DEBT CONSOLIDATION LOANS:
CALCULATING THE COSTS
Borrowers often find themselves in a position where interest rates on several outstanding debts are higher than they had originally agreed upon. They might not have budgeted for an emergency expense or event and some bills were forgotten. A late payment can raise your monthly bill to more than you can manage. This is when a payday loan isn't recommended. A better alternative to a payday loan would be to consolidate these higher interest loans. To take control of your finances, a debt consolidation loan provides financing for a borrower to repay old debts. Consolidating debt turns a handful of creditors and bills into one loan from one creditor to slowly be paid off in fixed installments. A lower fixed rate loan prevents financial confusion and relieves the customer from paying unfair rate hikes. Add up your loans and calculate if refinancing would be cheaper than your current financial path.
Before entering into any financial agreement, think about how much you can afford to borrow and include the interest. This is the loan's total cost. You may request $1,000 but the loan has an interest rate of 12%. For a 12 month payment plan, this comes out to an $89 a month and $1,068 in total. That's only a $68 fee for getting cash upfront and potentially stopping you from digging yourself into deeper debt with another creditor.
Most Common Questions about Payday Loan Alternatives
What is a payday loan?
A payday loan is a small dollar loan that allows borrowers to obtain cash on short notice. Sometimes, these loans are referred to as "short term loans," as the loans are usually for a short duration (until the borrower's next payday).
What are payday loan alternatives?
A payday loan alternative is an online loan option for millions of consumers who need to get fast access to cash before their next payday.
As a borrower with bad credit, can I get a payday loan alternative?
Borrowers with bad credit can apply for a short term loan. The interest rates and terms will vary depending on your credit score.