What are your options for consolidating Payday Loans?

by Tracy Murray-Crouch

When you need immediate cash and you can no longer make use of your credit cards or apply for new loans, payday loans or cash advances are your best option – ranging from a $1500 loan all the way up to $10,000 or more. These types of loans are very easy to get, usually there are no background checks necessary; for as long as you can repay on your next payday, everything should be ok. Because these types of loans are easy to get, there are a lot of people who have quite a few payday loans that needs to be settled. The downside to payday loans is that they carry high interest rates; a single missed payment can already have a significant increase in your payable balance. For this reason, you should never set aside and ignore them. One of the best ways to get rid of them is through payday loan consolidation. Below are a few choices on how you can consolidate your payday loans.

Option 1: Borrow from your friends or relatives.

If you are in a position where you can no longer afford to get another loan or if your credit is not that strong then it is probably best that you turn to your friends or relatives for the money you need. You can compute the amount that you need to pay off all of your payday loans and see which among the people you know can lend the money. If it is a pretty big amount, you can split up the amount and borrow from more than one person. The good thing about borrowing from people you know is that the interest rates will most likely be a lot better or in some cases you won’t be even charged interest at all. The downside to this however is that it can take a lot of effort to acknowledge and let your family know your financial situation.

Option 2: Debt Consolidation Loans

If you still have a pretty good credit standing or credit score, you can look into consolidation loan options. Debt consolidation is the process of paying off your payday loans using another loan with a much lower interest rate. A popular consolidation option is using a house equity loan. Usually you will be able to get a lower interest rate from this and you can instantly get rid of those payday loans with very high interest rates. If home equity is not an option, look for other loans that will have better terms than your high interest payday loans.

Option 3: Pay off Using Your Credit Cards

At first glance it may seem like a stupid idea because credit cards are known to have high interest rates as well. However, you can take advantage of those that have promotional rates. You can get 0% interest which will instantly reduce your monthly payments. Before jumping at this opportunity, you have to determine for how long the promotional rate will last. Usually, once the regular rates kick in it will be pretty difficult to pay back once again. So before the promotional rates end, make sure that you would have paid your consolidated loan.

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