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How to Consolidate Payday Loans

You needed a fast dose of cash so you obtained an infamous payday loan. Then that one was a struggle to pay back with the extremely high interest rates and extra fees. In order to get over that hurdle, you took out another payday loan. Before you knew it you had accumulated several payday loans, each with the intention of catching you up financially and getting back on solid ground. This could be a huge mistake especially when you are financially strapped!

Due to the nature of payday loans with the notoriously high APRs and excessive fees, it is like trying to keep dry while standing in the rain – almost impossible. That is however, unless you have an umbrella – and in this case, an umbrella might be a payday consolidation loan. Even though these may be difficult to achieve it would be wise to get a plan figured out asap to avoid falling further in debt.

Why Get a Consolidation Loan?

If you are struggling to make the payments on your payday loans, especially when you have accumulated more than one, debt consolidation can help you reduce the overall interest you are paying and consolidate the bills you must pay each month. This will help you pay off your loan debt faster, which will free up your income for other necessities and bills. You will also be able to positively influence your credit score when you are making consistent progress on your bills and debts and you don’t keep accumulating more payday loans in a vicious cycle to pay off other payday loans.

Consolidating these loans will also:

• Reduce the stress you feel over multiple debts
• Reduce the amounts, both in quantities and dollars, of late fees
• Reduce the calls and letters you receive from collection agencies
• Help you avoid further financial strain, and even bankruptcy

The longer you go without doing something to pay off the payday loans and end the increasing fees and interest rates, the harder it will be to climb out of the financial hole that payday loans can help you dig. Consolidating loans can be helpful solutions to the strain that payday loans are putting on your budget.

How Can I Get a Payday Consolidation Loan?

Not all payday loans are as easy as some when it comes to consolidating them into one lump loan. For every short-term loan you have, read the fine print and determine how you might be able to include it in a debt consolidation plan. Some consolidation loans are only available for larger amounts of money, perhaps over $2500, so your smaller, multiple payday loans might not be applicable.

• Contact a debt consolidation company to help you find the best plan to address your payday loan situation. This will likely start with adding up the total of the amounts you owe, as well as the APRs that are being charged, what fees you are incurring, and when each loan is payable in full. It would be wise to contact a trusted and legitimate non-profit HUD approved debt management company such as Money Management International, or other trusted HUD counselors.
• On your behalf, debt consolidation companies can contact your creditors and work to negotiate lower interest rates on your payday loans. This is an important step because these firms can also work with your creditors to stop late payment charges once they know you have a working plan in place to pay your debt in full.

• As part of your planning and budgeting, you will determine how much is the maximum you can afford to pay each month toward your payday loans. Your consolidation representative will negotiate with your creditors in order to work out a plan that meets this maximum and doesn’t put you in over your head even further.

• If you have debt amounts from payday loans that have already been sent to collections, check the Statute of Limitations on the debt and request a debt validation from the collection agency. Once you have taken this step, you can consolidate your loans and include this debt in your figures. If the debt is already at the collection agency, it is this agency that will need to be involved with the negotiations.

If you do not want to work with a debt consolidation company, but instead want to forge ahead on your own, you can approach other banking institutions to see if they would offer you a consolidation loan package. The challenge of this is negotiating on your own terms with your creditors how much money you will be able to pay each month. If you just have a few small payday loans that keep holding you back, you might want to consider consolidating them through your credit card. Even though this then adds to your credit card debt, the interest you avoid paying this way on multiple accounts at very high APR rates can be worth the hit to your credit history. Just remember, always be wary and never obtain multiple payday loans unless it is absolutely necessary!


About Moe Bedard

My name is Maurice Bedard, but most people call me Moe. I am the founder of America's #1 Mortgage Forum, LoanSafe.org, and also a website design firm called We Create Web Designs. My online work has been featured in the New York Times, LA Times, Fox Business, and many other media publications. I currently live in Carlsbad, California with my beautiful wife and children.

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