You may not have realized how far you fell into a debt cycle while scrambling to make ends meet. Using online cash advance lenders to make ends meet seemed like a simple solution until there were too many unaffordable loans on your plate. All your efforts to make payments are scooped up by the finance charges and cloud any attempts to get the loans paid off in full. It boils down to the need to reapply for a new loan to pay off an old. The endless cycle does not have to continue no matter what your personal finances look like.
Consolidation programs are not exclusive to short-term loans. These loans have been used to help relieve the financial burden in many financial portfolios. They are most often linked to student loan and credit card debt problems. The loan will “consolidate” multiple loans into one easily managed payment. By doing so, you pay one interest rate and extend the term length which will lower the monthly budget demand. The final cost to this loan is usually greater than if the debtor had paid them back in full without consolidation. Extended loan periods equate to additional interest payments. It’s an added cost many debtors are willing to take on in order to find financial relief.
When it comes to services specifically targeting cash advance consolidation, the programs may vary. It is important to understand how the company will consolidate your short-term loans and how much you will pay for their service.
*Will you create a new loan that pays off all the direct online cash advance lenders in full? This is a simple straightforward approach to minimize the financial burden on your budget. Home equity loans, unsecured private loans and credit card balance transfers are self-serviced options. You won’t pay a middle man for these services but you will pay more for your debt over the long-term. It’s similar to buying a new car. The payments can be split into a 60 month term or 36. The payments for the longer term are easier managed, but it is also two more years of interest charges collected by the lender. If you use the credit card transfer, make sure you are familiar with the terms and conditions especially concerning rates and term of any special offer.
*Consolidation services will often charge a hefty fee to consolidate your loans for you. The service providers become the mediator between you and the direct lenders. The plan is to negotiate lower interest rates and configure smaller minimum payment options. Debtors will send in one payment to the service and it will then be distributed to each lender on their behalf. The service fee will be figured into your one monthly payment. This service heavily depends on the willingness of your cash advance online lender to participate in negotiations.
Talk to your online cash advance lender directly before seeking paid-for services
It would be to the debtors benefit to try to work directly with the short-term loan lender first. You may be able to work out a payment plan without having to pay for a middleman. It never hurts to ask; be upfront, personable and honest in your approach.
The downside to using a consolidation service for debt relief is that it doesn’t address the problem which led the debtor into a financial mess in the first place. Some people will get used to the lower monthly payment and then spend money elsewhere raising debt totals once more.
Work out a way to improve your budget’s ability to handle the larger payments instead of consolidation. You will get the debt paid off quicker and pay less for the loans in the end. Don’t keep taking new short-term cash advances out to pay for prior ones. It’s an endless cycle that will only put a borrower further in debt.