Refinancing a loan – is it worth it?
Quick loans have enjoyed unflagging popularity for many years. It is used by people who care about instant access to cash. It turns out to be very useful when you can’t get a bank loan. The most advantageous solution is the timely repayment of such a loan, but it is not always possible. In the absence of funds for repayment of debt you can use refinancing payday loans.
A non-bank loan has several advantages. It does not require many formalities, completing documents, providing income certificates, and completing complex applications. Payday loans companies place much lower requirements than banks. Most such companies check the credibility of their clients, e.g. in BIK, but do not carry out a detailed analysis of creditworthiness. This is a good solution for people who are not employed full-time. Pensioners are also often used by pensioners who do not have high income. It is also worth considering that online loans mean quick access to cash. All you have to do is go to the website of your chosen loan company and complete the application. After positive consideration of such an application, the money is immediately transferred to the account. So this is a way to raise additional funds, which works well when you need a quick injection of cash. Not everyone can borrow money from family or friends, and the bank has to wait too long. When unexpected expenses arise, payday loans online are often the simplest and fastest solution.
There is no denying that a non-bank loan is a big temptation. It seems like a simple way to repair your home budget. However, you need to think carefully about the use of payday loans. Indeed, in many situations they prove to be very helpful, but before making such a commitment you must always make sure that we will be able to pay it back within the prescribed period. Thanks to this, we will avoid many unnecessary problems and stresses, as well as costs that may be associated with the extension of the repayment deadline. Of course, there are also cases when, despite careful financial planning, repayment of payday loans is simply not possible. In this situation, you certainly must not panic. There are many solutions that can be used to solve such a problem. First of all, you should contact the loan company and find out what options it offers. One alternative is to refinance payday loans. The advantage of refinancing is above all the fact that it allows you to postpone the repayment date in a simple and stress-free way.
What is a loan refinancing?
The refinancing offer did not appear on the payday loans market for a reason. Non-bank companies have long offered the option of extending the repayment of a liability. Of course, such an extension took place only after paying the appropriate fee. Customers were eager to use this type of solution, shifting the deadline many times and increasing the cost of the loan each time. Instant payouts via the Internet gave the opportunity to postpone repayment, which was used by loan companies each time increasing their profit. The situation changed radically after the anti-usury act was introduced.
Anti-usury Act and non-bank loans
After changing the applicable law, the loan can be extended only once. If we do not settle our liability by a new date, it is the basis for starting debt recovery proceedings. In such a situation, it was necessary to create an alternative solution, which became refinancing of payday loans. In other words, refinancing gives you the chance to circumvent applicable laws and legally postpone repayment. Everything is done in accordance with the law and the client avoids debt collection proceedings.
What is the refinancing of payday loans?
This is not a very complicated procedure. Refinancing means that a customer who is unable to pay back a loan incurs another commitment from another company. The funds obtained in this way are used to settle the first debt. From the customer’s point of view, it doesn’t really change much – it still has to pay back the amount borrowed. The only significant difference is the change of the creditor, i.e. the loan company.
Payday refinancing – advantages
As already mentioned, refinancing loans has the obvious advantage – it avoids overdue debt. The customer who decides to do so, gets rid of the old debt, which removes the spectrum of recovery and all problems associated with such a procedure. Thanks to this, we have a chance to avoid additional fees associated with the debt recovery procedure. At the same time, refinancing does not adversely affect your credit history. If we need a few extra days to settle the contract, the method may be the most beneficial.
Refinancing non-bank loans – disadvantages
However, one should also take into account the fact that refinancing of payday loans is not without flaws. Unfortunately, there are always additional costs when we are late with repayment. This cannot be avoided with this solution. Refinancing of payday loans is therefore associated with the need to incur fees associated with incurring a new commitment. The use of such an alternative gives more time to settle the debt, but at the same time causes its cost to increase. When we have sufficient funds to pay off a new payday loan, nothing bad happens, worse if we lack money, e.g. we do not have a stable income or we have to pay off other liabilities. In this situation, you can easily fall into a spiral of debts, i.e. take further loans and credits until you declare bankruptcy. Therefore, refinancing loans must be used carefully and carefully.
Consolidation and refinancing
People who have problems paying off all their liabilities can take advantage of loan consolidation. Consolidation combines all liabilities into one. This applies to online loans, bank loans, credit card debt and other obligations. Is this an alternative to refinancing? First of all, it is worth remembering that consolidation involves several different debts, and will also be associated with additional costs. The advantage of such a solution is spreading the debt repayment into more installments, however, the repaid amount will be higher in the end. In addition, dealing with consolidation is not always an easy task, because it is associated with quite complicated formalities. Banks often require collateral for a consolidation loan, e.g. in the form of a mortgage. So if we have only one loan to pay back, refinancing is a much better idea.
Instead of refinancing, you can also take advantage of the free loan offer. Many companies provide free payday loans to attract new customers. When incurring such an obligation, we do not incur any additional costs, we only refund the sum borrowed. This type of solution seems very profitable, but you need to find a company that will grant the loan for the amount you need and within the time limit that will allow you to settle your first commitment. Of course, taking out a loan to pay off debt makes sense only in emergency situations and in the event that we have the funds to pay off another debt. If we do not settle the free loan on time, we will also be charged additional costs.
Refinancing Loans – Use or Avoid?
From the point of view of a loan company customer who is unable to pay back a loan, refinancing seems like the perfect solution. It is a simple, easy-to-use method that gives you the chance to solve the problem in a few moments. There are different situations in life. Sometimes we plan to pay our liabilities on time and we have funds for it, but there is an unforeseen accident, accident or illness. Instead of settling the commitment, we have to cover unforeseen expenses. In this situation, refinancing a loan is a good idea. For example, we know that next month we will have the necessary cash to pay the debt, so we decide to extend the deadline and we can sleep peacefully. The loan company does not start debt collection proceedings, we do not get to BIK and we can maintain a good credit history.
However, it is also worth remembering that the extension of the loan repayment is a solution that works only in the short term. We certainly can’t do it forever. With each postponement, regardless of the solution chosen, we will incur additional costs. Therefore, if we have problems with paying debts on time, we should first and foremost provide a source of adequate income that will help us to get out of a difficult situation. In this way, we will avoid the risk of falling into a spiral of debt and all the negative consequences associated with serious financial problems.