Can Payday Loans be Consolidated?

ElitePersonalFinance
Last Update: February 10, 2021 Debt Loans

We cannot control emergencies and some of the circumstances that might occur. Sometimes, unexpected things occur between our pay periods, and money is short, or we haven’t budgeted for some things. You never know when your car might break down, you might become ill, or have any other type of emergency that you are not financially prepared for. Fortunately, there are payday loan agencies that can provide a loan so that you can make it through these types of difficulties. But what happens when two or three things happen at once, and you get multiple payday loans to take care of them?

There’s nothing as difficult as trying to make several payments on payday loans on top of regular financial obligations. Payday loans can be costing you quite a bit in terms of fees and interest. Payday loans can help you in a bad financial situation. Because of their high fees, the approval will be easier. There are ways to consolidate your payday loans, so you are in better shape financially.

Consolidating Your Payday Loans

Payday loan consolidation is actually a very popular option when multiple loans have been taken out. There are basically two plans for consolidating these types of loans. You may choose to enter a payday loan consolidation program or take out another consolidation loan.

Payday Loan Consolidation Program

This type of program is a lot like a traditional debt consolidation program. You work with the lenders to help reduce the interest rates. When you and the lenders reach an agreement to lower interest, your payments can be lower. Several different agencies can work on your behalf to get lower interest rates instated. Just make sure you work with a legitimate debt counseling service before paying for their services.

Once you and your lenders have reached an agreement, you should be able to make a payment a month until the loans are paid off. This type of payday loan consolidation will show up on credit reports.

Payday Consolidation Loan

This type of loan is not working with a debt consolidation agency. Basically, you take out a loan to pay off your multiple payday loans. It is a “debt consolidation” loan since it will pay off the payday loans and consolidate them into a single personal loan paid back using monthly payments. Many people may have with securing this type of loan because it may be for a relatively large amount. Another problem is that you can end up making payments for a very long time to come, and you’re still going to be paying large amounts of interest.

Should I Consider Consolidating My Payday Loans?

If you have made several payday loans, it’s very important to pay them off as soon as you can. Of course, the best case is if you pay each off on your next scheduled payday as the loans are designed to be handled. If you start renewing them or rescheduling them rather than paying them off, you will be racking up a large about of fees and interest. Participating in a payday loan payoff program or consolidating loans can give you the leverage you need to regain control over your finances. However, it is really not advised to take out more payday loans to pay off other payday loans. And it is also not a good idea to use payday loans to make monthly payments. This can turn into a vicious cycle that can mean ruin for your finances. But using a legitimate consolidation agency can help you in a few ways, including:

  • Reducing the overall amount you pay in interest over time.
  • Let your work out monthly payments that are more affordable and manageable.
  • Eliminate expensive late fees.
  • Stop calls you may be getting from collection agencies.
  • Help improve your personal credit history.
  • Help you figure out a budget that is going to work for you.

What if You Can’t Get a Consolidation Loan?

If you are not sure if you will qualify for a consolidation loan or are not interested in handling it, you have other options for managing multiple payday loans available. First of all, you can talk with your payday lenders to see what other options are available. In many cases, they can make alternate arrangements with you to help you. Sometimes, depending on their policies, you might be able to rollover your loan. This will, of course, incur more fees. You may also be able to talk to your personal bank, some of your friends, or a family member to see if you can borrow the money to pay off some or all of the loans.

In some cases, the balance might be put on a credit card. You may also be able to get a cash advance from your credit card. Either of these options will probably have rather large interest rates, and if you withdraw the cash from an ATM, there will likely be some fees assessed. However, using a credit card will also allow you to pay the debt off in monthly installments instead of a lump sum making it more manageable in most cases. And if you use a credit card to pay off a payday loan, you can always apply for a consolidation loan and include your credit card debt along with other debts you need to pay off.

Looking at Your Options

If you have a credit counselor, you can ask them any questions before taking out any other loans. They can help you assess your situation to determine what solutions might be appropriate. There are usually numerous solutions that can help get you out of a bind or out of debt altogether. In many instances, you can get one large consolidation loan to take care of your payday loans, credit card balances, and even unpaid medical bills. This can lower the amount of money you pay on your debts since you are making a single payment each month.

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