Basically a situation such as the one discussed above arises, when a consumer avails a number of pay day loans but is unable to make timely repayments, and then the company that deals with pay day debt consolidation deals and negotiates with the creditors in order to provide a repayment method in which the consumer is supposed to make a single and centralized payment on account of the pay day debts, with a much lower interest rate. Usually pay day debt consolidation can be distributed into two categories namely:
Pay Day Debt Consolidation plan : Under this category the pay day loan agencies have a kind of tie up or agreement with the creditors to lessen the interest on the total amount of the payday debts so that the consumer gets the advantage of having an affordable and comfortable plan of debt repayment, and even if the consumer misses one or two payments, the company may reduce the dues to curb the monthly expenses; so eventually the debtor is required to make only one payment which is then distributed to the lenders, and thus the pay day loans can be consolidated.how to get out of payday loans
Pay Day Debt Consolidation loan: Under this system the consumer is required to pay small amounts of EMI, therefore the rate of interest is larger and the duration of repayment is more. This system has gained quick popularity in the financial market because these loans have helped people to push aside their financial worries. So the right payday loan consolidation will surely lead one towards financial freedom.
The short term cash advances or pay day loans can sometimes become an unwanted obligation owing to defaults on making regular payments on the expected date, and in case of a pay day loan the lenders allow a two 30 day extension in case of failure to make payments but some of the debtors are unable to repay the entire loan amount even after that, which makes the pay day loans look larger in size, as these loans are mostly availed by the people of lower and middle class; furthermore because of the accumulation of two loan amounts usually there is also a penalty amount that is required to be paid. In such cases when lenders are unable to collect the payment from the debtors, the work is usually transferred to a collection agency which leads the consumers to face endless harassments owing to which they avail the pay day debt consolidation program which delivers them from the hassles of these financial obligations.