About Payday Debt Consolidation

If you can’t get approval for debt consolidation through a bank, you have the option of using payday debt consolidation. This type of repayment plan is similar to getting a payday loan, but instead of using the money you borrow as you see fit, the company offering the plan will use the money to pay your creditors for you. With most payday consolidation companies, your monthly fee for their service comes out of your paycheck either weekly or monthly depending on how you have it set up. MSN Money recommends negotiating for the lowest rate possible before agreeing to any plan for debt reduction.

Advantages of Payday Debt Consolidation

One of the best things about any type of debt consolidation plan that is handling your creditors for you is that you no longer have to deal with your creditors. Many people despise the relentless phone calls and harassing messages left by creditors, and in most cases they will agree to cease collection activity once they become aware you are working to consolidate your debt and pay it off. You should also be able to get a debt consolidation loan without owning a home through a company like this.

The Downside of Dealing with Payday Lenders

The Federal Trade Commission recommends considering every alternative before using a payday lender because of the consequences involved in using these companies. The worst thing about payday debt consolidation is undoubtedly the high interest rates. Payday companies often charge very large fees and interest for both lending money and offering consolidation services. You can avoid being taken for a ride by a payday company if you read the terms of the plan you’re considering thoroughly and make sure you are aware of the laws regarding interest and fees in your state. Additionally, you should always make your payments on time if possible because the company you’re using could report you to Teletrack, which is similar to a credit bureau. If it looks like you will definitely miss a payment, find out if the office you’re using is offering non Teletrack payday loans.