Payday loan consolidation is another name for a loan restructuring. It can be a good or a bad thing. With payday loans, it can make your life easier but with the repayment that is needed to keep it going you can often end up in debt again.
If you have a credit score that is low or not as good as you need it to be you may be in danger of being overdrawn on your credit cards and in turn, overdrawing your other bills as well.
The best thing about loan consolidation
This can lead to you having to declare bankruptcy. This may cause you to be denied another loan for a very long time.
The best thing about loan consolidation is that it is all done for you. There is no way that the bank could get you to repay a loan and your creditors would never even know about it. And while consolidation may sound good it is much more than that.
Part of the plan is working with your creditors to make sure that you only make payments that are part of the consolidation program.
The bad thing about the lenders and the companies that provide them is that they will continue to charge you the same fees. Instead of paying just one bill for a credit card, for your mortgage, and for your utility payments they can be charging you all of these things.
Refinance all of your credit cards or charging a prepayment fee
Some companies will try to pressure you to refinance all of your credit cards or charging a prepayment fee for your mortgage when you actually would not be able to pay for the house. In some cases, the person who is taking the loan will be making a lot of money, but he or she is still not getting their own loan.
What happens is the people behind the companies can earn a lot of money for a little investment, so they have the incentive to do all the things that they know the lenders want them to do. They will benefit by charging you high-interest rates.
Part of the plan is working with the lender to get you lower rates than what you currently pay. Because the person doing the loan consolidation is trying to get as much of the original loan back as possible, he or she wants to be able to give you better rates than you are currently paying. You have to be careful though because the company that you are dealing with may try to give you loans to pay off your existing credit cards so that you can stop paying them.
The person with the credit cards should be asking questions when a consolidation company offers to take over those accounts. They may say that it is a consolidation loan. But before they do it they need to know that the account is already paid off.
Before you sign the papers, you need to find out what the charges are going to be for these accounts. They may be many times higher than what you pay now so you are paying more money to get less money in the end.
While the new consolidation company is working with the credit card companies to try to make you pay more they are also adding them to your bills. This makes the new loan the same as your current one but with a new company that is charging you more money for services you never requested.
The loan was paying the charge every month
Now if the person who has the loan was paying the charge every month and when the loan was repaid in full he or she may be happy about it. But if you have to pay each and every month because you are paying a lot of money now and you are no longer paying off the interest that you were paying for the original loan then you may not like what the person who is working with the lending company is doing.
It can be good to have more than one loan because it allows you to have to pay the loan back and not the fees each month. You may also not like to be paying all of the credit card companies at once. You can make them pay over time and you will still get them taken care of.
There are many pros and cons to using a payday loan consolidation. What works for you may not work for someone else.