid with the next salary. However, due to unexpected circumstances, one may not be able to pay off the loan and end up indebted to the loaners. In such instances, a payday loan consolidation program would assist the borrower to come out of debt.
The term ‘consolidation’ refers to the process of using a program to lump all your payments into one monthly payment. If you have taken up a payday loan and would like to pay off the amount with ease, this article highlights what you need to know about payday loan consolidation programs. They are convenient for you as you get to pay your lenders. However, given the rise in the number of scams, you need to do an in-depth research on the consolidation companies that you are considering. Get to know if they are authentic and if they are reliable and efficient in delivering their services. This will avoid you getting more problems yet you already need to get out of the debt. A trustworthy consolidator will not hold your money in trust.
The consolidating company undertakes the following activities:
Taking over of the payday loan debt
The consolidation company takes up responsibility for the debt. They deal directly with your lenders and will advance the payments to them. They also send a cease and desist order to the lenders.
Negotiation of a repayment plans with the lenders
The loan consolidation company also negotiates with the lenders so as to settle with a favorable repayment plan. This also includes the halting of all interest and fees that they may charge you. The repayment plan will offer you better terms by lowering the amount of the monthly payments as well as lengthening the period during which you should complete paying off the loan. Depending on the consolidation company that you use, the duration may range between 6 to 18 months. They set a maximum period for you to complete paying off the loan.
Issuing of documentation to your lender’s
For a proper follow-up, reference and to convert the negotiations into written form, the loan consolidation company then documents the information. These documents are issued to your lenders as soon as possible. From this point onwards, all that you have to do is to send your money to the loan consolidation company. They will then forward your payment to the lenders in the amounts that were agreed, as stated in the negotiations. As earlier stated, a genuine consolidator will not hold your money in trust, but advances the amount to the lenders so as to clear off your loan.
Loan consolidation programs are a good method of getting out of debt. Not only do they offer you favorable terms of loan repayment, they also relieve you of all the hassle associated with sending payments to all lenders as well as possibly reducing the amount to be paid by halting the charging of fees and interest.