How to Consolidate Payday Loans

At first glance, today’s financial world appears to be in good shape. Consumer are spending more money than they have in the past two years, supporting both local merchants and large nationwide companies. Businesses are hiring again, filling positions that have been vacant for years. It’s a full circle change, and it appears to be pushing the economy back to a period of relative strength.

But beneath the surface – beneath the new positions, raised incomes, and greater spending – is a very different story. Over the last two years, more individuals and families alike have found their finances in a wreck than ever before. A combination of toxic mortgages, failed property purchases, and unemployment have caused one of the greatest consumer lending crises in recent history.

It’s not subprime, it’s not employment-related, and it isn’t tied to any type of security. Instead, it’s unsecured debt from payday loans and other cash advances. While less immediately obvious than other forms of consumer debt, these loans have been creeping up on many people during the last few years, fueled by their own massive interest rates, loan-related fees, and additional charges.

In this guide, we’ll be looking at a number of options for people indebted to payday lenders. These include repayment plans, many of which call for snowballing the debt as with other loans. There is also a large amount of consolidation and management solutions available, many of which have the power to assist consumers. Whether private or personal, you’ll learn how to get out of debt quickly!

Over the last twelve months, the payday lending industry has received a great deal of regulatory attention. States that were once indifferent to the presence of payday lenders, or possibly looking purely at their initial economic benefits, have turned on the lenders en masse, pushing them into a poor position due to caps on interest rates, limits on fees, and other regulatory action.

This has limited choice, while also forcing many of the consumers saddled with payday loan debt from before the changes to continue operating at their current interest rates. It’s a tough situation to be in, as the interest rates on payday loans could previous reach into the thousands of percentages annually. For many people, this means debt that expands at a massive rate, often out of control.

There are options, however, and amongst the most popular for payday loan borrowers is a new form of debt consolidation. Purpose-built to meet the needs of people with excess payday loan debt, these debt consolidation services focus on offering relatively short-term loans – often for less than twelve months – for repaying the ever-growing interest and balance of payday loans and cash advances.

Two well-known payday loan debt consolidation services are Langhorne Finance, and Town and Country. Both built to specifically tackle the issue of growing payday loan debt, these lenders are experts in their field, and can offer special payday loan consolidation services to borrowers. They know the payday lending world well, and specialize in helping borrowers get out of it quickly.

Generally speaking, payday loans grow rapidly over the course of a year, particularly as the vast majority of people taking out payday loans have little, if any, way of repaying them in time. This results in massive fees for borrowers – fees and interest that compound as the loan gets older, and snowball into a huge expense. In some case, a loan’s balance can triple in just a few short months.

For this reason, it’s best to solve these problems quickly and simply. Divert a great deal of your income towards your consolidation loan, and aim to have it repaid in the shortest time period as you’re able to do. Slow repayments are the enemy of successful payday borrowing, and it can be worth securing a higher interest rate on your consolidation loan in order to use faster payments.

There’s also the total value of your consolidation loan to consider. While you’ll repay your payday loan balances faster, and in turn pay less interest, there’s the interest on the consolidation loan, too. For the most part, these loans result in a relatively less expensive borrowing experience than you’d encounter if you repaid the loans one-by-one. It’s best to always check this for yourself, however.

Before you work with any payday loan consolidation service, it’s important that you separate all of your payday loans into storefront loans (loans acquired through a retail payday lender) and internet-based loans. For regulatory purposes, these loans are often grouped differently, and in many states you may need to use two consolidation loans – one for internet loans, and one for storefront loans.

Along with the need for different consolidation loans, you may also qualify for public assistance from the Community Financial Services Association if your loans are primarily from storefront or retail lenders. Most lenders are CFSAA lenders, and work with the association to ensure that their borrowers are able to seek assistance or strategically repay their loans should they grow rapidly.

While they serve a legitimate need, offering financing and short-term cash flow for those with a low or unstable income, payday loans have a disproportionate amount of potential hazard for borrowers. If you’re burdened with payday loan debt, use a consolidation service to repay it as quickly as you’re able to. In the future, be vary wary about short-term, high-interest loans offered by payday lenders.