Quick non-bank loans for a short period of time, so-called payday loans, are the only lifeline for many people. When our financial situation is difficult or when unexpected expenses arise, and for various reasons we do not have a chance to get a regular loan, this form of credit is our only option. Unfortunately, this sometimes leads to a spiral of indebtedness and a lack of real repayment possibilities. Then it is worth thinking about consolidation of payday loans, thanks to which the installments may become lower and the loan repayment time longer.
A payday loan consolidation – how does it work?
When the specter of paying off more payday loans hangs above us and we are aware that we will not be able to manage it financially, it remains for us to consolidate all loans. It involves a kind of accumulation of incurred payday loans and their conversion into one loan taken on better terms for us. Our new loan, therefore, pays off all payday loans. In such a situation, we no longer have to remember to pay several different installments, but only one with a certain interest rate.
Due to the fact that the consolidation of payday loans is to help us pay off such debt, the installment amount determined then is adjusted to our financial capabilities. Due to the fact that the monthly installment is lower, we can pay it back freely, without generating even more debt. Of course, in this situation, the loan repayment time is also longer, but we must remember to pay the next installments on time to avoid paying interest.
A payday loan – why are they attractive to us?
Non-bank loans are extremely easy to get. In fact, any applicant can get it, regardless of whether he has a stable source of income and how his credit history is presented. It is therefore ideal for people who cannot count on a bank loan. These are, for example, clients working without a contract, i.e. without documented income, and people who had a problem with paying off their debts in the past. What’s more, payday loans are also ideal for customers who need cash in a very short time. Such loans can be paid out within one day of submitting the application.
However, as you can guess, borrowing in this way also has its drawbacks. One of them is the high cost of payday loans. Depending on the offer, it can be a very high interest rate, high costs of credit service or all types of additional fees, the existence of which customers often have no idea. Short repayment periods can also be a problem for the borrower, who is not able to accumulate sufficient funds to pay the required amount. All this means that to settle one debt, we take another payday loan and in the blink of an eye we can fall into a spiral of debt, from which it is difficult to get out.
Payday consolidation – is it worth it?
For many borrowers, consolidation of payday loans seems to be the only rational solution. However, for this solution to be really profitable for us, we must ensure that, in accordance with the terms of such a new loan agreement, our installments will be significantly reduced. Only then will it be easier for us to pay back such obligations. On the other hand, if a new loan only slightly reduces our monthly liabilities, consolidation may prove to be a low profitable way out of a difficult situation.
That is why it is so important to review the offers of various financial institutions and thoroughly familiarize yourself with the debt consolidation conditions proposed to us. First of all, we should pay attention to the amount of the installment, which must be real for us to pay. But let’s also take into account the total cost of such a loan, which cannot be excessively high so as not to put us in further financial trouble.
Consolidation loan – where to apply for it?
Very often, when we think about the possibility of consolidating our debt, we think of a bank loan. Unfortunately, in the case of payday loans, it seems impossible to receive a positive credit decision in such institutions. Banks carefully check their potential customers, which is why problems with repayment of any financial obligations in the past and our name appearing in the BIK database will certainly result in a refusal to consolidate on their part.
Therefore, it is best to apply for this type of loan at non-bank loan companies. The procedures for granting loans are significantly simplified in them, which means that they can also be obtained by people whose credit history is not good. Of course, however, you have to reckon with the higher costs of consolidation loans in non-bank companies.
Therefore, when browsing their offers, we should check, among others, what interest rate is offered to us. Other credit costs that need to pay attention to are all listed additional fees and commissions. Of course, let’s also find out how much our monthly installment will ultimately be, so that we can be sure that we will actually be able to repay the loan. Let us remember that such a loan is to help us overcome the financial problems associated with excessive debt. Let’s not allow consolidation of payday loans to be completely unprofitable for us.