The slippery slope of payday loan debt begins when a financial emergency and poor credit leads you to take out payday loan. You have every intention to repay the loan as soon as you are paid, but something else comes up, forcing you to take out yet another payday loan or postpone paying off the original payday loan.
As you incur additional debt from the loan’s high interest rate and late fees, you soon realize you are mired in debt and begin to fear that you will never be capable of paying off your payday loan debt. Fortunately, debt consolidation loans can provide a solution to payday loan debt.
Debt consolidation loans are loans that can be obtained either in person, online, or over the phone from respectable financial institutions such as banks or credit unions. These loans are taken out for the entire amount of your payday loan debt, and then used to pay off the payday loan lender(s), and once those lenders are paid off, you begin paying off the debt consolidation loan. Although taking on more debt to pay off another balance sounds like a bad idea since it is possibly how you ended up mired in payday loan debt, using debt consolidation loans is different from using payday loans since debt consolidation loans can truly benefit those in financial binds. Debt consolidation loans are beneficial because they permit a longer period of time to pay off the loan than payday loans, and they have much lower interest rates than payday loans, both of which save you money and mental agony in the long run.
Please note that if bad credit was a motivating factor in your decision to take out a payday loan, you will likely have to put up collateral when obtaining a payday loan consolidation loan. Also, do not think of debt consolidation loans as temporary solutions to payday loan debt. After you pay off your payday loan debt, develop and adhere to a budget and begin an emergency savings account so that you can avoid resorting to payday loans in the future.
Web. 29 May 2012 <http://www.gobankingrates.com/debt/how-do-consolidation-loans-work/>.
At The University of North Carolina Wendy plans to actively participate in a student group, Health Focus, which will enable her to use her knowledge and love for health and nutrition to educate youth in the Chapel Hill/Carrboro area. She also hopes to promote voter registration amongst her fellow students.
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