Getting a second chance payday loan is one of the few ways to refinance your payday loan.
Thus, to refinance a loan means paying off the debt with yet another loan – it is more like switching up one loan for another.
Typically, whenever you refinance a loan debt, you may have to take out another more significant loan offer than the ongoing one.
This new debt pays off the older ones; sometimes, there serves as cash back.
This, however, occurs where after refinancing the debt, some of the money loaned is leftover; the leftover flows back to the borrower.
But still, this does not relinquish you from paying said cash back.
What to Consider when Refinancing a Payday Loan with a Second Chance Payday Loan?
Whenever you take on a second chance loan for refinancing, you must consider your already pending loan offer and its corresponding fees and interests.
Your goal would be to apply for a second chance loan with a higher loan amount than the current pending loan offer, precisely one that is more likely to favor you in the long run.
The newly obtained loan may embody different terms and conditions from the previous one. Thus, it would help if you agreed on an installment form of payment for your second chance payday loan offer.
But note, all these may attract high-interest rates and settlement fees.
Your credit utilization ratio is another critical metric to note when applying for a second chance payday loan.
Suppose you are someone that has already exceeded your limit of borrowing by going beyond your credit utilization ratio. In that case, you may get issues with approving your second chance payday loan.
Also, if your proof of income reflects a higher risk on the direct payday lender, it’s more unlikely that you can get a second chance payday loan.
However, consumers are advised to consider all these factors before taking out any online payday offer.
How to Refinance a Payday Loan with a Second Chance Payday Loan
You can refinance a loan debt with a second chance payday loan through the following proven methods:
- Talk to your direct payday lender
- Check and redefine your affordability
- Find the right lending institution
- Conduct a thorough market research
- Communicate the true purpose of the second chance payday loan to your new lender
- Read through the small prints
#1: Talk to Your Direct Payday Lender
The truth many people fail to understand is you may not necessarily need to get a second chance payday loan now.
While your current pending online payday offer may not allow for repayment in one sum, online payday loan direct lenders are always open to receiving settlements on direct payday offers in small installments.
This, in turn, allows you to pay back the loan debt in the most convenient way possible.
Thus, it is advisable to check with your direct payday lender for the current pending loan offer first to confirm the terms of your loan offer.
You are also allowed the right to renegotiate loan terms for a pending loan settlement.
Maybe you are experiencing some delay with your salary payment; you can always discuss this with your lender directly and come up with a new payment term for the pending offer.
#2: Check and Redefine Your Affordability
As discussed earlier, one central point to consider when applying for a second chance payday loan offer is the affordability factor for your new loan offer.
Thus, your capacity to afford the loan is of utmost reverence.
It would also help to check your credit score and rating to confirm that you qualify for the second chance payday loan and a more expensive one.
While online payday direct lenders will generally approve your funding request with a bad credit score or rating, having a low credit rating can limit how much you can get in short-term financing at that point.
You must also consider your current income and ensure that your debt-income ratio is not too high for the second chance payday loan.
As a result, your monthly earnings should be able to reimburse the loan timely and effectively.
#3: Find the Right Lending Institution
It’s good to note that not all lending institutions and lenders can grant you direct access to a second chance payday loan while another is pending.
Not all direct payday lenders will give you a second chance payday loan because it seems like a highly unfavorable risk for the lender.
It implies that you may be unable to pay off the intended loan.
So, it is always best to check with an online payday loan company or a direct lender that fits your needs.
Your borrowing limit should also be up to what you need.
Thus, borrowing from two different institutions is not advisable to work out your required pending sum.
#4: Conduct a Thorough Market Research
After finding the best lending institution to work with, it would help to conduct thorough market research to compare the difference in interest rates and fees of the new lending platform.
This would guide you to your new loan’s most affordable agreement terms.
Compare the timeframe for payment as opposed to other payday lending institutions and affirm that it is one which you can meet up, considering it is more than the previous loan.
#5: Communicate the True Purpose of the Second Chance Payday Loan to Your New Lender
Your new lender should know that the second chance payday loan is for refinancing another pending loan offer.
This is a precaution against problems with the lender in the future if he finds out.
#6: Read Through the Small Prints
Most people often make this mistake in second-chance payday loan agreements.
They fail to read the contract properly and face regrets later. So first, read the agreement regardless of how much in a hurry you may be. Then, run through with your direct payday lender and ensure you’re both on the same page.
Instant payday lending done right can save you from a lot of stress; and here at InstanPaydayLA, we are here to help you achieve all these.
