Sometimes consumers of payday installment loans had a hard time paying off debts. This is when debt consolidation becomes vital. When you consolidate debts, all your unsettled accounts will be paid in a single payment.
If you are planning to consolidate debts, especially with your payday installment loans, there are important things you need to consider. Since the payday lending industry has been associated with predatory practices, it is important that you deal with legitimate lenders before you consolidate debts. You also need to consider looking into specific laws applicable in your state regarding debt consolidation and other matters regarding paying off debts.
The following are helpful guide questions if you are planning to consolidate debts of your payday installment loans:
1. Is Your Payday Installment Loan Lender Storefront or Online?
It is more difficult to consolidate debts with online lenders than with lenders located in storefronts. Many online companies do not disclose their exact physical location. If this is the case, you should contact your online lender to provide you with their address so you can settle your debts with them.
2. What Loan Companies did you borrow from?
When you have determined you want to consolidate all the debts of your payday installment loans, you need to prepare a list of your loan companies or lenders. When you have the list in hand, do a thorough background check of each lender your are considering by checking their records at the Better Business Bureau. Determine whether the lender you are dealing with is licensed to offer payday installment loans in your state or not. If they are not, do not use them for consolidation.
3. How much do you owe your lenders?
After listing all the lenders you have borrowed from, the next thing to do is consider how much you owe each one. You need to determine the total number of payday installment loans you have borrowed, when you borrowed them, and how much is the principal amount of each loan. It is advisable that when paying off debts, you start with the older ones with higher interest rates to avoid the accumulation of even larger debts.
4. How much are the rates and fees charged by the loan companies?
The government has imposed caps on how much may be charged for a payday installment loan. Before you consolidate debts, check out the laws applicable in your state and if your creditors are charging you rates and fees allowed by law. If the amount has exceeded the maximum limit imposed by the state, you have the right to refuse to settle the debt and you can even file a complaint against your lender.
5. Have your loans been renewed or rolled over?
There are certain states that have restricted the number of times a payday installment loan can be rolled-over or renewed. Make sure that all the loans has been rolled over or renewed within the state limits before considering paying off your debts.
Before planning to consolidate debts associated with payday installment loans, it is important to educate yourself about the laws applicable in your state. If your lender is practicing illegally, you have the right to not pay off your debts in order to protect yourself against predatory lenders.