It is a common to apply for a payday loan when you have some urgent needs or outstanding bills. But when you get your paycheck you end up getting another loan because again you don’t have enough money after paying the previous loan. As the cycle continues, you will surely end up having multiple payday loans and debts, of course. So, if you want to escape the payday loan trap you have to check for options for debt consolidation. This method can help you manage your bills and avoid late payments.
Consolidating payday loans does not free you from your obligations to your creditors. However, it is an option wherein you can merge all your payday loan debts into just one account so you will only have to deal with one payment each month to pay for your debts. There are several options to consolidate and pay your payday loan debts.
Hire an agency and or apply for a consolidation loan – This does not mean that you have to literally file for a loan. This option will involve hiring a debt relief agency that will help you consolidate your balances and talk to your creditors to reduce your debts through waiving penalty charges or lowering the interest rates. Their services are not free but their efforts to lower your debts can even save you more money. You have to deposit the payment to your agency and then the company will then disburse it to your creditors.
The other option that you can do is to get a consolidation loan or personal loan so that you can pay your creditors in full. However, getting a loan may not be all that advantageous because your credit score is still taken into account. There may be some agencies that will approve your loan but the interest rate can be high. If you prefer this, just make sure that you request for a longer payment term to avoid defaults in your payment.
Get a credit card cash advance – Although many will disagree on this approach, cash advance from your credit cards still have a lower interest rate than what payday loan imposes. Simply put cash advance is lesser evil than getting another payday loan. However, you still have to verify how much credit is left in your account. Never max out your limit. If you think there is not enough limit to pay for your debts then use other option.
File for a home equity loan – After consolidating our payday debts, you may apply for a home equity loan and then request for a more manageable payment term. But be careful because since this is a secured loan and your house is your collateral, see to it that you never miss paying your loan or else you will lose your home.
These options for debt consolidation must be well-thought about because each has pros and cons. Therefore, making a wrong choice may lead to further financial troubles.