What is Legitimate Payday Loan Consolidation?

Payday Loan Help
What is Legitimate Payday Loan Consolidation?
What is Legitimate Payday Loan Consolidation?

The truth is that once you start getting used to payday loans, it can be difficult for you to get out of it, especially when you have this tendency to rely on them when you run out of cash. Many people fall under this trap which makes it difficult for them to pay back. These kind of loan is quite costly since interest rates charged or quiet high. Now what happens is when you are already having a hard time paying back your loans, you fall in a debt trap.

What are the common problems people face with payday loans?

Payday loans are actually expensive.
One of the main reasons why people take out payday loan is because they want to bridge the gap of their current financial needs. In cases where you need to pay for something and don’t have enough cash on hand, the easiest way out is to get a payday loan. This is because this kind of loan is fast and quick to approve. If you have poor credit score, you don’t have to worry as to whether you’re going to be approved since payday loan lenders or not so strict when it comes to credit standing.

Payday loans are structured in a way that it makes it difficult to pay.

Payday loans may be quick to get. But if you are going to look at the different payday loans, you will notice one thing. This type of loan is structured in a way that it is not easy to pay back. When you get a payday loan,you will have to pay whenever you get your paycheck. The thing is that if you are already struggling to make both ends meets, it makes your current financial situation much more complicated.

Most people are tempted to get more payday loans, one after the other.

Chances are once you start getting a payday loan, you think it is okay to get one after the other. This will out you in a debt cycle. Simply because it is easy to get a payday loan does not mean that if you are having a hard time paying your payday loan, you will get another to pay back the other.

The good news is that there are still ways for you to solve the problem. One of which is to find a legitimate payday loan consolidation company.

How do you get out of debt with payday consolidation?

In a payday loan consolidation, a financial services company helps you negotiate your outstanding your payday loans. With a debt consolidation company, you get to manage your debts as they help you make an account where you can make monthly payments in order to settle your loans. They negotiate on your behalf so it is much easier for you to manage your outstanding loans. Basically, their aim is for you to lower your monthly payments so you will be able to payback your payday loan.

Things to Consider

When looking for a payday loan consolidation company, it is very essential that you take the time in gathering information about these companies. Not all of them are legitimate and in order for you to avoid being scammed and wasting time, here are the things that you have to look at when searching for a payday loan consolidation company.

  • Make sure that the company is licensed and registered.
  • Look at the profile of the company. The profile information along with the contact details and other pertinent information that clients want to know about the financial services that they offer should be there.
  • Read reviews online. It actually helps if you read the comments and feedback from people who have already tried their services.
  • The company should offer a personal financial consultation. This allows you to ask the questions that you need.
  • When a company asks you for an upfront payment, say no. Clearly, this is not a legitimate company.
  • Another thing is that there have been a lot of people who got scammed because the debt consolidation company promised them that they can totally eliminate debts.
  • If they don’t want to answer your questions if you have queries, it is a red flag.

Debt consolidation companies are there to help you negotiate and manage your debts in such a way that it is a whole easier for you to pay back your outstanding loans. They cannot eliminate all of your debts unless your file for bankruptcy. So whoever promises you that they can help you get out of your payday loans that easy is a scam.

Paying back your outstanding loans and getting out of the debt trap is never easy. You may have to come up with different strategies that require you to look for other sources of income. Getting a debt consolidation company can significantly help you in so many ways. Then again at the end of the day, you have to tackle the main cause of the problem. Manage your finances wisely and look for additional sources of income.

Getting Out Of A Payday Loan

Payday Loan Relief

Stretchy Loans

When you have a lot of financial responsibilities, one of the easiest ways out is to seek credit. There is nothing wrong with getting a loan for as long as you are able to pay it on time. There are instances where your finances and credit get mismanaged. In that case, the person has a hard time paying back the loans. It gets more difficult, especially when you are paying a payday loan.

The interest rates are high and any delay in payment can make it more difficult for you to repay the whole loan. Getting out of a payday loan is never easy but there are definitely ways that you can use to improve your finances. It takes time and sacrifice on your part.

Let’s face it. The fact is that when you are having a hard time paying back the loan, it can actually drag you into a trap, especially when it comes to payday loans which are considered to be high cost loans. The good news is that there are different ways for you to repay your debt. These are some of the strategies that you can use in order to pay back your loan:

  • Pay off the loan using your savings
    For many people, using their savings to pay back a loan is not the best way to do it. After all, you don’t want to touch the money that you have been saving for a long time. But there are instances wherein when you weigh in the benefits and the cost of using your savings to pay off the loan, the benefits outweigh the costs.

Instead of you having to pay for expensive interest rates and other costs related to your inability to pay back the payday loan, it is much better that you use some of your money in your savings to pay back your loan. Then again, this will only apply for people who have savings. If you have some cash in your account, you can use some of this money in order to pay your loan and in that way you can focus on earning money and saving for the next time. Use that and once you are able to pay back your loan, you can focus on other important things like earning additional income and increasing your savings.

  • Ask for extended repayment
    If you are really having a hard time paying back your loans, one of the options that you might try to use is to talk to your lender and ask if there are options available. You may want to request your lender to extend the repayment. There are some lenders who might offer you an extended payment option as a form of relief.

 

You should prepare yourself that not all that lenders are flexible when it comes to the terms of the payday loans that they provide. If you ask them and they say yes, they allow you to have an extended repayment, you get to have more time to prepare for the cash that you need in order to pay back the loan.

In having an extended repayment plan, it does not mean that you’re able to eliminate all of your financial responsibilities. It just means that you have much more time to pay back the loan so you don’t have to worry about having to pay for a lot of charges.

  • Talk to a credit counselor
    When it comes to eliminating debt, every person faces different circumstances. There are instances wherein if you only have one payday loan and you have a stretchy source of income, it is much easier for you to repay back the loan. For people who are heavily indebted, it gets more challenging, especially since there are many things that you have to consider. One of the best ways is for you to seek the professional help of a credit counselor. You can actually look for a foundation.

 

These foundations aim to provide information and at the same time available options to help those who are struggling to get their financial freedom. If you feel like you don’t have any more option left, it is always in your best interest to ask for help from people who know the different strategies that you can use in order to get out of your payday loan.

  • Apply for another loan
    This option is not the most popular option, especially if you are already having troubles with your current loans. You should only get another loan if you only have to pay back one loan and it is much costlier for you to pay for the late fees instead of getting a new loan. If you come to a point where you have already a lot of loans that you need to pay back, the most logical thing to do is not to get another loan that you might end up having a hard time paying back again.
  • Find ways to earn extra cash
    People who have enough money or cash does not need a loan unless it is really needed. Again, the trouble in paying back your payday loan stem from the fact that you are struggling with your finances. If you want to really get out of payday loans, you need to look at the root causes of the problem. One of the ways for you to avoid having to apply for a payday loan is for you to strengthen your finances. You should not just rely on one income. There are definitely lots of ways for you to have better finances, good credit standing and more money in your bank account that you can use in cases of emergency.

 

Here are some tips to follow:

  • Do part-time jobs
    Working full-time does not necessarily mean that you can pay for all of your expenses. When the need arises, it is hard to just rely on one source of income. That is why there are a lot of people who venture in different kinds of jobs. Some may even have part-time jobs or even three jobs just to be able to save money and to have the funds that they need in cases when they needed the most. By having a spare income, you don’t have to worry about financing certain expenses because you know that you have at least some cash that you can use for contingency.
  • Cut down on expenses
    One of the most common problems that people face nowadays is that they tend to spend more than what they can actually afford. At first, this might appear as if it is not going to cause any long-term problems. But come to think of it, if you are having a lot of expenses that are not necessary or you have luxuries that you cannot afford, the tendency is for you to find ways to finance these expenses.
    Once you go beyond the limits of your income, you resort to other means like for instance applying for loans until such a time that you are already in a debt trap. Whether you want to get rid of your payday loan or you simply want to manage your finances, it is very crucial that you know how to spend your money wisely.
    Check your expenses and make sure that you only buy the things that you really need. There’s nothing wrong and spending on items that are luxurious and can give you happiness. What is wrong and when you tend overdo it and you know that you cannot afford it. Just sped for the things that you need.
    Work overtime.
  • Another way for you to increase your income is to actually work overtime. If you feel like there are so many words that you need to finish, you can actually work all the time which gives you the chance to have extra cash on your paycheck. But having the opportunity to work additional hours, you get paid more and this is a very easy method for you to augment your income and at the same time help in paying off your payday loan.
  • Do a garage sale
    When you are looking for ways to pay off a loan, you need to be creative and at the same time, resourceful. You can actually do a garage sale by putting out all of the things that the saying are no longer needed. Not only do you get the chance to clean your stuff and to clear out all of this unnecessary things, but you can also actually make money out of it. Although the amount that you can raise is not that big especially if you don’t have a lot of things to sell, it can actually give you at least some amount to pay off your existing payday loan.

Take the time checking for things, personal items, furniture, and other belongings that you want to get rid of. Once you have finally identified these things, you can make a list and start doing the garage sale. For all you know, you can actually raise a good amount of money especially if you have good items that people will want to buy.

  • Start a side business
    Another possible way is for you to start a side business. Know that it does not mean that you really have to find a big business because it also means that you will need to get another loan to capitalize your business. But if you are going to improve and have a look at the different prospects and ideas where you can spend your energy and make a business out of them, you can actually find that there are many businesses that require small capital.
    Things may get really challenging at the beginning, especially when you are doing your full-time work and don’t have enough time to manage your side business. But as you spend more effort and learn more about your business, you will notice that you will get additional income once you generate sales and profit.
    You may also ask your family and friends if they want to have business partnerships with you. In that way, you don’t have to raise the whole amount of capital. For some people, what they do is they make use of their knowledge or even their personal hobby into a business. This makes you enjoy what you like doing and at the same time generate extra cash to get out of your payday loan. Who knows your business might expand and become big in the future. If this happens, then your problem is solved.
  • Be frugal
    When you ask rich people, you often notice that many of them share the same personal habits when it comes to spending their money. You will see that many really rich people don’t even spend on the things that ordinary people want to buy. Being frugal when it comes to spending is the very first step for you to avoid incurring debt and will help you avoid having to get a loan.
    For example, you may want to use coupons and deals whenever you shop for grocery items and other personal stuff. Many people may say that these coupons do not have that much effect especially since the discount is not that big. But when you actually calculate the total cost over the long. As time passes by, you can see that the discount accumulates and you can actually get a good deal.
  • Make a budget
    This is very much related to the previous strategies and related to managing your finances. If you are frugal, one thing that you should know and you should do is to create a weekly or a monthly budget whichever is much easier and more convenient for you. The reason why you need to make a budget is for you to be able to track down your income versus your expenses.
    When you have a budget, you can see where you are spending your money and how much you are spending on a particular type of expense. By seeing your budget, you know if you are actually overspending on things that you think are not necessary. Even if let’s say that you have a payday loan and you have other laws that you need to pay back, it’s still very important that you have a budget.
    This will ensure that you will no longer repeat the same mistakes that you did in the previous time when you were in need of money and you had no choice but to avail a payday loan.
  • Use your vehicle
    With Uber and other car applications, you know how the chance to earn extra cash with your car. This is now becoming a very popular stream of income not just among male drivers but even among female drivers. The nice thing about using your car for Uber is that you get to choose your schedule.
    It means that if you feel like you want to drop off someone in a particular location you can just turn on the app and start driving. If you do this on a regular basis, you will notice that you can actually get a good amount of money. This is a very feasible and less stressful part-time job that you can do to help you escape the cycle of having to about paying back your payday loan.
  • Rent a room in your house
    Rent costs can be quite expensive nowadays. Imagine if you are renting a big flat and there are many rooms and unoccupied, it’s just a waste. So why don’t you rent out the other rooms to get additional cash? This is a very steady stream of income and you don’t have to worry as to whether you will get additional money since the tenant will really pay for the monthly rental. It’s just a matter of being careful and selective when it comes to tenant selection.
  • Consider Debt Consolidation
    Considering debt consolidation has its share of pros and cons. There have been numerous cases were in people experience successful results, there are some people who experienced problems.
    This is one of the reasons why you need to make sure that you know what you are getting into. Before you even finally decide that you want to consolidate your debts, you need to find a reliable company or organization that you can trust and you know can really help you and consolidate your debt into one simple debt for you to avoid paying hefty fees and other costs.

 

Benefits of Loan Consolidation

In consolidating your debts, you can enjoy the following:

First is that it gives you the opportunity to have knowledge about financial management. Debt consolidation is highly recommended for people who have several outstanding loans and sometimes it can be really difficult for you to manage your responsibilities. So if you consolidate your debt, it goes into one account and it’s easier for you to track.

Another benefit that you can get is that you are able to negotiate for lower monthly repayments. Of course, lenders are different when it comes to their repayment plans. However, there are cases where lenders are willing to lower down your monthly repayment in such a way that you are able to pay back your loan.

Good Finance Management Skills

At the end of the day, your goal should not just be focusing on getting out of a payday loan. Your goal is for you to get out of that payday cycle. Once you learn how to manage your finances well, it is easier for you to pay or finance for other expenses.
When you have good financial standing, it also means that you can improve your credit score. Having a better credit score enables you to have access to different loan options. This means that you don’t necessarily have to get a payday loan in the event that you are in need of money.

How to settle payday loans?

Payday Loan Help

When you need money and do not have cash on hand, you can get a loan and one type of loan is payday loan. Also referred to as cash advance loan, it is an unsecured small loan with a short term. It does not matter whether the loan repayment is related to the borrower’s payday or not.

How to settle payday loans?
How to settle payday loans?

Who takes out a payday loan?

For people who need quick cash before their next paychecks; payday loan is the answer to take of care of those unexpected emergencies. Payday lenders rarely check your credit making payday loans very attractive to people with poor credit. In addition, the loan application process is fast and funds are often released quickly after online negotiation.

Who are payday lenders?

Financial firms provide short-term loans to borrowers to be paid back as soon as the client receives his/her next salary. This type of loan appears to carry low interest rates but when you calculated the amount annually, that is very high. Payday loan firms know that they are the only the credit option for people in need of cash although critics consider that these loans place many borrowers in a high-interest debt cycle.

Payday loan requirements

The basic requirements for a payday loan application are similar:

  1. Meet the minimum age requirement in your state (18 years old in most states);
  2. Possess an open active checking account;
  3. Show proof of income; and
  4. Have a valid phone number.

How do payday loans work?

For example, you need to borrow $300 for a hospital bill from a payday lender. But first, you have to fill out a post-dated personal check for $340 (plus $40 for finance fee), payable to the lender. When applying for a payday loan online, you have to enter your complete information. The lender then advances you $300 for a set period, usually 14 days. On the due date, the lender will encash the $340 post-dated check. However, you have to pay additional fees if at the end of the term your debt is not fully paid.

Who uses these types of loans?

Many Americans use payday loans every year according to Pew Charitable Trusts. The fact is that anyone who owns a checking account and has a steady income qualifies for a payday loan. It appears that borrowers who are without credit cards and savings accounts resort to this type of loan. Consequently, payday loans are attractive to people with no credit or credit problems.

The Pew reported that payday borrowers share common characteristics: they are mostly renters with no home of their own; low earning capacity of less than $40,000 a year; and have not finished a college degree. They are often separated or divorced individuals with children and African-American in ethnicity.

According to that same report, the average borrower takes out at least eight loans of $375 and spends $520 on interest alone by the time the initial loan is repaid.

What are its benefits?

Payday loans can be a good tool for the quick and easy borrowing of cash during an emergency if you don’t have other financial options. Payday loans are helpful for people who don’t have credit cards or savings available for an immediate and temporary financial need such as an emergency medical bill, sudden car repair or other one-time expenses. As much as the loans do not require a traditional credit check, they are used by people with financial problems.

Considerations before taking out a payday loan

Before you apply for payday loan, think it over carefully, especially if you have a poor financial capability of paying it back on time. If you’re short of cash this month, think whether you’ll have interest rates and fees to pay for next month. Consider whether getting a loan payable by installment is much better. If you plan for a payday loan, search a lender under the regulation of the Financial Conduct Authority (FCA). Before you go ahead with facilitating a loan, it is very important that you read those fine print carefully and determine if a payday loan will improve your financial situation. Keep in mind that if loan payments are not settled quickly, they become extremely expensive, so be careful.

Understand how payday loans work

Understand well how payday loans work. These loans are only a good alternative if you can guarantee to pay off a loan by the due date because the outcome would be very expensive requiring you to pay high interest rate. Payday loans are classified as short-term borrowing and must be repaid on a specific date, usually within one month or even less.
Payment with interest for a payday loan when not paid back on time. If you cannot afford to pay it back punctually, your best option is to roll over your payday loan. But again this comes with more interest and fees.
Upon taking out a payday loan, you give your lender authority to withdraw the money you owe plus interest from your bank account on the due date, either by a written post-dated check or by signing a certification allowing them to make deductions automatically from your checking account. If your fund is inadequate to pay for your account on the due date, you will add more payments to your lender and the bank.

Consider the effect on your credit score

When deciding whether to take out a payday loan to pay off other debts, think about how it will affect your credit score. If you are unable to settle payday loan, your account will be forwarded to collection that will be disastrous and very bad on your credit report. You can avoid dealing with collections by making monthly payments of your credit card debt.
Credit card debts have an effect on your credit score as well even if you do not default on your credit card payments but carrying a large balance may lower your credit score.

What happens if your payday loan is unpaid?

Like other loans, if you fail to remit monthly payment, it leads to payment of higher fees, stiff penalties, and even legal action. Automatic debit payments are used by most payday loans to take funds directly out of the bank including prepaid account so on top of everything overdraft fees end on top of you. If all of your funds are taken, you have no more cash to pay for your necessities like childcare, food, and utilities. And the worst development is the barrage of calls and threats coming from your debt collectors. These are all unpleasant scenarios; don’t let it happen for there are ways to settle the debt of payday loans.

How to settle payday loan debt

If you are not able to keep up your payday loan debt and cannot meet the monthly dues, you can negotiate for settlement with the lenders of payday loans. Get rid of your debts and settle your payday loan debt by negotiating with them to allow you to pay a smaller amount of the balance you owe. Find the best way to settle payday loan so you can escape from the payday loan trap and stop harassment of collecting agencies and payday loan lenders.
You have to coordinate with lenders of payday loans or collection agencies and you can try to settle your bills on your own. Make sure you know how much is your total debt by checking your personal finance and credit report to find out which bills are unpaid and whether the accounts are able to pass the period of Statute Of Limitations (SOL).
In case you don’t feel comfortable negotiating with lenders, you may take advantage of settlement services. You are enrolled by these services to a settlement program so you are required to stop paying your payday loan companies to save a certain amount every month. When you’ve accumulated enough cash for several months, the negotiator at the settlement company communicates with the lenders or whoever holds your accounts so that they agree to accept an amount less than what you owe. Search details on the workings of debt settlement and study the pros and cons before you enroll in it.

Study steps to take for payday loan debt settlement

Follow these steps before enrolling in a payday loan debt settlement program:

  • Calculate the payday loan amount
    First of all calculate your total payday loan amount by gathering all the documents and then list the names of the lenders, the amount you owe to each lender, penalties, interest rates, late fees, etc. Check if you will be able to pay the loan amount on your own.
  • Go through your state payday loan laws
    Be familiar and knowledgeable with your state payday loan laws; if not, then you should know about them now. Each state has its own payday loan laws; better check whether your lender is following those rules. A good knowledge of payday loan laws of USA is important before paying any money to your lender.
  • Check the license of your lender
    Does your lender have a license to do business in your state? If not, then you have a reprieve since that is a violation and you are no longer required to pay the interest rates and fees. You only have to pay the principal amount.
  • Place a hard debit check on your account
    If you are not able to pay your loan or your lender is withdrawing illegally from your checking account, you may put a hard debit check on your account. You can also ask the branch manager of your bank to close the account, but this is not a wise move.
    Once your checking account is closed, your lender will surely file a lawsuit against you for violating the terms and conditions of the contract. This may cost you a lot of money for a large amount is needed to pay the attorney fees and other court-related fees.

Selecting a trustworthy settlement company

    1. Check the fee structure of the company. Under the new settlement laws, every debt settlement company is required to charge fees in proportion to the settled debt amount. So, if this settling company is not following the rules, then doing business with them will put you at risk.
    2. Check the certifications whether the debt negotiators of the settlement company are certified by IAPDA. When debt negotiators have sufficient knowledge on law settlement, they get their IAPDA certifications.
    3. Watch out for the affiliations as good settlement firm will be affiliated with organizations like TASC, BBB, etc. You find out if the firm is a bonafide member of United States Chamber of Commerce.
    4. Check the performance of the company to make sure you work with a settlement company that has a good success rate. Visit the company’s official website and gather as much information about the company. Read their testimonial sections if they have one and know their clients’ testimonials if they are satisfied with their services.
    5. Check the privacy policy of the company – Go through the privacy policy of the payday loan debt settlement company to ensure that they don’t disclose your confidential information to others. It may be a third party misusing information about you so you lose your money. You may have told settlement company your personal details while working with them. So, it is important never to reveal personal issues and better check it out with the settlement company if they respect your privacy.
    6. Find out whether the settlement company offers any service guarantee to their clients. If positive, then check the assistance they will provide if the settlement work is not sufficient to relieve the burden of your debt. Check if fees are refundable by the company if they are unsuccessful in settling your payday loan debts.
    7. Consult your family – You can always go to your family members and ask their opinion about the settlement company you’re considering to work with. Meanwhile, you can request them to recommend a good settlement company found in your state.

Aside from the points mentioned, find out if the company had been following the newly-enacted settlement laws by the Federal Trade Commission. For example, under this new enactment, settlement companies cannot charge any fees before the settlement of at least a single account of the consumer. They are not also allowed to make false claims about their services. Work only with a settlement company that follows all the given rules and regulations.

You got rid of payday loans, what next?

After you settled payday loan debt, make sure there is no next time. To start cleaning up your credit, a smart thing to do is sign up for a free credit report. The best way to ensure not to fall into any mistakes is to make a regular credit check and constantly improving your credit score.

You can also sign up for credit repair or search for a debt consolidation loan to help you pay off all of your debt including personal loans. This is a big step you are taking by following the right direction towards financial security.

Knowing how to settle payday loans will get you out of payday loan debt as well as other loans, although it seems daunting, it’s worth all your efforts and hard work. Learn to take control of your finances, save money as much as possible and start a plan for a secured financial future — it is a difficult plan but financial security is a reward worth striving for!

How to avoid payday loan consolidation scams

Payday Loan Consolidation Scams

There are several consolidation scams which are taking advantage of people who might not know what they are up to. It is bad enough that you may be in debt. It would be worse to sink further in debt and lose your money to such scams. So, what can you do to avoid consolidation scams? The following are some helpful tips which may be useful to  you:

Do extensive research

When seeking options on how to get out of debts, you need to do thorough research on the firms that offer such services. The Better Business Bureau (BBB) can offer you  information on the consolidation firms that you may be considering.

The information may include historical records of the company, complaints that have been made against it and how they were handled as well as violations the company may have committed. Such information goes a long way into ensuring that the firm you approach has a good standing and can be trusted.

Ensure that payday consolidation companies are licensed and registered

In most cases, consolidation scams operate without the required legal licenses and are not registered. Should you come across such consolidators, be wary of them and do not use their services. This is because should anything happen, there is no accountability  or law that will be able to protect you and ensure that your rights are adhered to.

Be familiar with the terms of the lender

It has been found that most consolidation scams take advantage of borrowers by capitalizing on the fact that they may not have scrutinized the terms of the contract before signing it. Therefore, you should check for any terms which may imply that some actions resulting in severe consequences can be taken against you should you fail to honor a specific duty. To avoid getting ripped off, also familiarize yourself with the laws in your state.

Contact the company directly

Be familiar with the terms of the loaner
Be familiar with the terms of the loaner

A good consolidation company is one which you can have constant and open communication with. This gives you a sense of confidence as you can know the progress of your repayments and there is a point of contact should you need any assistance or clarification.

Avoid consolidation companies that do not offer a contact person who can have a face-to-face meeting with you or one that does not even have a website or a physical office that you may visit. Companies without a physical office, reliable contact personnel or telephone numbers are probably scams that will vanish with people’s money.

Avoid the payday loan consolidation company which tends to increase your debt

Should you find a consolidation company that is constantly asking for your money, be wary of it because this is probably a scam. Such requests are not usually made.

A legitimate consolidation company shares the same goal as you – to reduce the debt you owe. There is a  cause for worry  if you are not given the following information: by how much the company can reduce your debt, the fee they charge and the time frame which they expect you to settle your debts.

We hope the above tips will help you in your journey. Good luck!

Why consolidate?

Need to consolidate payday loans?

We can help

Get out of debts

Why you may find it helpful?

When faced with financial problems related to loan repayment, most people look for options to get out of debt. There are options that a debtor may settle for and these include seeking funds to pay off the debt, debt settlement, debt consolidation or filing for bankruptcy. Debt consolidation may turn out to be the best option in changing people’s situation. Why consolidate?’ you ask. Well, read on to find out.

Payday loan debt consolidation lets you bring together all your loans and use the services of payday debt consolidation companies to clear your payday loan debt or any other types of debt. Under such programs, you will make a single payment to the loan consolidation company. They will then forward the payment to the various creditors on your behalf. This offers you the benefit of spending less time and less administrative work on making repayments.

Too many payday loans? Close to Bankruptcy?

Debt consolidation is a good option if you are nearly filing for bankruptcy. This gives you the chance to get back on your feet, if you still have the capacity to pay your loans, even if it is over a longer period of time. This may even help you make a positive impact on your credit score. This is the advantage that debt consolidation has over filing for bankruptcy. When you consolidate debt, you stand a chance of improving your financial position after clearing the debt.

How can we help you with payday loan consolidation

You might also be experiencing increasing debt in your name, thanks to high interest rates. Debt consolidation eases this pressure on you to dig deep into your pockets. This is because the debt consolidation company negotiates for better terms of repayment on your behalf, including lower interest rates. The goal of debt consolidation is to reduce the total amount of debt. Therefore, if you know that you are currently struggling to repay the loans borrowed and that this situation may probably be even tougher in the future with negative cash flow, payday debt consolidation may be the best option you have.

When you consolidate payday debt loans, you are able to get some relief from not having to deal with the creditors directly. This is beneficial especially if you have been receiving calls or mails from them constantly. You are doing your best to repay the payday loan debt and this pressure adds psychological stress on top of the financial stress you are already experiencing. When you consolidate payday loan debt, you are able to focus on repaying your debt in a more relaxed manner as the debt consolidation company takes over and deals with your creditors. Your time will no longer be spent on responding to the constant communication from creditors. You will be able to put your effort into working harder to clear the debt.

Give Some Relief
Consolidate Payday Debt Loans Give Some Relief

Apply Today if you want payday loan consolidation

Payday loan consolidation is a good solution for getting out of debt. There are many success stories of individuals

who have managed to clear their debt after joining a debt consolidation program suitable for them. You could probably be the next success story. I hope that now you are not asking ‘Why consolidate?’ but are convinced that payday loan consolidation is the path to being debt-free.

Payday Loan Forgiveness

Payday Loan Relief

A payday loan is a short-term business financing that has a high interest payment. Whenever you need loan forgiveness, you can talk to a licensed credit counselor and get the help you need.

A payday loan is a short-term business financing alternative that is based on the debtor’s income and credit profile. In most cases, they are advertised as a way to finance the unexpected purchase that a business might experience in a couple of days before the month ends. Unlike other types of business or personal loans, payday loans are taken out over days instead of years, and they can be used to cater for emergency expenses until income arrives.

With a payday loan, it is easy to get into a debt trap since they have high interest rates. You can easily depend on this type of business financing, and roll over one loan several times to postpone paying back. Easy accessibility of the loans results to an expensive habit and the cash you use to maintain those loans will hinder you from getting back to your feet. Payday forgiveness is one of the approaches that can help you get rid of payday loan debt.

What happens if you fail to repay a payday loan?

Failing to repay your payday loan can cause a barrage of bank overdraft charges and endless collection calls. This will also hurt your credit rating, lead to income garnishment and lawsuit.

Here is what to expect once you fail to repay your payday loan.

  • Bank withdrawals and collection calls
    Creditors who specialize in giving out the payday loan will never be lenient to you once your debt is due. They would initiate an automatic withdrawal from your bank account if you had allowed them to access your account in the loan agreement. If the withdrawals fail to go through, they might break the charges into small portions so that they can get access to any amount available in your account.
    Each unsuccessful attempt might bring a bank charge against you and the efficacious debit attempts will drain your account, making other transactions to bounce. This will lead to more charges.
    Apart from that, expect to get endless calls from the lenders and get letters from their lawyers. They will also contact your family members and friends you presented as references when you obtained the loan.
  • No jail term but expect to get more threats
    Defaulting a payday loan is not a crime and it is unlawful for the creditor to threaten the borrower with a jail term or even arrest. However, some creditors have thrived in employing bad-check laws to file criminal grievances against debtors, with the jury speciously rubber stamping the lawsuits.
    Any person that has been threatened with jail term or detention for failing to repay a payday loan should call the office of the attorney general in his or her country. Do not flout a court order prompting you to appear before the judge even the case was filed erroneously.
  • An opportunity to negotiate
    A smart creditor will rather get the debt directly from you instead of selling your debt to an external collection company. The third-party debt collection organization might pay less amount when buying your debt. If it is possible, you can begin repaying your loan by giving out 50% of your loan. You can tell your creditor that you can’t pay the loan and you are contemplating to file for bankruptcy. Once you mention being bankrupt, they will be serious since the lender know bankruptcy means you have nothing.
  • Court summons
    The majority of lawsuits against debtors are for a small amount and in most cases, the lenders will win the lawsuit because the borrower fails to appear before the court. For this reason, you should not fail to attend to court summons as this will help you get a payday forgiveness.
  • How to get out of a payday loan cycle
    When you have been trapped in a cycle of payday loan debt, there are numerous ways to get out. If you had secured a payday loan and failed to repay by the due date, you might have decided to borrow another just to push you. Note that this will result in an additional loan with extra charges, possibly followed by another and with time, the debt starts to accumulate. If you find yourself in the same scenario, then there is new hope for you. With a proper strategy and appropriate planning, you can get out of the payday loan cycle and avoid the high cost of the loan.

Reasons for taking out several payday loans

Recent research has indicated that many debtors end up paying excess cash on charges than what they get from payday loans. This is because payday loans are paid back within 14 days. This gives the debtor little or no time to get enough cash to repay the loan. That is how a payday loan traps business owner in debt. The Consumer Financial Protection Bureau approximates that more than 85% of payday loans result in the debtor obtaining another loan to offset the previous one. In this case, you will need loan forgiveness since these short-term loans are costly and you might not get the best means to repay them.

  • Handling your debt
    Consolidating your debt is one of the things that can help you get out of the payday loan cycle. Since payday loans come with high interest rates, you will need to stop getting more loans and merge all your debts into one big loan that has low and manageable APR. If you have already spoiled your credit score and you need to consolidate the debt, your best alternative is to obtain a business financing from a credit union or get some help from the relatives or close friends. The alternatives to consolidate the loans comprise credit unions, balance transfer credit cards, and faith-based corporations. You can as well ask some help from friends and relatives.
  • Personal loans from a credit union
    Credit unions are owned and managed by its stakeholders. For this reason, their terms and conditions are flexible and the business financing they provide more accessible to individuals with bad credit and history of debt. The credit union might look at more than just your credit rating when deciding to approve your loan.
  • Faith-based agencies
    Numerous faith-based agencies are coming up in the lending industry to assist those struggling to get out of the payday lending debt cycle. The organizations agree to pay your debt in full such that you can repay them the loan over a set duration, always without any charges or interest.
  • Balance transfer credit cards
    This kind of transfer allows you to move your debt and pay small to no charges on it for a set duration. For instance, a balance transfer credit might give 0% APR for ten months. That is to say that you will get a 10-month break from paying the loan interest as you pay back what you owe. To use this alternative, make sure you have a balance transfer credit card that allows you to transfer your payday loan debt. When looking for the best card providers, you can opt for the one that provides longer zero interest duration such that you will have more time to repay your loan. Even though you will need an excellent credit rating to get the best balance transfer credit card, you might be able to get approved for some balance transfer credit cards with bad credit rating.
  • Ask friends and family for help
    Once you explain your situation with one of your relatives or close friends, they might be willing to offer some financial support that you might not need to take out more loans. This kind of personal loan has the benefits of no interest rate attached.If the individual you speak to cannot give you the cash, you can request them to co-sign a loan with you. However, you need to prove that you have the capability to make the monthly payments since this is risky for the cosigner and some might want to avoid putting their credit online.
  • Prepare a plan to get out of debt
    Even though consolidating your debt us a better way of reducing your interest and hence the total cost of the debt, it can’t work on its own. Debt does not arise from anywhere. If you try to evaluate your finances, you will get structural issues that made you look for the payday loan. Credit counseling and budgeting are effective means to create financial literacy and know how debt works. The moment you understand how to handle your spending behaviors and lower the expenses of your daily life, you will enhance your credit and lessen the possibilities of being trapped in a cycle of payday loan debt again.
  • Prioritizing debts with high interest
    The moment you know the loan amount and how expensive is each loan, you can plan on which one to settle first. Start by repaying those loans with high interest and then move to the debts with lower interest. Note that this will assist you to reduce the total amount you will need to pay at the end. With the charges that are equivalent to 3-digit APRs, payday loans will be your most costly debts. Moreover, you will have to wait for your next paycheck to have the complete amount or you will face charges to renew the loan. For you to get loan forgiveness, you need to reconstruct the debt or find effective ways to get the full amount immediately.
  • Request for an extended repayment schedule
    The manner in which payday lenders structure their payday loans makes them expensive and hard to pay. For this reason, it is important you get an effective way to restructure your payday debt. In this case, you can request to negotiate a payment schedule with your lending institution. Try to persuade the lender to give you an extended payment plan (EPP) that will split the loan into small installment monthly payments. This will allow you to have enough time to pay back the payday loan and you won’t face any extra charges or interest rates. You might be required to sign a fresh loan agreement with the terms and conditions of the extended repayment plan. Ensure that you go through it carefully and understand the terms before signing the agreement.

How to Get Rid of Payday Loans and Escape the Cycle

As a business owner, you might be tired of obtaining loans from payday lending institutions or having numerous payday loans that have trapped you in debt. While in this situation, the only thing to think about is how to get rid of the payday loan debt ASAP. Well, worry not as this post will show you how to attain that in simple steps. Your finances will appreciate the efforts you made for many years to come since paying the monthly bills will be easy. While it is easy to obtain a business financing from a payday loan lender or use an online lender, you might feel trapped in a continuous cycle of borrowing and need some payday loan assistance. With some careful planning, you can effortlessly get rid of the cycle of continually borrowing. Here are some of the steps to help you put a permanent stop to this cycle.

  • Establish a personal budget
    Putting together your realistic personal budget that comprises all your weekly and monthly expenditure and other financial obligation is the first thing to do. This will allow you to understand what you can repay the lender. Rushing to repay your loan one or two months early may bring more financial issues on future.
  • Call the payday lender
    the moment you have identified the amount you can afford to pay every month, contact your lender or lending institution that and tell them that you will not be able to repay the complete amount that was agreed-upon. Notify them of what you can manage to give, how frequent they will get the repayment and request for their understanding with your modified repayment plan.
  • Consider creating a new bank account
    Keep in mind that when you obtained the payday loan, you agreed to let the lending institution deduct payment directly from your bank account. If you are uncertain that they honor the modified loan payments terms, it might be important to open a new bank account to prevent the stress that a debit for the entire loan amount will be deducted from the account next time you get a paycheck.
  • Get prepared for emergency expenses in advance
    The moment you complete repaying the loan, go through your budget again with an opinion to balance it better by saving some cash every month for yearly expenditure. Don’t forget to save some cash for emergency purposes since some things just happen unexpectedly.

What are your rights with payday lending company?

Before you start fighting against the payday loans, you need to know your rights as a borrower when you enter the loan agreement. You need to understand how the payday lenders get away with losing money from debtors and what the law is doing about it. Consumer financial protection Bureau states that the lending companies are not legally bound to give loans at the lowest rates. However, the legislation requires lenders to disclose the cost of the business loans in terms of yearly APR.

Even though the exposé of the cost does not reduce the worries about the predatory structure of this business financing alternative, payday loans are recognized as an instant solution to a financial emergency. However, payday lenders understand that their business model is designed to keep consumers caged in debt the cant pay back.

Fees and interest

It is essential to note the language payday lenders use when structuring these business financing alternatives. These lenders get a chance to charge a high amount of interest because in the real sense, they are not taking the interest but a fee.

Features of a payday loan

  • These are short-term loans that are provided in a small amount. In many countries, $500 is the set limit even though it can range above or below this figure.
  • In most cases, a payday loan is paid back in one installment on the debtor’s following payday or once income comes from other sources. The deadline for a payday loan is usually 14 to 30 days from the date the credit was obtained. The due date is agreed-upon in the loan agreement.
  • When paying back the loans, consumers are required to write a check for the complete amount and it should be postdated. The payment will include the fees, or the consumer can authorize the lender to automatically deduct the cash from the bank account, credit union account or even the prepaid card account. In case you fail to pay back the loan on or before the deadline, the lender will cash the check or automatically debit the funds from your account.
  • The lender does not consider your capability to pay back the loan as you solve other financial problems.
  • The loan amount can be offered to you by cash or check, automatically deposited to your account or can be loaded on your prepaid card.

What Are the Dangers of payday loans

Payday loan firms can make their clients to become dependent on them since they charge higher fees and need a quick repayment of the loan. This condition makes it hard for the debtor to pay back the loan and still cater for other financial obligation. The majority of debtors obtain those loans from multiple different lenders and this makes the situation worse.

Once you depend on those loans, you will be left with less to pay for other expenses and you might end up spending everything in your paycheck. Even though they provide an instant financial solution, the loans don’t offer a long-lasting solution for the financial problems. once you think that you need a payday loan, evaluate your financial condition to get means to change your budget and plan your finances to determine if you can free excess cash.
Even though it is enticing, obtaining a payday loan for non-emergencies things like a vacation makes no sense that saving the cast over time.

 

Break the borrowing cycle

If you always depend on payday loans, you better stop now. You can pay the loan in small amounts so that you can reduce the balance and avoid taking another loan to stop the cycle. Ensure that you can handle the basic needs at home and use the remaining amount to pay off the loan. Find out if the lender will allow you to pay the loan in two installments instead of one to make the repayment easy.

You can also stop some spending until you repay the loan in complete and try to survive with your paycheck without securing another payday loan.

Avoid needing a payday loan

Proper budgeting and emergency finances can help you avoid taking out payday loans. In most cases, wanting a payday loan is the same as having constant late payments or overdraft fees from your financial institution. Planning for expenditures in advance is essential since it helps you avoid experiencing these financial woes.

Forgiveness of Payday Loans – Final word

If you need assistance and guidance to handle your payday loans, do not hesitate to talk to a reliable profit credit counseling agency. They will help you get the payday forgiveness you seek and feel confident with the solid strategy that allows you to manage your cash. Their assistance will comprise the payday loan relief and you will also get professional advice on how to pay back your loans effortlessly.

Payday Forgiveness Loans by Payday Loan Consolidation .com

Stop Paying Payday Loans Legally

Payday Loan Relief
Couple with financial troubles
Stop Paying Payday Loans Legally

Payday loans can literally suck the life out of you. They may seem like the best option when you are strapped of cash, but they can plunge you in a never-ending cycle of debt.

By taking out a payday loan, it means your credit score sucks; otherwise, you’d have gone for a bank loan.

The payday lenders have also intentionally structured these loans in such a way that you’ll have to make full payment with your next paycheck otherwise they’ll keep rolling over your loan. This then makes them difficult to repay and very expensive.

So how do you end the vicious cycle and stop paying payday loans legally when you feel overwhelmed?
Here’s how:
Why is it so easy to get trapped in a payday loan debt trap?
Payday loans are easy to access. All you need is an active bank account and proof of income.
These loans are unsecured, and your credit doesn’t matter. All you need to do is fill out the lender’s loan application form, and after approval which takes less than 30 minutes, the money would have been credited to your checking account. Easy, right?
The repayment schedule, however, isn’t as straightforward as you’d wish it to be.
Usually, these loans come with double digits interest rates and APR. In fact, according to a study conducted by Pew charitable trust, an average payday borrower pays $55 every two weeks to borrow $375 which is equivalent to 381% APR!
The repayment structure is in such a way that you have to pay off the full amount with your next paycheck. If you miss payments, the loan will accrue interest, you’ll be charged late payment fee, and in worse scenarios, you’ll even be sued by the lender.
Most borrowers end up rolling over their loans, and within no time, they find themselves in a debt trap that they can’t seem to get out of.
Since a majority of payday borrowers are low-income earners, they’ll take out these loans for the wrong reasons and spend them on their everyday expenses instead of using them for emergencies only.
It then becomes a vicious cycle which leaves the borrower with huge debts and penalties that are impossible to clear.
How to escape the debt trap
Here’s how you can escape payday loan debt traps and the financial distress that they cause:

  • Build an emergency fund and avoid over-reliance on payday loans
    Life is unpredictable, and sometimes it throws challenges that leave us in need of quick cash.
    Having some money in a saving account can help you out on such days.
    Start saving even as little as $10 per week. You can have the amount directly debited from your paycheck every month. This will help you out when you are stuck, and it will keep you from borrowing to fill the gap.
    You can also make a budget and change your spending habits. Having a budget helps you track your income and expenses. It will also help you focus on necessities so that you’ll be able to free up some money to save.
  • Sum up all your loans and start paying the high interest debts
    Make a spreadsheet of how much you owe and write down the interest rates of each loan.
    Pay off the loans with the highest interest rates first.
    This strategy will help you avoid incurring more expenses due to the accruing interest.
  • Negotiate for an extended payment plan instead of borrowing
    You could negotiate with your creditors to allow you delay payment.
    Some payday lenders are lenient to break down your payment into manageable installments.
    Make sure you ask if there are fees for the extended payments.
    Instead of borrowing to buy expensive items, you could wait until your paycheck arrives to make the purchase. You can also ask your employer for an advance to cover you up until your payment comes.
  • Look for other alternative and less expensive source of funds
    Instead of an online payday loan, you can apply for a credit card or get an affordable loan from a credit union.
    Most credit unions offer its members low-interest loans payable in flexible monthly installments.
    You can also borrow from friends and family but make sure you keep your promise to avoid breaking the trust.
    Try to keep your credit card limits below 30% and use them only for emergencies. This will keep you from accumulating more debt than you can pay.
  • Ask for payday loan debt assistance
    If you can’t get rid of the payday loans despite putting in your best efforts, you can opt for debt relief to help clear off your debts and stop the harassing phone calls from debt collectors.
    A debt relief company can offer you debt settlement or debt consolidation services to help you be debt free in no time.
    They’ll negotiate with your creditors to waiver off the fees, accrued interest and charges on your loan and come up with a payment plan that’s both comfortable and affordable.

What happens if you can’t pay your payday loans
Apart from the interest and charges piling, you also risk being sued by the lender.
By stopping payment of your payday loans, you may be left with nothing to depend on for your daily expenses especially if you authorized automatic debits from your paycheck.
Funds will be automatically debited from your account leaving you to pay overdraft fees in case there are no funds.

So how do you stop payday loans legally?

You can legally stop payment in these easy steps:

  • Revoking your authorization
    If you authorized and signed for automatic debits, you can cancel and revoke that authorization.
    Send a letter to the lender, and keep it as proof if he fails or refuses to grant your request.
    You could also talk to your bank to stop any automatic debits if the lender does not comply with your request.
  • Beware and stop automatic renewals
    If you allowed automatic debits, you need to beware of renewals fees.
    Some lenders deduct renewal fees only instead of deducting the entire loan amount.
    These deductions don’t change the loan amount leaving you with the same loan balance.
  • Know your rights as a borrower
    When the collection calls come, don’t feel threatened or stressed out by threats of a jail term or other implications.
    It’s illegal according to the federal law and if they tell you that, let them know you know your rights and you’ll report such threats to the financial service payment authority to take action against them.
  • Talk about your experiences with the CFPB
    If you had a nasty experience with any payday lender, tell your story to the consumer financial protection bureau.
    Their sole mandate is to protect consumers from exploitation by unscrupulous payday lenders.
    They’ll take up the case and help you out.
  • Check if the lender is authorized to give out loans
    If it was an online payday loan, there could be high chances that it’s illegal.
    In some states payday loans are illegal so check out if the loan is legal.
    If it’s not, you don’t have to pay.

Getting out of payday loans debt trap and never looking back may be an uphill task, but it’s worth the sacrifice and effort. Start rebuilding your credit scores and secure a solid financial future for you and your family. You’ll thank yourself for that.

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The Program

Payday Loan Help

Why Payday Loan Debt Consolidation?

Payday loans consolidation is a real option that gives you the relief you need to get back on the path to your financial freedom. If you cannot manage to pay off the cash advance loans within the next 30 days, Payday loan consolidation is a real option to give you the relief you need and reverse the vicious payday loans cycle. The pay day assistance programs are about breaking the cash advance loan cycle and setting you on a path to your financial freedom. It will help stop the harassing phone calls from the payday loan debt collectors and help stop additional high interest and fees from accumulating. We want to help you achieve your financial freedom and get back on track with NO upfront FEES.

  • Payday loans debt consolidation lowers your payments
  • Payday loans consolidation pays off payday loans quicker
  • Waive late fees
  • Helps eliminate collection calls

BECOME DEBT FREE !

The program is designed with your affordability and results in mind. We are committed to finding the best solution for you. We want to give each and every consumer the peace of mind they deserve. Thousands of Americans are struggling every day with payday loan debt. You are not alone! The specialists have the expertise and knowledge to help stop the harassing phone calls and negotiate a fair settlement in order to give you the chance to regain your good name and rebuild your financial future.

If you have more than 2 payday loans you may be stuck in what is known as the “payday loan cycle”. You may be buried under debt and cannot pay off the loan with your current income. If this is the case, you have options . Payday loans consolidation is a great option which most people do not know about. Consolidation will provide one simple payment without having to obtain more debt.

If you can manage to pay off your payday loans without consolidation within the next month, then that should be your objective. However if you cannot see yourself getting out from under the payday loan obligations within the next 30 days, payday loans consolidation is a real option to give you the relief you need and reverse the vicious payday loan cycle. Payday consolidation is about breaking the payday debt cycle and setting you on a path to your financial freedom.

We want to help you achieve your financial freedom and get back on track to a more financially responsible future. The payday loan consolidation companies can help you get out from under the payday loans circle, help stop the harassing phone calls and consolidate your payday loans for good.

Payday Loans Consolidation:

Payday loans consolidation programs do not require the use of equity in your home, vehicle or other financial assets.

Once you complete the payday loans consolidation program, you’ll find that you can usually get reasonable credit at several different rates. These rates decrease and improve over time with a history of making proper on-time payments.

  • Payday loans consolidation programs have worked for many consumers already.
  • Payday loans consolidation programs are fast.
This outstanding program offers a manageable way out of your payday debt problems. So call us toll free or fill out our simple Free consultation form . We will get started in helping you free yourself from the burden of the revolving payday debt cycle using consolidation and get the financial freedom you deserve. Payday loans consolidation is the answer!

How to Get Out of Payday Loan Cycle?

Payday Debt

Many people are struggling when it comes to managing their finances. There comes a time when you are in need of cash and you don’t have that much option, most would go for payday loans. There is nothing wrong with taking out a payday loan, especially when you really need it. However, there are instances where people find it difficult to manage their loans to the point that they experience debt problems. How do you get out of a payday loan cycle? How do you achieve financial freedom?

How to Get Out of Payday Loan Cycle?
How to Get Out of Payday Loan Cycle?

The moment you start thinking that just because it is easy to get a payday loan is the moment where you start experiencing problems. Just because it is convenient and fast does not mean that it is the right and the best thing to do. If you fail to pay the interest rate and a loan, you will incur late charges and this will make the loan a lot more expensive. This explains why there are so many people who fall into the debt trap.

Consolidate Your Debt: Is There A Good Way?

Think Long Term
For you to get out of that cycle, it is very essential that you think long term. You don’t just focus on the things you want. You try to find the root cause of the problem and the root cause is attributed to mismanaged finances that leads you to the possibility of getting a payday loan again. By knowing how to manage your finances and by having that financial discipline to do so, it is much easier for you to achieve your financial goals.

Once you are already at that point which you know how to spend your money wisely, you can start rebuilding your credit score. One of the main reasons why many people struggle and have loan options is because they have bad credit. Chances are if you have poor credit scores, you won’t be able to have as many options as other people. With poor credit standing, you are forced to go for lenders who often charge high interest rates or what you call expensive loans.

The good news is that there are definitely several ways for you to get out of the payday loan cycle. It is never easy. It takes time and a huge amount of effort on your part.

Here are some effective strategies to eliminate your outstanding loans:

  • Stop getting more payday loans
    For many people, getting a payday loan is the quickest and the most convenient way to get instant cash. After all, they are not like other kinds of loans. In fact, you can even submit your application online. At first glance, this may appear to be the best decision, especially when you are in need of cash and you don’t know where to get the amount that you need.
    What many people are not aware of is that payday loans are quite expensive. Of course payday loan lenders will always try to market their loan packages saying that they don’t charge that high or the loan package is very affordable. But if you’re going to compare it with other kinds of loans, you can easily see the differences.
    Now imagine yourself in a situation where you have one payday loan and you are struggling how to pay back this loan. The last thing that you want to happen is for you to get another payday loan simply because you are run out of cash. The next thing you know you will end up worrying about the new loan as to how you can pay it back again. To get rid of the cycle, you need to stop getting a new loan, especially a new payday loan.
  • Look at the big picture
    When you are experiencing problems in paying your payday loan, you have this tendency to be too focused on the specific amount you need to raise. Although there is nothing wrong in doing that just so you are aware of how much money you have to pay, it is much better that you focus on the whole picture.
    By taking a look at the debts that you have altogether, it is way much easier for you to find opportunities and to plan to repay your loan. How do you do it? One of the ways is for you to list down all your outstanding loans. Take the time to record the details of the current outstanding loans, including the interest rates as well as the amount that you still need to pay. Some people may think that this may not be a good idea, especially when you are dealing with a big amount of money. Then again, if you know what you have to work on, you can at least identify ways on how to solve the problem.
  • Set your priorities
    As with any problem that you are dealing with, you have to set your priorities. When you know what type of loan you have to pay and how much each of these debts actually cost you, then you know what to prioritize. Financial experts will tell you that one of the things that you need to do is to prioritize those debts that are charging you high interest. The reason is that these loans are expensive which makes it more difficult to you to handle your finances and repay the other loans.
    How do you get rid of a payday loan? You can actually restructure your debt or if you can find ways to raise the whole amount as soon as possible.
  • Ask for extended payment plan
    Compared with other kinds of loans, payday loans are costly and it is structured in a way that it is hard to repay. To wipe out your loan, you can actually find ways if it is possible for you to restructure your debt. One of the most common mistakes of borrowers is that when they are face difficulties paying the loan, they don’t want to talk to their lenders.
    There is always that possibility that when you talk to your lender, you can get an extended payment plan. By asking if you can have the extended payment plan, your loan is divided into smaller payments. This allows you to pay back the loan. But the good thing is that you never have to worry about additional fees or other interest that you need to pay. There is actually no harm in trying to get in touch with your lender. At least, you know you have tried all the possible options.
    What can you expect in getting an extended payment plan? Once your lender allows you to extend your payments, you will have to sign a new agreement. Under the new contract, the terms and conditions of the extended payment plan are provided.

Consider Refinancing with a Personal Loan

Another alternative for you to get rid of your payday loan is to refinance it using a personal loan. However, it is very important that you qualify for the personal loan before you can even choose this option. There are online lending companies that allow you to apply for a personal loan even if your credit score is below 600. Another option is that if you have your own credit card, you can actually get a cash advance and repay your loan. Then again, you need to keep in mind that this will only apply if you only have one payday loan or a few. In such cases where in there are several outstanding loans that you need to get rid of, the last thing you want to do is to get another loan that will make it even more difficult for you to pay back the loans.

Are you considering getting a personal loan? A personal loan is just one of the different types of loans available. However, this is more used for consolidating your debt or when you are in need of immediate cash.

Here are some FAQ about personal loans:

  1. Personal loans are considered to be unsecured loans. This only means that you do not have to worry about your assets being used as collateral. If you default on your loan, they cannot get any of your property. That is why this kind of loan makes it a more challenging and difficult to get. Since the lender cannot possess any asset in the event that you no longer able to pay your loan, it makes this kind of loan high risk on their part. That is why in applying for a personal loan, they usually look at your credit score and other factors to make sure that you are capable of paying back.
  2. The amount that you can get is fixed
    Personal loans give you a fixed amount. It is not as big as other types of loans which range from about $1,000 to $50,000. The amount that you can get actually varies depending on the lending company, your credit rating, and your income. You can expect that if you have good credit score is that you can have more money that you can borrow when you apply for a personal loan.
  3. The interest rates are fixed
    In the entire life of your loan, the interest rate is not changed. The lender takes into consideration your credit score. The higher your credit score, you can expect a much lower interest rate. This allows you to borrow a more affordable loan compared to when you have poor credit scores.

The repayment period is also fixed. You can either pay it in a year or two years depending on the terms and conditions of the contract. If you are for a longer repayment scheme, you can expect that the amount that you pay every month is much lower. However, when you look at the cost of the interest rate, it is actually expensive. This makes it a whole lot more difficult for you since you are tied with the loan and if you have other outstanding loans, this might not be the best option for you.

Try credit counseling

There are many nonprofit organizations that offer credit counseling programs. These programs are created to help borrowers were struggling to pay their payday loans and other debts. At first you may say that it’s not necessarily needed. Some people also have the tendency to attempt to do things on their own because they fear that other people would judge them or other people cannot really help them. Credit counseling will help you assess your financial situation.

These people have been working as financial counselors, they know exactly how to look at your situation and give you helpful advice. First of all, they can help you when it comes to setting up a concrete plan in order for you to get out of the loan cycle. On top of that, they may also know other lenders that offer cheap loans that you can use to refinance your other debts.

What can you expect from a credit counselor?

They can help you in so many ways. For one, they can give you advice on how you can manage your business. Second is that they can help you create a budget and even get a copy of your credit scores. By having access to free workshops and other materials, it is much easier for you to assess the situation and to organize plan in order for you to eliminate your loans in the long term.

You can look at the official website of the financial counseling Association of America or National Foundation For Credit Counseling. Take the time to make a list of different credit counseling organizations. You may want to also gather some information and call them directly.

  • Find Ways to Increase Your Income
    One of the main reasons why people take out personal or payday loans is because their current cash cannot meet their needs. It’s more difficult especially if you don’t know how to manage your finances. But if you’re looking for a long-term solution to get rid of your debts, you can actually find ways for you to increase your income.
  • Find a part-time job
    Although you don’t necessarily have to overwork yourself just to get enough cash, it doesn’t hurt if you have a part-time job. By having a part-time job, you can actually have side income that allows you to have spare cash that you can use for your daily needs. There are different part-time jobs that are available. When you have free time, instead of wasting your time doing nothing, you might as well put in a few more hours to get some income.
  • Do a garage sale
    Do you want to throw away old stuff and other things that you are no longer using? Instead of throwing them away, why not make money out of it? You can actually sell them really cheap price and there will be many people who may be interested to purchase these items. If you have so many items that you can sell, you can actually raise a good amount of money. Although the amount cannot entirely cover the actual cost of the loan, it will at least reduce your financial burden.
  • Try uber
    Nowadays, there are many professionals who use Uber. As an Uber driver, you can choose your time and number of hours. This kind of part-time job is very easy since you just need to drive your car and pick up and drop off your customer. The amount of money can be quiet good, especially if you are working in peak hours.
  • Manage Your Finances
    Last but not least is that it is very important that you know how to manage your finances. Having many payday loans speaks a lot as to how you handle your finances. It is very essential that you come up with a budget.
    Rule of thumb is that never purchase something that you know you cannot afford. This will put you in the more difficult financial situation.
    You need to discipline yourself financially and spend your money wisely. In the long run, it makes it a whole lot easier for you to avoid situations where and you have to get a loan.

A guide for student loan consolidation

A guide for student loan consolidation

Student loan consolidation may not be the silver bullet solution that it used to be and can be quite daunting. However, consolidation can still offer some benefits depending on your situation.

First of all, student loan consolidation can simplify your finances. By consolidating your student loans, you roll all of them into one bigger loan. This means you’ll have just one loan to keep track of and pay off instead of several ones. This helps to reduce late or missed payments. There’s also the possibility of securing a lower or fixed rate for your student loan consolidation debt.

About a decade ago, consolidating your student loan was perhaps one of the smartest financial decisions you could ever make. However, many things have changed since then.

To find out if consolidating your student loan is the right choice for you, take a look at some of the current student consolidation pros and cons, and whether it will actually save you money.

Key points on student loan consolidation

student loan consolidation
student loan consolidation

Here are some things you might want to keep in mind.

1. One of the best reasons to consolidate student loans is that it lets you stay organized. You now make one payment on one big loan instead of a couple of separate payments on several smaller loans. This will help prevent missed or late payments which makes consolidating your student loans worth it.

2. Consolidating federal student loans issued after 2006 with a federal student consolidation loan won’t save you any money because your loans already have fixed rates. You might be able to lower your monthly payments by choosing a longer repayment term, but this will cost you more in interest in the long run.

3. Consolidating your student loans with a private student loan consolidation company can potentially save you more depending on current interest rates. With private student loan consolidation, you’ll need good credit to qualify for a good interest rate. A variable rate loan will have a lower interest rate in the beginning, but interest rate could rise over time. A fixed rate consolidation loan may be higher to start with but you won’t have to worry about the interest rate increasing and having to pay more later on.

4. In general, steer clear of consolidating federal student loans with a private lending company unless you get an unbeatable rate. Federal student loans have many valuable fringe benefits that private loans don’t offer.

Rising cost of college and student debts

Rising cost of student debts
Rising cost of student debts

College education has never been more expensive. According to The College Board, the price for one year at a standard private college has jumped 146% in the last three decades to $31,231, while the four-year public school cost has increases insanely by 225% to $9,139. Those figures have been adjusted for inflation, otherwise they would be obscenely high. The figures only include schooling fees and not living expenses.

It comes as no surprise  that student loan debt is on the rise too. In 2013, 59% of graduates from four-year public colleges had borrowed money to help them get through school, up from 52% in 2001. Their average debt load had increased 24% within a decade to $25,600, according to The College Board. If you add private school grads into the mix, the average American owes $29,000 in student loans.

We must not forget that these numbers are averages. Some students managed to earn their degrees with far less debt. On the other hand, some accumulate a lot more. No matter where you are on the spectrum, being informed can help you stay organized. It can help you figure out the best way to pay back your debt and maintain a reasonable lifestyle while doing it.

With student loan consolidation, you’ll have to be realistic about its benefits and downsides.

How to consolidate student loans

Consolidating your student loans can be a breath of fresh air. It allows you to consolidate (combine) multiple federal education loans into one. The result is a single monthly payment instead of multiple payments.

There are two main ways to do this: a private or a federal student consolidation loan

Federal student loan consolidation

You can consolidate almost any federal student loan using the direct consolidation loan program. However, you can’t include any loans from private lending companies or any PLUS loans borrowed by your parents on your behalf.

You may start consolidating your federal loans any time you wish after your graduation, leaving school or dropping below half-time enrollment. You probably don’t have to undergo a credit check to start consolidating your student loan. The interest rate on a federal student consolidation loan is fixed throughout the life of your loan.

However, it varies from one person to another. Reason being the interest rate is based on the interest rates of the loans you’re consolidating. You’ll have to pay the weighted average of those rates rounded up to the nearest 1/8th of a percentage point.

Private student loan consolidation

Various private lenders also offer private student loan consolidation. Some even allow you to include federal student loans in a private consolidation loan.

If you don’t have a long or strong credit history, as is the case with many students and recent graduates, you may not qualify for private student loan consolidation. You might be required to get a co-signer with better credit to secure a lower interest rate.
The interest rate on your private consolidation loan can be variable or fixed. We’ll discuss more on this later in the post.

Pros and cons of student loan consolidation

Student loan consolidation PROS
Pros and cons of student loan consolidation
Pros and cons of student loan consolidation

1. Depending on how many different loans you’re juggling with, keeping track of just one bill and payment due date instead of several can be a big relief, especially if you’re a recent student who is not quite used to the monthly grind of paying bills and managing finances.

2. You may get to choose a repayment plan that’s the best fit for your financial situation. For example, federal student consolidation loans offer several payment plans that take your income into account.

3. Consolidating may leave you with a total monthly payment that’s lower than what you were paying for your loans separately. In some cases, it can also save you money in the long run though that’s an unlikely scenario with federal consolidation.

Student loan consolidation CONS

1. The major downside of student loan consolidation is that you may end up paying more money over the life of your loan if you decide on a longer repayment schedule to make your monthly payments more manageable.

2. As you may gain repayment plan options with consolidation loans, you may lose access to other repayment plans benefits such as interest rate discounts or loan forgiveness, forbearance and deferment options. This can be a concern especially if you’re consolidating a federal student loan with a private lending company as federal loans are typically set up with far better borrower protection than private loans.

3. Consolidating your student loans may often mean that you’re locking in your interest rate. This can either work for or against you, depending on the current interest rate and whether your loans already have fixed rates or not. However, given that you can consolidate only once, it is a factor that’s worth careful consideration.

Does student loan consolidation help save money?

Does student loan consolidation help save money?
Does student loan consolidation help save money?

Truth be told, this benefit of student loan consolidation really depends on your new interest rate and any fees that the lending company charges. When lending companies claim that they can help you save money with student loan consolidation, they usually mean they can lower your monthly payments by stretching out your term, for instance from 10 years to 20 years. That actually means you’ll pay more money in the long run.

To better answer this question, we’ll look separately at whether consolidating federal student loans and private student loans can save you money.

Will federal consolidation save you money?

Let’s say the year is 2005 and you are about to consolidate around $17,500 in student loans. In 2005 federal student loan rates were still variable and back then interest rates were at a historic low. So in this situation, consolidating is a no-brainer. You’d be able to consolidate all your student loans during your grace period at around 2.875% interest rate, which would have been locked throughout the lifespan of the loan.

Since 2006, however, all federal student loans have been issued with fixed interest rates throughout the life of the loan. Which means federal student loan consolidation now will not save you the money that you would have saved in 2005. Today, unless you’re including older loans that still have high or variable rates, consolidating federal student loans will simply combine loans that already have fixed interest rates.

You could see some minor savings, or you could end up paying a little bit more. This is because of the way your new interest rate will be averaged and rounded off. It’s a negligible amount either way.

An example

For instance, you’ve three federal student loans:

1. Loan A is a $10,000 loan that you took out in 2013 at a fixed 4.5% interest rate.

2. Loan B is a $10,000 loan that you took out in 2014 at a fixed 3.4% interest rate.

3. Loan C is a $5,000 loan that you took out in 2015 at a fixed 6.8% interest rate.

If you consolidate these loans, that will leave you with one loan for $25,000 at an interest rate based on the weighted average of the three loans interest rates rounded up to the nearest 1/8th of a percentage point. The weighted average means the high rate on the smaller $5,000 loan counts less compared to the others.

In that case, the new interest rate on the consolidation loan would be 4.625%.

Total paid amount

Here’s what your total paid amount would look like if you paid off each loan separately using a standard 10-year repayment plan:

Monthly payment Total repaid
Loan A ($10,000 at 4.5%) $103.64 $12,436.56
Loan B ($10,000 at 3.4%) $98.42 $11,810.13
Loan C ($5,000 at 6.8%) $57.54 $6,904.83
Total $259.60 $31,152.52

When we add the amount paid for each separate loan with a ten-year repayment plan at a combined monthly payment of about $260, the total becomes more than $31,150.

Now let’s compare the $25,000 consolidation loan with a 4.625% interest rate. By consolidating, you’ll actually pay $31,272 over the full life of the loan with a monthly payment of $260.61. As you can see, consolidating actually costs you about $120 more in this case – about a dollar more every month for 10 years.

A note on longer repayment terms

The example above compares paying down a consolidation loan and paying your loans separately, keeping the repayment term the same. If you consolidate and afterwards lengthen your loan term, it will lower your monthly payment. However, it’s likely that you’ll pay more in the long run.

If you are to pay off that $25,000 consolidation loan over 20 years instead of 10, your monthly payments would drop to about $160, which will free up an extra $100 a month. If you’re falling behind on other bills or need to tackle high-interest credit card debts, this can be quite helpful. Once you’re in a better financial position, you can always start paying more than the minimum due on your loan.

However, if it takes you 20 years to pay back, you’ll pay $38,366 over the life of the loan – a full $7,000 more than you would have paid on a 10-year repayment schedule.

Will private student loan consolidation let you save money?

Some banks and other non-government lending companies will consolidate your student loans. Some of which will allow you to mix some federal student loans as well. (However, you should remember that the reverse is not possible – you cannot consolidate any private student loans using a federal consolidation loan.)

If you’re thinking of consolidating both types of loans through a private lender, you should weigh the pros and cons really carefully. Usually, federal student loans offer better interest rates and other perks, such as more repayment plans and hardship options like forbearance and deferment compared to private loans. this is especially true for students with poor or little credit history. Consolidating a federal loan into a private one will mean that you may lose some or even all of those benefits.

When applying for a private consolidation loan, your credit is the key to determining the kind of interest rate you’ll receive,  and whether consolidation will save you money or not.

For students with poor credit or a very short credit history, it can be really tough to qualify for a good rate without a co-signer who has a good credit. A co-signer guarantees that he or she will pay the loan for you if you can’t pay it back yourself. That puts a co-signer in a very tricky proposition as it can ruin relationships if you were to make someone else carry the burden of your debt. Therefore, always pay up and don’t put someone else in a spot.

Which is better: fixed or variable interest rate?

As mentioned before, you won’t have to consider this if you’re using the federal student loan consolidation program because your interest rate will be fixed. However, if you’re looking to consolidate loans with a private lender, the choices available could be wider as many private lenders also offer variable interest rates that could fluctuate. Let’s look at some pros and cons of each to consider.

Fixed rate consolidation loans:
Which is better: fixed or variable interest rate
Which is better? fixed or variable interest rate

1. These have a higher interest rate than variable-rate options, at least initially. The lending company knows it will be unable to capitalize on interest-rate hikes down the road, so this is the price you pay for security.

2. They’re ideal for budgeting because you know your payment will be the same from month to month and year to year. It is just easy to plan ahead.

3. This might be the best option if you value the security that comes with knowing that your rate (and your payments) won’t change.

Variable rate consolidation loans

1. Variable rates have a lower interest rate, but that rate can change. Your rate will be pegged to an interest-rate index ( or a set number of percentage points above such an index). As the index fluctuates over time, so will your interest rate and therefore your monthly payment. This can work in your favor when interest rates go down, but it can become pretty costly when rates climb.

2. They are not as ideal for budgeting because your payment can change along with your interest rate.

3. These might be the best choice if you’re willing to risk the long-term security of a fixed rate for short-term savings, or if you can pay off your loan in a reasonably short time to capitalize on the low initial rate.

You’ll want to see what index your variable loan rate will be tied to. It’s often the federal prime rate or the one-month London Interbank Offered Rate (LIBOR). The prime rate has held steady at 3.25% since 2009, a low unmatched since the 1950s. The LIBOR, at 0.18% today, is starting to gradually rise in 2015 after hitting a historic low last year.

Most experts agree that interest rates have nowhere to go but up. However, the question is how much and how fast they may rise.

Two examples of private student loan consolidation

Consolidating your student loans can look pretty different depending on whether you choose a variable rate or fixed rate consolidation loan. We’ll explore these two scenarios with the same set of loans.

Example 1: Fixed rate private consolidation loan

Let’s first look at consolidating your loans with a private lending company that offers you a fixed rate consolidation loan.
In this example, let’s assume you’ve three private student loans: Loan D, a $5,000 loan at a 5% interest rate; Loan E, a $10,000 loan at 8%; and Loan F, a $15,000 loan at 12%. Assuming a 10-year repayment plan, here is what the monthly payments and total amount repaid on those loans would look like:

Monthly payment Total repaid
Loan D ($5,000 at 5%) $53.03 $6,364.03
Loan E ($10,000 at 8%) $121.33 $14,559.16
Loan F ($15,000 at 12%) $215.21 $25,824.38
Total $389.57 $46,747.57

As you can see, paying each of these loans separately will result in close to $390 in monthly payments and a total amount paid of over $46,700.

Let’s say you decide to consolidate your loans. You have pretty good credit and qualify for a fixed interest rate of 7.5% on your new $30,000 loan. Say you can stick to the 10-year repayment term and consolidating at this interest rate will mean a monthly payment of about $356 and a total repaid of about $42,730. That way you’ll save about $34 a month and $4,000 over the life of the loan.

Example 2: Variable rate private consolidation loan

Let’s say your good credit means you qualify for a 4% variable interest rate on that $30,000 consolidation loan. Assuming your interest rate stays at 4% for a year, and then it begins to climb 1% a year until it hits a rate cap of 10%. (Most lending companies will have a rate cap in place on variable rate student loans to protect you in case rates rise an inordinate amount.)

Again, let’s assume a 10-year repayment plan. Y’ll make payments ranging from a low of about $304 a month to a high of about $365 a month and total payments of about $41,460. As you can see, even though interest rates rose while the loan was in repayment, the variable rate resulted in the most total savings.

We made two crucial assumptions in both cases. First, you are credit-worthy enough to qualify for an interest rate on the lower end of the spectrum. Second, you can stick to a standard 10-year repayment plan for your consolidation loan instead of lengthening the term.

If you can’t qualify for a low interest rate or keep your repayment term reasonable, private student loan consolidation most likely won’t  save you any money – in fact, it could cost you a lot more in the long run.

Also don’t forget that a variable interest rate is a gamble that becomes riskier the longer it takes you to pay off your loan. You should always check what kind of rate cap is in place to protect you.

How does student loan consolidation affect your credit score?

Student loan & credit score
Student loans & credit score

Student loan consolidation can affect your credit just like most big financial decisions,  but not significantly enough that to be a major factor in your decision. Since you won’t be juggling as many separate bills, consolidation can make it easier for you to make on-time payments. Staying on top of payments and making them reliably each month is a proven way to raise your credit score over time as it demonstrates to creditors that you are a responsible borrower.

However, there are a few minor ways consolidation can hurt your credit. If a lending company makes a hard inquiry to check your credit – the basic process of running your credit score to see if you qualify for a loan – it can drop your credit score a few points. Though the damage will be negligible and short-lived as long as several lenders aren’t making hard inquiries around at the same time.

It’s also possible that when you replace your old loans with a new one, it can hurt your score by lowering your average account age. That’s because 15% of your credit score is based on the length of your credit history.

Consolidating and paying down your loan on time will actually raise your credit score in the long run as you prove your ability to handle debt responsibly.

Six strategies for paying off student loans faster

 strategies for paying off student loans
strategies for paying off student loans

By now, it’s probably pretty clear that consolidation doesn’t offer many guarantees when it comes to saving money on your student loans. However, there are several strategies that can do just that.

Don’t forget to cover your other financial bases before you embark on any aggressive student loan repayment plan. That means being able to pay your bills, but also having an emergency fund, beginning to save for retirement and prioritizing debt that has an interest rate higher than your student loans.

You should remember that your student loans are likely to have lower interest rates and more favorable payment terms than many other kinds of debt – especially credit cards.

For instance, if you have $10,000 in credit card debt with a 19% interest rate, it doesn’t make much financial sense to spend your extra money financing a student loan with a single-digit interest rate when you’re only making minimum payments on the credit card debt.

Strategy #1: Choose the shortest repayment term you can manage

Your loan’s repayment term is the time you have to pay back the loan. Ten years is the standard, but some recent graduates extend their term to 15, 20, or even 25 years in order to keep their monthly payments low. This is a big temptation with student loan consolidation because your new monthly payment can look quite intimidating once your loans are combined.

If you choose a longer loan term, it can bring you some relief in the form of lower monthly payments, which can help you make faster progress paying down higher-interest credit card debt. However, it dramatically increases the total amount you repay throughout the loan tenure since interest continues to accrue on the unpaid balance.

Now let’s go back to Loan A, the $10,000 federal loan with a fixed interest rate of 4.5% and see how the loan term affects how much you would pay monthly and over the life of the loan.

Term length Monthly payment Total repaid
10 years $103.64 $12,436.56
15 years $76.50 $13,769.83
20 years $63.26 $15,184.32
25 years $55.58 $16,675.80

As you can see, you can cut your monthly payments in half with the 25-year term, but you’ll have to pay more than $4,200 over the life of the loan in order to to it.

Strategy #2: Pay more than you need to each month

Again, let’s look at Loan A. Under the standard 10-year repayment plan, you would pay just under $104 a month for a total of $12,437 over the 10 years period. But if you pay a bit extra money each month this is what’s going to happen:

Monthly payment Total paid Time saved Total saved
$113.64 (an extra $10) $12,158.34 13 months $278.27
$123.64 (an extra $20) $11,937.99 23 months $498.62
$153.64 (an extra $50) $11,485.78 45 months $950.83
$203.64 (an extra $100) $11,072.91 65 months $1,363.70

As you can see, paying just $10 more each month will save you a few hundred dollars over the life of the loan, and you’ll be free of it a year earlier. If you can be really aggressive, paying an extra $100 a month can save you more than $1,300 over the life of the loan — and you’ll have it paid off in just four and a half years instead of ten

Strategy #3: Prioritize your most expensive loan

Prioritize your most expensive loan
Prioritize your most expensive loan

Using this strategy, known as the debt avalanche, suggests that you haven’t consolidated all of your loans, because you’ll be attacking the loan with the highest interest rate most aggressively.


In the example below, we’ll go back to Loans D, E, and F. Loan D was the $5,000 loan at 5%, Loan E was a $10,000 loan at 8%, and Loan F was a $15,000 loan at 12%. Let’s go with a 10-year repayment plan to see what monthly payments and total amounts repaid on those loans would look like:

Monthly payment Total repaid
Loan D ($5,000 at 5%) $53.03 $6,364.03
Loan E ($10,000 at 8%) $121.33 $14,559.16
Loan F ($15,000 at 12%) $215.21 $25,824.38
Total $389.57 $46,747.57

Let’s say you can pay more than $390 a month because you want to pay off the loans faster and reduce the total amount of interest you pay on them. You look at your budget and decide you can spare $550 a month for your debt – that’s roughly an extra $160 a month over the required payments.

If you finance the highest interest loan first (Loan F), you’ll be putting roughly $375 towards that loan each month (the minimum $215 plus the extra $160) while keeping the other payments the same as in the table above. That way, you’ll now be able to pay off Loan F in only four years and four months instead of 10 years.

 Once you’re done with Loan F, you turn to Loan E. After 51 months of paying $121.33 a month, your balance is about $6,693. Now you have about $497 to throw toward Loan E (that’s your $550 loan payment budget minus the minimum monthly payment for Loan D, which you’re still paying). It is going to take just 15 more months to pay off Loan E at this rate.

Finally, for Loan D, which is at about $2,560 after paying $53 a month for 66 months. Now you can go at it with the entire $550 a month, which means you’ll need just five more months to pay off Loan D.

By paying a bit extra each month and prioritizing the loans based on their interest rates, you can pay them off in six years instead of 10,  reclaiming four years of your life where you won’t have to make any student loan payments. And not only that, but you’ll save more than $8,000 in total interest compared to what you’d pay with a standard 10-year repayment plan.

Strategy #4: Prioritize your smallest loan

This strategy also assumes that you haven’t consolidated all of your loans, because you’ll be attacking focusing on the loan with the smallest balance first. This method is also known as the debt snowball.

We’ll once again use Loans D, E, and F for this example. You’ll go at your loans with the same extra $160 a month above those minimum monthly payments. This time, however, you start with the smallest balance: Loan D, the $5,000 loan at 5%. Putting in an extra $160 each month, on top of the original $53, means you’ll have it paid off in just two years. After that’s paid off, you turn your focus to Loan E. The balance is about $8,582 after making the $121.33 payments for two years. Now, you can redirect all the money you were paying toward Loan D and apply it to Loan E, on top of the minimum payment you’ve been making all along. Paying $335 a month, it will be gone in another 28 months.

Finally, you go to Loan F. The balance is about $10,472 after making those $215 minimum payments for 52 months. Now that you have no other loans to take care of, you can put in your whole $550 monthly budget towards it, and you’ll have it paid off in another 22 months.

So you’ll have all three loans paid off in 74 months instead of 120 months by paying a little more each month and starting with the smallest loan first. You’ll also save about $6,000 total  in interest.

While we can’t say the results are as good as those of the debt avalanche plan, but they still make a huge difference. With the thrill of paying off two loans completely early, you’ll most likely be more motivated to stick with the aggressive payback plan. This is why some financial experts recommend the debt snowball over the avalanche method.

Strategy #5: Exploit any available discounts

Some lending companies may offer small breaks on your interest rate. The most common discounts are for making on-time payments over a certain period of time, setting up automatic payments, or having other existing accounts with the lender. Some lending companies may waive any existing loan origination fees. You must make sure you know which discounts your lending company offers so you can make sure you take advantage of them.

Strategy #6: Explore student loan forgiveness

There’s a way to get a portion of your federal student loans forgiven,  meaning you won’t have to pay backthat certain amount. It’s no surprise that this very tempting possibility comes with some hefty strings attached. Forgiveness is a likely possibility if you embark on a career in public service, move to certain locations, join the military or volunteer with certain organizations.

Conclusion

Is it worth it to consolidate student loans?
Is it worth it to consolidate student loans?

Is it worth it to consolidate student loans? The answer could go either way. Here’s a summary to help you decide.

1. Consolidating your loans with the federal student loan consolidation program won’t save or cost you any significant amount of money. That’s because federal student loans borrowed after 2006 already have fixed rates, and your new interest rate will be simply a weighted average of the old ones.

2. Consolidating your loans with a private lender may save or cost you money. Very good credit is required to have a shot at savings (or a co-signer who’s credit-worthy). A tempting variable rate can be risky unless you know you can pay off your new loan in a relatively short time; fixed rates eliminate the risk of rising payments but they’ll be slightly higher.

3. If it’s hard for you to keep track of your finances, juggling multiple bills and remembering payment due dates, student loan consolidation is 100% worthwhile as it will help you stay organized and reduce the possibility of falling behind on payments.

4. It’s not wise to use consolidation as an excuse to drastically lengthen your repayment terms. By doing this, you will just pay more interest over the life of the loan. Choose the shortest term you can manage.

5. You can save a hefty amount on your student loans using strategies that don’t require consolidation, such as paying more than you’re required to each month. Variations on this strategy include targeting the smallest balance first, or paying down your highest-interest loan first. If you want to give either of these tactics a try, you won’t need to consolidate.

It’s safe to say that the days of saving a significant amount of money by consolidating your student loans with a lower interest rate are over. However, there’re still many reasons to consolidate even though it may cost more in the long run. There are advantages such as locking in interest rates on private loans, simplifying payments, extending loan term to lower monthly payments and having more financial breathing room each month.