Call Us and Get a Free Quote! 888-407-2775

Payday loan debt consolidation vs. Payday loan debt settlement


A surprising number of Americans find themselves embroiled in substantial payday loan debt.  An estimated 12 to 15 million payday loans are taken out each year in the US. If you are one of the millions of Americans who feel trapped in a vicious payday loan cycle, don’t despair.  The silver lining may be in getting a payday debt consolidation loan or a payday debt settlement loan. These two options offer distinct methods of going about being debt-free.

It’s a sad thing to see how many people opt for a payday loan in lieu of any other recourse of action. However, when “it” happens the best we can do is find the least harmful way out so we can get back to our regularly scheduled life. What options there are is available and accessible to us at a time of need depends on our capacity to pay off debt.  However, this is isn’t always the case. An increasing number of loans default or people end up getting a second and third payday loan. When payday loans pie up, or you have come to a halt and default on the loan’s terms. That’s when payday loan consolidation comes in to play the hero’s role.

Payday Loan Debt Real Life Case

Take, for instance,  the recent case of Claire, a 42-year-old, mother of two, gainfully employed at a veterinarian’s office, going about her happy family life with one of the best outlooks on life. Her husband worked at a local bank in the compliance department, and her boss even allowed her to leave work early so she could pick up her kids from school. Little did she know her life would be turned upside down the day she found her husband already home waiting to tell her the sad news of losing his job.

During the last Great Recession of the US in 2008, many Americans lost their jobs, their homes, and their peace of mind.  Claire ended up a single mother living two paychecks behind and paying up to $500 in payday loan interest each month just to keep food on the table, and her lights turned on. When she failed to make good on payment after consecutively taking out several payday loans, her inter

est rate compounded to where she was paying interest on the interest that she did not pay the previous payday loan.

What a nightmare! Actually, Claire failed to read the small print on the contract the day she decided to get a payday loan.  A 400% APR is not an uncommon rate to find stated in the small print on the bottom of the contract.

Had Claire started reading her contract from the bottom up with a magnifying glass, she would have realized the extent of the repayment sum she would end up owing.

Getting help from the web

Most people will start their research by asking friends and making a search engine inquiry. That’s how Claire found the sites that offered debt settlement programs for payday loan debt. However, the overwhelm of information got to her. She felt confused and frustrated.  “What exactly is APR, and how can it compound so quickly?” she asked herself. “Could these Payday Loan Debt consolidation companies really help?” she wondered. “If so, how?”

Finally, Claire made the call that saved her situation and cleared her life of payday loan debt.  Her questions were all answered before she signed on any new loan by courteous, knowledgeable people who didn’t pressure her into making a decision.  These are some of the questions Claire asked for and received information about.

What is the difference between payday loan debt settlement and payday loan debt consolidation?

At its core, the goal ofa Payday Loan Debt Settlement plan is to lower the amount of total debt owed. The amount of time it takes to pay off this type of loan varies depending on the size of the loan and debtor’s situation.  On average, it takes 2 to 4 years to pay off these loans.

A Payday Loan Debt Settlement Advisor is someone chosen to act on behalf of the person that owes the money to discuss ways of lowering the debt by making a cash offer on the dollar.  The downside to this type of arrangement is having the cash in hand. Unless you’ve come into some extra cash, take out savings, an IRA, cashed out a policy, or made a big sale, there is not much negotiating the advisor can do for you.  This is an option that is not available to people who don’t have any leverage to settle the debt with. Another consequence of debt settlement is that of lowering your credit score.

However, if you have the dollar capability, this is an excellent option. It doesn’t take long to apply and settle the debt once negotiations begin.  Talking to an advisor will let you know exactly what your chances are of paying pennies on the dollar for your debt. Take the time to see where you stand since negotiations for debt settlement depend on the amount and age of the loan.

Payday Loan Debt Consolidation works differently.  Consolidating debts means putting all the debts or loans together into one payment at a lower interest rate. It is recommended to have an Advisor who will give you the representation you need to negotiate the terms of the consolidation loan with the lender.  The negotiation point in debt consolidation consists of lowering your interest rate and deleting late fees. These loans usually take a little longer to pay off, 2 to 4 years on average. However, these are also loans you can afford to pay. In other words, the terms of the consolidation loan are wrought out in your favor according to your means.  You can keep track of your loans and payments more easily this way. Another advantage is that debt consolidation doesn’t hurt your credit scores as debt settlement does.

The process of a Payday Loan Debt Consolidation Loan includes transferring your debt to a new lender.

Claire’s best choice

After making several phone calls and getting the facts straight, Claire was able to make the best-informed decision she could make.  Working in conjunction with a Payday Loan Debt Consolidation Advisor, Claire was able to evaluate her debt, and she felt hopeful and optimistic again.

Annie worked closely with a great Payday Loan Debt Consolidation Advisor. Her advisor was able to explain the terms of the new loan so she knew exactly how much she would end up paying in total and how long it would take her to become debt-free.

Post a comment