We hear every day from the media how the U.S. economy continues to struggle. For many, the effects of a bad national economy have brought a harsh reality to their families. They have lost their jobs and are struggling to keep their homes and pay their bills on time. They may be working temporarily at a job that pays less than their previous employment. A drop in salary can make paying bills on time very difficult. If a tax refund is imminent, one option is to take a loan based on a cash advance on tax refund. In other cases, however, many have turned to payday loans as a solution to the problem. A first consideration in this type of financial assistance is whether the loan can be paid back with the additional cash advance fee based on the cash advance interest rate that determines the additional fees.
Cash advance fees as well as payday loan fees can seem quite reasonable with a small loan. For example, the fee might be $15 per each $100 of the loan. For a loan of $1,000, the fee alone could be as high as $150. The cash advance APR (annual percentage rate) is calculated by taking the cash advance rate (i.e. $15 per $100) and dividing it by the number of days until the maturity date of the loan. This is usually the number of days until the applicant’s payday. If that were to be 14 days, for example, then $15 divided by 14 equals $1.07 per day. Multiply by 365 days and you can calculate the APR which would be 390%. Even that very high rate seems reasonable unless the loan cannot be paid back on payday.
The general procedure with a payday loan is for the customer to leave a postdated check in the total of the amount of money borrowed plus the lending fee. That check can then be presented by the lender for payment to the borrower’s checking account on the loan’s maturity date. This date is usually the date of the borrower’s next paycheck. If the borrower has secured a loan from an online lender, then the lender processes a debit in the total amount of the loan to the borrower’s account.
What happens if the borrower does not have the loan amount plus the additional fees in their checking account on the date of maturity? They will be charged a NSF (non-sufficient funds) fee by their own bank as well as additional fees by the lender. What are the consequences for the loan not be repaid as soon as possible following the maturity date? The lender may continue to submit the borrower’s check to their bank for payment which will result in additional NSF fees. The lender may also increase the payday loan interest rates. As one can imagine, what seemed like a simple loan in the beginning could quickly accelerate into a financial nightmare.
Of even greater concern for the borrower would be yet another financial emergency which requires them to obtain an additional cash advance pay loan. If the consumer’s job situation has not improved since the first loan was taken, their financial situation could soon spiral out of control. A payday loan is a viable solution to a temporary problem, but multi payment payday loans can be difficult to manage. In fact, the borrower may find that their entire paycheck goes to make these cash advance payments. In the case of multiple loans and even multiple lenders, payday loan debt assistance is needed in the form of payday loan debt consolidation.
If this is your situation, you may be wondering how to consolidate payday loans debt. The various lenders that offer payday loan consolidation loans offer welcome relief to the borrower who has taken an interest cash advance or two in an effort to keep their household bills paid. Consolidating payday loans involves setting up a payday loan repayment plan. Similarly, cash advance consolidation involves the consolidation lender working with the client’s various original loan lenders to come up with payday loan debt relief in the form of a single payment with a lower interest rate. This plan will spread the total loan repayment out over many more months than the original loans and incur more interest than the payday loans interest rates, but it will bring a overall lower monthly payment.
The process of preparing to consolidate payday loan debt usually begins with a credit counseling session with the new lender. The lender assesses the borrower’s overall financial situation and determines the best solution for the borrower’s situation. In some cases, the lender can negotiate with the original payday loan lenders to reduce the amount owed on the loans they own as well as the payday loan rates charged on the money borrowed. With reduced loan amounts and fees, it will be possible to group all of the loans together in a new repayment plan that will help with payday loan debt considerably. A new, affordable single monthly payment will be calculated that will set the borrower on a path to stabilizing their finances.
The advantages to choosing payday loans consolidating are many. The first will be the immediate relief from trying to manage multiple payments to more than one lender. The second advantage will be that making payments on time to a single lender will begin to rebuild the borrower’s credit standing. Because lenders have the right to report a late payment to credit bureaus, problems with payday loans can quickly cause a plummet in the borrower’s credit score. When timely payments begin with payday loan help debt consolidation, the borrower’s financial situation will begin to improve right away. Debt consolidation for payday loans offer welcome relief at a time when so many are struggling.
Until the U.S. economy begins to recover, more and more families are going to find the need to borrow some money for emergencies before their paychecks arrive. Using a cash advance or payday loan should be considered with great caution and only after weighing all of the other options. Too often people let their emotions push them into a quick decision that they believe will bring the quickest solution to their crisis. A small fee added onto the amount borrowed just doesn’t seem dangerous considering that their paycheck will arrive in just a few days. However, statistics are showing that the default rate on payday loans is 10% to 20%.
Fortunately, payday loan debt help is available for those facing multiple payday or cash advance loans. Payday loans consolidation is available to bring a dangerous financial situation under control. For the borrower of multiple payday loans, the obvious next step is to contact one of the many reputable loan consolidation firms that will set them on a path to stability. Debt consolidation payday loans offers one payment, a lower interest rate, peace of mind – it’s all worth the time to explore this terrific option to sleepless nights and endless stress about repaying multiple loans.