So, you have applied for a payday loan, and now you have received the news that you have been accepted and that the money will be in your bank account within the hour. The problem now is, how are you going to pay it back? In this article we will take a closer look at the world of the online loan, the companies that provide them, as well as the ways in which to repay them.
Losing your job or seeing the business you spent years painstakingly putting together go broke is something that can be the first step on the road to applying for a payday loan. These loans have the ability to trap people in a constant circle of debt and repayment that is very difficult to escape from.
If you are Struggling to Pay Back your Debts
Once you get caught up in this circle of debt, it can be hard to break away. In the end, there is going to be a time when you simply cannot get enough cash together to pay the loan. This is when you are going to have to look into ways of dealing with debt, so that you do not end up with debt collectors knocking at your door.
The people over at moneysupermarket.com have some good advice on paying back a loan “With a payday loan, you agree to borrow a certain amount, over a fixed period of time – for example, $150 for 10 days. You don’t normally repay using a cheque or by ringing up with your bank details. Instead, the lender will automatically take the loan amount, plus interest, direct from your bank account on the agreed day of repayment. This is a process known as Continuous Payment Authority (CPA).”
Online Loan Debt Consolidation
When the situation arises that you cannot pay your online loan, then this is something that you need to consider. Online loan debt consolidation is something that can help you to escape from the trap of too many repayments that you can no longer afford.
The Idea Behind the Program
In basic terms, signing up for a debt consolidation program means that all communication and interaction with the lending company is completed by the company that is handling the debt consolidation. Not only that, but they will also handle the repayment terms of debtor, who is left with nothing else to do but to make the repayments to the debt consolidation company, who then passes that money on to the creditors.
Taking this course of action can relieve a lot of the stress and strains that go with being in debt. Not only that, there is also a good chance that the amount due every month will be reduced, and in some cases the fees and charges are dismissed. These much more reasonable rates are unlikely to be achieved by the debtor handling the task by themselves.
How to Get Assistance from a Debt Consolidation Team
The first step to take is to get some debt counseling, which is free. With the help of a debt consolidation expert, it is a lot easier to figure out how much money you have got coming in, and what your outgoings are.
Once the initial evaluation has been completed, and it has been agreed that debt consolidation is the only way to go forward, then it is time to sign up to one. You may be surprised to learn that there are many companies that are available, and although they will want a fee, their help can be invaluable.
As soon as the agreement is signed, you will be assigned a consultant, and he or she will begin to open lines of communication with your creditors. This is handy due to the fact that all of the stress and worry that comes with dealing with creditors is now gone from your life. From the moment you sign the consent forms, it is up to the debt consultant to work on your behalf in regards to the negotiating of the repayment plans, as well as reducing fees and charges. Typically, when a debtor makes use of a debt consolidation program, the lending companies will more often than not waive the charges and the fees.
A Cease and Desist letter may also be applied. This means that the lending companies you owe money from cannot call or contact you in anyway. Your debt consolidation representative will be the only one they should contact. Having debt collectors off your back would be a very big stress reliever.
Other Benefits of Using this Service
If you have several loans, then there is the problem of paying them all individually. With debt consolidation management, all of these payments merge into one. That one payment is sent by the debtor to the debt consolidation company, which then hands it on to the appropriate creditors.
Paying your Debts Yourself
When paying off your own debts, it is important that you have enough funds to meet the repayment date. Otherwise, it is likely that you are going to get into some kind of financial difficulty. There are many ways in which you can repay a loan. The traditional method of handing over a post-dated check to the lending company is now proving to be less popular. This is due to the fact that it was possible for certain borrowers to hand over post dated checks that belonged to a bank account that is actually already closed.
Another aspect is that modern technology has taken over, and it is much simpler to transfer funds between accounts electronically. One of the most popular methods of doing this is through the Automated Clearing House system.
What Is The Automated Clearing House System?
The Automated Clearing House system is a system where money is transferred from one bank account to another electronically. ACH is used by all of the main financial institutions of the United States, and it is the central clearing facility for every electronic cash transfer across the country. It is a bit like a holding area for cash payments before they are cleared by one bank to another. Millions, if not billions, of these transactions take place each day, with trillions of dollars passing between banks.
Asking for a Repayment Extension
If you are struggling to pay the amount of money you owe out of your bank account, then some online loan lending companies allow their customers to ask for an extension to their payment date. Although this sounds like a good idea in theory, there is a problem or two that comes with this. The first problem is that by asking the lending company for an extension to the repayment date, there is going to be a penalty to pay. This penalty is obviously going to be in the form of a fee that will be added to the amount that you already owe.
The second problem is a consequence of the first, due to the fact that there is now even less money available to you when the extended payments date comes around. This could mean that you end up asking for yet another extension, which incurs more fees and so the cycle continues.
Defaulting means not being able to pay back the loan that you have signed up for. You have had the cash, spent it, and now you can’t repay it. For short term online loans, this is worse as the repayment period is short, and so things can go wrong quite rapidly. For people living in the dozen states where short term loans are covered by usury laws, lending companies are restricted to charging interest to a set amount. In some states, it is set in the law that the debtor needs to follow an installment plan, and this comes into effect when all of their repayment extensions have been used up and they still cannot pay their debts.
Debt Collection Agents
If you have failed to make your required payments on a loan, and you have not contacted the lending company with regards to your financial problems, then you could be getting a visit from a debt collection agency. Debt collectors typically try to contact you by phone or via a letter, informing you of their intentions to visit you in the near future. If things have got to this stage, then things could be about to get very uncomfortable, and even unpleasant. The most important thing you need to remember is that debt collectors have rules they are required to abide by law. If they do not, and they start to try and intimidate you or threaten you, then you have the right to seek legal advice with regards to harassment.
There are certainly more advantages to using the Automated Clearing House system to pay your online loan, rather than having to mail a check, or visit a store in the nearest town. Nevertheless, money can go missing this way, and if you do not have sufficient proof with regards to sending it, then it can be difficult to get back.
Another problem with this method is that you must have enough cash in your checking account in order to make the payment. If you do not, then it will either be rejected, and you end in default, or, your account ends up overdrawn, and you get bank charges on top.
Using a debt consolidation company to administer your debts is a great way of taking away the hassles that come with dealing with multiple creditors. Aside from the fact that you no longer have to make multiple payments to multiple companies, you should also see late fees, charges and interest frozen on your account. This means that you are actually reducing the debts with your payments, rather than just paying interest and charges, which could leave you in debt for years to come.
Applying for a loan online which is meant to be for a short length of time invariably incurs a large amount of interest and fees, meaning that the borrower could in fact be paying back almost double what he borrowed. If the situation arises where you are thinking about putting in an application for an online loan, then try as hard as you can to find an alternative. There are a lot of other options out there, so long as you do some research.