How to Consolidate Payday Loans
Get a copy of your credit report., Total your outstanding debt., Contact banks and credit unions., Consider peer-to-peer lending., Compare rates and terms., Create a monthly budget.
Step-by-Step Guide
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Step 1: Get a copy of your credit report.
Your credit score determines what lending options will be available to you.
If you've had multiple missed payments or are carrying high balances on credit cards, you might want to consider another option.You are entitled by law to a free copy of your credit report every year.
Go to https://www.annualcreditreport.com/index.action.
This is the only website authorized by the federal government to issue your free credit report.
Taking out a consolidation loan can improve your credit score in the long run – if you use it wisely.
For example, if you used the consolidation loan to pay off credit cards as well, don't immediately start racking up debt on those cards again. -
Step 2: Total your outstanding debt.
The options available to you depend on how much money you owe, and how that compares to your income.
If you only owe a few thousand dollars, you'll typically have more options.If your total debt is less than $3,000 and your credit is okay, you may be able to get a debt consolidation credit card.
These cards typically offer no interest for the first 12 to 18 months.
However, your payday loans may not qualify.
Speak to a customer service representative at the credit card company to make sure.
You may have additional debts other than your payday loans, such as outstanding credit card debt.
Take a look at everything you owe and look at how much of it you want to consolidate. , Banks and credit unions typically are the most likely to offer personal loans to consolidate debt.
It's best to start with the bank where you have your checking or savings accounts, since you have a pre-existing relationship with them.You may be able to apply for a debt consolidation loan online.
You still should talk to a representative and let them know your situation.
You can give a real person a better picture of your situation than they could get by reading your loan application.
If you're unable to get a loan from your regular bank, look at others nearby.
Smaller, local banks tend to be more forgiving about poor credit than larger national banks. , If you're unable to get a loan from a traditional bank or lending institution to consolidate your payday loans, peer-to-peer lending may offer a solution.
These online services allow private individuals to lend money to other private individuals.The way these sites typically work, many individual lenders buy small interests in your total consolidation loan.
You make a single monthly payment back to the site, which distributes the money to your lenders.
Your credit score may still be a factor on these sites, but individual lenders typically are much more forgiving of troubling credit situations than your average traditional bank. , Ideally, you'll have loan offers from more than one bank or credit card company.
If you do, compare and contrast to find the loan product that will best meet your needs and save you the most money.If you have competing loan offers, don't be afraid to go back to a lender and ask for better terms.
You can tell them the offer provided by the other lender and ask them to beat it or at least meet it. , If you decide to consolidate your payday loans by taking out another loan, that loan needs to become your priority.
List your income and regular expenses to see where your money goes each month.Find areas where you can eliminate spending to free up more money to put towards paying off your loan.
For example, you might make your coffee at home instead of stopping at a café on the way into work.
You might want to talk to a financial advisor, especially if you feel you need help budgeting or organizing your finances properly. -
Step 3: Contact banks and credit unions.
-
Step 4: Consider peer-to-peer lending.
-
Step 5: Compare rates and terms.
-
Step 6: Create a monthly budget.
Detailed Guide
Your credit score determines what lending options will be available to you.
If you've had multiple missed payments or are carrying high balances on credit cards, you might want to consider another option.You are entitled by law to a free copy of your credit report every year.
Go to https://www.annualcreditreport.com/index.action.
This is the only website authorized by the federal government to issue your free credit report.
Taking out a consolidation loan can improve your credit score in the long run – if you use it wisely.
For example, if you used the consolidation loan to pay off credit cards as well, don't immediately start racking up debt on those cards again.
The options available to you depend on how much money you owe, and how that compares to your income.
If you only owe a few thousand dollars, you'll typically have more options.If your total debt is less than $3,000 and your credit is okay, you may be able to get a debt consolidation credit card.
These cards typically offer no interest for the first 12 to 18 months.
However, your payday loans may not qualify.
Speak to a customer service representative at the credit card company to make sure.
You may have additional debts other than your payday loans, such as outstanding credit card debt.
Take a look at everything you owe and look at how much of it you want to consolidate. , Banks and credit unions typically are the most likely to offer personal loans to consolidate debt.
It's best to start with the bank where you have your checking or savings accounts, since you have a pre-existing relationship with them.You may be able to apply for a debt consolidation loan online.
You still should talk to a representative and let them know your situation.
You can give a real person a better picture of your situation than they could get by reading your loan application.
If you're unable to get a loan from your regular bank, look at others nearby.
Smaller, local banks tend to be more forgiving about poor credit than larger national banks. , If you're unable to get a loan from a traditional bank or lending institution to consolidate your payday loans, peer-to-peer lending may offer a solution.
These online services allow private individuals to lend money to other private individuals.The way these sites typically work, many individual lenders buy small interests in your total consolidation loan.
You make a single monthly payment back to the site, which distributes the money to your lenders.
Your credit score may still be a factor on these sites, but individual lenders typically are much more forgiving of troubling credit situations than your average traditional bank. , Ideally, you'll have loan offers from more than one bank or credit card company.
If you do, compare and contrast to find the loan product that will best meet your needs and save you the most money.If you have competing loan offers, don't be afraid to go back to a lender and ask for better terms.
You can tell them the offer provided by the other lender and ask them to beat it or at least meet it. , If you decide to consolidate your payday loans by taking out another loan, that loan needs to become your priority.
List your income and regular expenses to see where your money goes each month.Find areas where you can eliminate spending to free up more money to put towards paying off your loan.
For example, you might make your coffee at home instead of stopping at a café on the way into work.
You might want to talk to a financial advisor, especially if you feel you need help budgeting or organizing your finances properly.
About the Author
Michelle Lee
A passionate writer with expertise in DIY projects topics. Loves sharing practical knowledge.
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