5 Key Takeaways on the Road to Dominating
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a Guide on Debt Consolidation and Payday Loan Relief
Debt Consolidation and payday loans are subjects of interest to people that seek personal financing. Payday loans are short-term in nature, and allow people to borrow money to meet unforeseeable expenses until the time they receive their next paycheck. At a glance, payday loans may seem like a good solution to temporary cash flow problems however, the loans are structured to carry high interest rates which easily mount into huge debt if not repaid during the first pay period. As a result, consumers of payday loans end up paying more fees compared to what they borrowed. Such people can find much-needed financial relief by consolidating the debt accumulated through payday loans into a personal loan. Personal loans have numerous advantages over payday loans for instance predictable monthly payments, lower rates and fees and flexible loan terms.
Through debt consolidation, people can recover from mounted payday loan debt. Debt Consolidation combines multiple high interest loans like payday loans and other unsecured debt into a single loan with lower interest rates. This is beneficial in the sense that it reduces monthly interest charges, thus enabling you to pay debt much quicker. If you are seeking to get out of the vicious cycle of payday loans, consolidating your payday loan into a personal loan is definitely a sensible option, not to mention a simple one. The process involves applying for a personal loan which upon approval gets used to pay off the payday loan, leaving you to repay the personal loan according to the agreed loan terms, often at a lower interest rate. On your journey to eliminating payday loan debt, it is wise to review your finances before applying for any personal loans and formulating a plan for staying debt free. Without a proper plan, it is quite possible to get caught in a cycle of borrowing and not being able to repay debts.
Payday loan consolidation into personal loans is important for effective debt management. The first obvious benefit of consolidation is the lower fees. Compared to personal loans, payday loans often attract higher interest rates. Typical payday loans have fees equal to annual percentage rates of about 400%. Personal loans on the other hand have much lower interest rates usually ranging between 5% and 36% based on the lender.
Personal loans have the advantage of predictable monthly payments. After consolidating several payday loans into a single personal loan, you will be required to make a single payment every month to repay the debt. Until the loan is fully paid off, the sum of monthly payments to be made remains the same. Not to mention, personal loans come with flexible terms of repayment.