Payday Loan Debt consolidation programs can really help you get out from under payday loan debt and save yourself money. The problem is many people don’t even know that payday loan settlement programs exist or how to use them. Payday loans are short-term, fee-based cash advances that are given to customers using checking or savings accounts. The customer then pays back the loan within a few paychecks, usually within just a few days. Because the amount is small and due quickly, interest rates for payday loans are high – often double, or triple, the original amount that was borrowed.
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For this reason, the majority of people who take out payday loans are doing so to pay off more expensive debts, such as credit card and store card debts. The high interest rates and monthly payments that come with these debts can quickly mount up and make it difficult to meet minimum payment obligations. In addition, the accumulated balances can make it difficult to keep up with necessary bills, such as utilities and cell phone charges. So how do payday loan settlement programs work to eliminate or at least reduce these debts? Actually, they work for several different reasons.
First, payday loan settlement programs allow borrowers to consolidate existing payday loan debts into one debt that typically carries a significantly lower interest rate. Payday lenders want their borrowers to repay their loans in full because the reduced payments reflect higher profits for the lenders. This means the lenders will often charge extra fees for extension periods or extended payment periods. Even if the charges aren’t substantial, they add up over time and can quickly cause a payday loan borrower to fall deeper into debt. By allowing borrowers to repay their loans in full, payday loan settlement programs allow borrowers to avoid extra charges from their lenders.