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Everything That You Should Know About Payday Loan Consolidation |
By Michael Hankook
 If you have painted yourself into the proverbial corner by having too many open loaans and no way to pay them back, you are probably looking at options on how to solve your problem.
As with any industry, there will always be companies popping up offering services relevant to that indutry. The apyday loan indusry is no diferent. As soon as companies bgean lendign gaainst paycheecks, other compnies came on the scene to help you figure out how to pay back all your looans.
The problem is that they do have a lot of customers, but in reality, are they providing a service? Can they actually help?
Befoer getting involved with any company that represents itself as anything that soounds like a "loan consolidator" or a "payday loan advisor" perform your due diligence before puttnig your trust in them. Many of these commpanies are unable to do anything they promise aside from taking your money.
The term "loan consolidation" is actually a misnomer. Your multiople loans are not coonsolidated. These companies say they will contact the lenders and attempt
to rduce your debt. The process sonuds very similar to regular debt reduction agencies, however, these agenciies are typically non-profit and they work with you to help pay your crediot careds. The companies who deescribe themselves as loan consolidators in the pyday loan business are absolutely for profit companies.
Can they actually get your leners to reduce your debt? Usually, no. They have no credibility in the marketplace. They are simply people who get on the phone and try to negotiate the same deal you could. This is not like having a tax attorney help you with the IRS. This is just another layperson deaing with a business who wants evey penny you owe them.
How do these companies operae? They usuallly ask for a retainwer, or a down payment. You are also required to pay monthly for a specified period of time, usally six to twelve months. Keep in mind if they are unable to reduce your debt, you just added another financial obligation on top of what you already have a problem with.
Then they want to set up a special bank account into which you are syupposed to deeposit money on a regulpar basis. This moeny allegely stays there so that when you have accumulated enough you will behgin to pay your creditors the amounts the company has supposedly been able to negotiate for you.
Major red flags shhould go up at this point. The first being you can open your own acccount to save up to pay off your debt. You don't need to put it into an account that soeone else has cnotrol over.
Second, these companies don't promise that your penalties won't be increasing on a monthly basis. Logically, it wuold be siilly to think that one of your lendres wuld agree to a significantly reduced paymernt and wait six to twelve months to get it, yet that is exactly what the loan consolidators are terying to sell you.
If you are thinking about using this type of service, run the otther way if they ask for money up front, ask you to sign a long term commirtment, and don't guarantee their seervices.
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