Payday loan consolidation is essentially the act of paying off several short term, usually very short-term loans with a single large loan or line of credit, commonly coupled with a predetermined repayment schedule, Find more about Payday loan consolidation. The purpose of payday loan consolidation is not only to lower the monthly cost of existing indebtedness, but also to simplify future repayments, reduce the long-term cost of borrowing, and eliminate the possibility of financial mismanagement. However, one must be careful not to fall into the trap of the ‘quick fix’ mythology. If a consolidation plan seems too good to be true, it probably is.
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A reputable, established and financially solvent debt settlement or consolidation company may propose a consolidation program as a way to help customers to get out of an emergency cash shortage. The companies are able to do this by negotiating with individual lenders over the debtors’ payables and interest rates. These negotiations can result in a significant reduction in monthly debt costs and often lead to a renegotiated payoff amount and reduced interest rates. To find a legitimate and reputable payday loan consolidation company, consumers should first educate themselves about the debt settlement process. This information is widely available on the Internet and through real estate brokers and attorneys.
Once a consumer has educated themselves about the debt settlement process, they can begin to develop a comprehensive list of possible short-term financial services that could help them avoid future financial emergencies. Many people have multiple payday loans, many of which they rarely use or interest them excessively, in an effort to acquire extra spending money. Unfortunately, in an economy where household income is stagnant or falling, these same individuals may be trapped in a financial situation where they are constantly struggling to make ends meet. To consolidate payday loans and other types of short-term debt, a consumer may contact the Consumer Financial Protection Bureau or visit their local library to research state laws about multiple payday loans.