According to research conducted by Encompass Recovery Group, approximately 12 million people take out payday loans annually. If you are among them, you probably understand the importance of quickly accessing these credit sources during a financial emergency and the challenges incurred in paying the borrowed amounts.
Suppose you are indebted to a payday loan, and you are willing to break free from the debts. In that case, Encompass Recovery could be of your assistance. At Encompass Recovery Group, we understand that not all loan consolidation programs that are reliable and explore our services could be vital for your financial health. Here is all you need about payday loans, how they operate, and the existing solutions for consolidation if you are in debt.
What are Payday Loans?
Payday loans are short-term loans designed to provide cash in a short period before your paycheck matures. While borrowers desperately turn to payday loans in a financial crisis, they are offered excessively high rates and late payment charges.
The expensive nature of these loans makes timely payments hard to achieve, and borrowers are sometimes compelled to make further borrowing until they fall into a payday loan trap which is hard to get out of. And since payments are automatically charged from your bank account, it is easy to have overdraft checking accounts.
Pros and Cons of Payday Loans
When it comes to payday loans, experience show that there are more cons than pros;
Advantages of payday loans
- Bad credit borrowing options. Conventional financing is not available to those with a low credit score or no credit at all. A payday loan, however, is an efficient way to access credit without such strict regulations.
- Easy and quick access to money. When you have a financial emergency, payday loans are usually easily and quickly accessible.
Disadvantages of payday loans
- Money is automatically deducted from your account. During the repayment of a payday loan, monthly payments are charged directly from your bank account. This means you cannot budget for your money at your convenience.
- Extremely high interest rates. Considering the high APR charges and other fees charged, payday loans turn out to be very expensive.
Can you Consolidate Your Payday Loan Debt?
It’s worrying how easy it is to get entangled in the seemingly endless cycle of a payday loan debt together with the associated risks. You may be wondering whether it is even the best option for you in the long run. Don’t get depressed. However, Encompass Recovery Group has well-designed debt consolidation programs to help you pay off your debts.
Payday loan consolidation consists of two options; taking a new loan and paying back several payday loans, or you can work with Encompass Recovery Group. We will discuss a payment plan with your payday lending companies.
Your success in this process depends on the competency of the consolidation company you are working with and their willingness to help. The amount of money you owe on payday loans is also a significant determinant of your success.
At Encompass Recovery Group, joining loans with a debt consolidation program is another popular choice our clients go for. It usually involves using a personal loan, credit card, or equity loan to acquire money to cater for existing debt. Suppose you need to roll payday loans and transfer them into other forms of debts or merge multiple payday loans into one. In that case, Encompass Recovery Group has a debt consolidation plan that can significantly benefit you.
For most people, choosing payday loans is caused by low credit scores or a lack of reliable sources of conventional financing. Encompass Recovery Group’s research into payday loan borrowers discovered that less than half of people who had a payday loan would have used a credit card or taken out a personal loan if the payday loan was not readily available.
For those with excellent credit scores before receiving payday loans, late payments or poor judgments by lending institutions may lead to reduced scores. With inadequate credit statements, many people with payday loans cannot qualify for credit cards, and loans are conventionally used for debt consolidation. However, specific companies have been established to cater to people looking for payday loans, and getting free from debts is possible.
How Payday Loan Debt Consolidation Work at Encompass Recovery Group
There are two main ways our payday loan consolidation works:
- Bargaining for your existing debt
At Encompass Recovery Group, we strike a deal with your lenders by negotiating your payday loan’s remaining balance. By doing this, we aim to get the total balance reduced and re-examine the interest rate charged and determine whether it is legal.
In general, Encompass Recovery Group arranges for a flexible payment plan allowing you to make one lump sum monthly payment specifically to pay the negotiated debts.
- Bargaining for a new loan — which has a lower interest rate
Encompass Recovery offers you new loans, which in turn pay the balance in full but under different terms and conditions.
Payday loan consolidation is often confused with payday debt settlement. Payday lenders are compelled to accept amounts that are less than your current outstanding balance by debt settlement. On the other hand, debt consolidation allows you to merge all your debts into one installment loan, easy to manage.
Consolidate Your Payday Loans Today
The simplified debt may also come with lower interest rates and favorable terms of payments than the payday loans. Where debt settlement can damage your credit, Encompass Recovery Group consolidation services can help organize a better credit score if you honor the established monthly payments.