Payday loans are useful when you need capital to pay for urgent expenses, but haven’t received your next salary yet. Let’s say you want to sign your child up for extra tuition classes for the end-of-year exams, but don’t have enough cash on hand to pay the deposit. A payday loan can tide you through this period and get your child’s education needs fulfilled.
However, when you start taking multiple payday loans, it can be difficult to keep track of all your debt. This is when you might need to consolidate your payday loans into a single loan to make them more manageable. If you have ever wondered: “How do I consolidate my payday loans”, a debt consolidation loan is your answer.
A payday loan is a one-month loan that gives you cash to cover urgent financial needs. You can think of a payday loan as a salary advance to pay off urgent bills or expenses that may incur penalties if left unpaid until your salary comes in.
As the name suggests, this loan usually needs to be repaid on your upcoming payday or exactly a month after receiving the loan. A payday loan is easy to acquire from a licensed money lender. All you need is a stable income and a bank account.
Unlike other loans which may offer 2-3 times your monthly salary or more, the amount of money you can get through a payday loan is lower than your monthly salary. Combined with the often prohibitively high interest rates, the small amount you can get may not always be worth the amount owed.
However, given the quick approval process, a payday loan may still be the only option for many in times of emergencies. But if you have several such loans from different licensed moneylenders, it can be stressful to keep track of different repayment deadlines for these high-interest loans. A debt consolidation loan may be the answer to your troubles in this case.
As the name suggests, a debt consolidation loan allows you to combine all your debts with different lenders into one. Here are some of the key reasons why you should consider a debt consolidation loan.
When you have multiple payday loans, keeping track of all repayment schedules and interest rates can be a real headache. If you miss a payment deadline, you incur penalties like late fees.
A debt consolidation loan combines all your debts into one loan, which makes keeping track of your debt easier and less stressful. You can plan your budget with more clarity as you only have to pay off a single consolidated loan.
Payday loans need to be repaid in a month or less. If you have multiple payday loans that are due in the same month, it can have a huge impact on your ability to pay them. By consolidating all these loans, you can spread out the repayment period over a more manageable loan tenure.
The longer the loan tenure, the less you have to pay per month. This decreases the chances of defaulting and prevents the accumulation of late payment fees. It is worth noting, however, that a longer tenure means you may pay more interest in the long run.
Consolidated payday loans have a lower interest rate than individual payday loans. This means you could pay less for your loans if you choose a shorter loan tenure.
As it is more manageable to repay the consolidated loan than separate payday loans, you also stand a higher chance of getting out of debt more quickly and easily.
If you have decided that consolidating your payday loans is indeed the right option for you, apply for one from a licensed money lender like R2D Credit by following these steps:
- Fill up our online application form or call or visit us.
- If you have not visited our office before, we will need you to come down for an in-person verification and to submit the necessary documents (such as your IC, proof of employment, and proof of income).
- Once the loan is approved, you need to sign the contract. (Before signing, do make sure you agree to all the terms such as the interest rates and loan repayment schedules).
- We will subsequently proceed to clear all your other loans. This means you will only need to repay one loan through a single repayment schedule (to us).
While consolidating your payday loans may help you track your debt easily, it does not get rid of it. So it’s important to budget and manage your finances well to avoid missing repayment deadlines which can lead to late fees. This can be as much as 4% per month on the amount that is repaid late, as well as a late fee of up to $60 for each month of late repayment.
Want to consolidate your payday loans or any other loans? For competitive rates and streamlined, professional service, apply for a debt consolidation loan with R2D Credit now.