Can’t Handle Your Payday Loans? Do This

If you’ve found yourself in a hole due to multiple payday loans with costly fees, see how consolidating them can help.

The Danger Of Payday Loans

Some people opt for payday loans when they need cash fast and feel they can’t qualify for other types of financing due to a low credit score, lack of income or credit history, etc. While payday loans can certainly give you fast cash, they can also give you a headache. Why? Because their interest rates can sometimes hit triple digits, and they usually require repayment quickly. What happens if you can’t repay a payday loan in time? You’ll have to roll it over to delay repayment, which typically incurs a fee. Do this enough times because you can’t keep up, and you’ll find yourself in deeper debt than before.

How Payday Loan Consolidation Helps

Being stuck with a payday loan with triple-digit interest rates and short repayment periods may seem like a nightmare. But what if you cannot repay the loan to get rid of it right away? Your best bet may be to apply for a personal loan and use it to pay off the payday loan(s).

Personal loans have interest rates that may still be high, as some can reach 36 percent APR. That’s still a lot lower than the 400 percent some payday loans charge, which is why consolidation is a great option for many borrowers.

When you consolidate your payday loans through a personal loan, you can enjoy much lower interest. And since personal loans have much longer repayment periods, you can also enjoy lower monthly payments that fit your budget. What about stress? Trying to deal with multiple payday loans can be a huge hassle. Consolidate them via one personal loan, and you can reduce your financial stress significantly.

How Payday Loan Consolidation Works

To consolidate your payday loans, you need a personal loan. Banks, credit unions, and online lenders offer personal loans, with the first two options usually having lower interest rates.

If your credit score is low, but you’re a bank or credit union member, give them a try first.
Some traditional financial institutions will approve borrowers with less than ideal credit if they have accounts in good standing. Otherwise, you can apply for a personal loan via online lenders, such as these:

• Avant
• LendingPoint
• OneMain Financial
• Oportun
• Seed
• Universal Credit
• Upgrade
• Upstart

Applying for a personal loan through such lenders is a straightforward process. Just visit their websites, fill out the necessary information, and you could prequalify yourself to see what type of loans you are available for your financial profile without needing a hard credit pull that lowers your score. From there, choose the loan with the best interest rate and terms.

After picking the ideal personal loan, apply for it through the lender. This will result in a hard credit pull that could drop your score a bit, but you can increase it later on by repaying the personal loan on time.

Approval usually takes minutes, and you could have the funds deposited into your bank account within 24 hours. Use those funds to repay the payday loan lenders to get that financial load off your shoulders. Then repay the personal loan via fixed monthly installments to complete the process.