How can I consolidate my payday loans?

Payday loan consolidation is one of the great challenges for all- centennial funding reviews. Before the crisis, it was easy to get bank credit, but when things got ugly, this option became more complicated and others had to be investigated. The issue of debt was not born with the crisis nor is it a new financing tool, but it is true that in recent years more companies have been encouraged to use it.

But what is it and how is it used? The issue of debt consists of the issuance of financial securities that promise a future payment in exchange for a price. That is, it is about borrowing money in exchange for securities in the form of debt. But these titles, in addition, entail a profitability, because otherwise no one would be encouraged to buy them.

Each issue of debt carries a return so that during the life of the title pay a periodic coupon and when it comes due, lenders are returned the money plus that return, which is what attracts these titles. Thus, in the same way, that states do, companies can also issue debt to obtain financing that allows them to grow, face payments, expand their business in a new market, etc.

There are different types of debt, depending on their maturity, their profitability, etc., so that companies have different formulas to launch their debt to the market. This type of securities, which can be in the form of bonds, promissory notes, etc … are included in fixed income. This type of corporate bond is an asset class that in English is called credit.

How can I buy debt from a company?

Investors can obtain these debt securities through the bank in charge of marketing those securities, through an intermediary, or in the stock market. Yes, in the financial markets you can also buy these fixed income securities. In Spain, we have the AIAF, which is the benchmark corporate debt market in our country.

The fact that it is a regulated market provides a lot of security for investors, since they are transparent processes and with guarantees. In this way, debt securities can be acquired as if they were stock market values, and also sold, so that if they do not want to wait until they expire, they can be sold in the secondary market.

In this way, corporate debt is an important weapon for companies to develop by diversifying their financial sources. While it is true that, if you are thinking of investing in it, as in the stock market, you should study which companies are more attractive to do so and which have better guarantees of payment.

For this, there is the ‘rating’ or note that the rating agencies also give to the corporate debt. It does not hurt to see what ‘rating’ has the firm in which we are interested to, well, know what quality is your credit. Do not be fooled by succulent profitability, because of the higher the profitability, the greater the risk of default.