How to Consolidate Payday Loans

How to consolidate payday loansIt’s not hard to get in over your head and wonder how to consolidate payday loans. Many states will cap the number of loans you can take out at any one time to just 2 or 3 because they know how tempting and dangerous it is to go any deeper than that.

So what can you do if you’ve found yourself in this unfortunate situation? There are a few ways out of it, as you’ll see below. The important thing to keep in mind is that you hold the power, you’re the earner of the money, and you ultimately control how the process is going to go down.

More Than One Payday Loan
Here is the real danger of taking out more than one payday loan. The calculations that payday lenders use to determine how much you can take out is based on you taking out just one loan, and it is already tilted in the lender’s favor. They want you to take out just enough money so that you’ll have to re-loan when you come back to pay it off. This means that they will allow you to take out more money than you can realistically pay back, and that’s just with one loan.

When you take out a second or a third payday loan, you are basically dooming yourself to not only re-loan, but to rob Peter to pay Paul. Let’s say you take out two payday loans at $600 each. You get paid every two weeks, and the fee is $70. This means that you are paying

Consolidation as a Plan
In the lending world, consolidating a loan means that you are adding up a bunch of smaller loans, and then taking out a bigger loan to pay them all off. For those that have resorted to payday loans, there often isn’t a company out there that will loan you a large sum of money to wash out your payday loans in one go.

But you’ve got the right idea. You definitely don’t want to keep up with payments on two different payday loans every time your paycheck comes in. Talk about major depression sinking in. You have to roll up your sleeves and get ready for a little bit of a battle, but in the end you will be victorious and you will have freed up hundreds of dollars per month in saved loan fees and lost time.

How to Consolidate Payday Loans: Step by Step

There isn’t a company out there that will consolidate payday loans for you. Maybe one day in the future, but not today. Luckily there are ways you can do it on your own, without going deeper in debt, and without incurring any additional fees. As a former employee of a major payday loan company, I can attest that this is the only method I ever saw that worked 100% of the time for those that had multiple payday loans out, and ended up getting rid of them.

Step One: Add Them Up
Get an accurate tally of how much you owe each loan company, and how much the fees are at each one. Get a monthly number on how much you are paying – just in fees – every month. Think of all of the things you could be buying with this money. Use this as fuel to keep yourself motivated throughout the rest of the process.

It’s important to make these calculations. You may have a vague sense that you’re being taken for a ride by these lenders, but until you get the hard data in front of you and can see the raw numbers, you will stoke that fire inside you that makes this your mission instead of just something you maybe might want to do.

Step Two: Contact Each Lender
This can be the hardest part for most people to do. For whatever reason, whether it be past experiences with bill collectors, or just a fear of what the payday lender will say, it can be hard to call and say you can’t make your loan payment. But it’s not the end of the world, and there are humans at the other end of this that can actually help you through the process.

Non-contact will put you on the fast track to stronger and stronger collection efforts by the lender. Just by keeping in touch with the lenders you’ll be put in an entirely different category, even if it’s just in the minds of the employees there. If you don’t call them, or stop in for a visit, they will assume you are just out to take their money and run. If you call them and let them know that they’ll get their money, and you’re just in some tough times, they’ll put you down as a maybe.

What you’re aiming for here is for any kind of space to work in. Maybe you can buy a few weeks, maybe you can get them to not deposit your check for a few more days. What we’re really after is setting up some sort of partial payment plan. Don’t ask them if they accept a payment plan, because they will say no. But all of them will take a partial payment from you.

In many states this will not stop them from depositing your check, but that’s fine, just add the expense to your calculations in step one.

Step Three: Make Partial Payments
Regardless of what you’ve told the employees at the lender, put yourself on a payment plan with them and pay the loan off in regular installments according to your plan. Here’s what happens when you make partial payments: you’re no longer a deadbeat. Your account will show that you’ve made some sort of payment, and in many instances this will put you in a different status than all of the past due people that owe the full amount.

Come in with some sort of payment on a regular basis. If they try to tell you that the payment is too small, tell them that you plan on doubling it next time, even if you don’t. Tell them when you’ll be in again, and keep your appointment. Show them that they can trust what you say, and things will get smoother and smoother as you go along.

Step Four: Never Look Back
Once you’ve got them all paid off, realize what a major accomplishment you’ve made, and make the resolution never to fall victim to this sort of thing again in the future. You may think that you can just take them out again if you have to, since now you know how to fix the problem, but it’ll save you a lot of time and hassle to just avoid payday loans altogether. Now that you have monthly numbers from step one, total up how much you ended up paying by getting involved with payday loans and think of all the other stuff you could have done with that money.

If Everyone Followed Our Plan
If every single person that took out a payday loan suddenly started paying it back in small chunks whenever they could, payday loan companies would not go out of business. They’d get their principal back, plus the fee, and there will always be people that will fall into trouble again and need to take out another loan. This is a perfectly legal and perfectly legitimate way to get yourself out from under this mess, and back to some form of order in your financial life.

Other Ways to Consolidate Payday Loans

These steps are just one way that you can use in order to get out from under your payday loans. If you’re creative you can come up with other ways that serve the same function. The goal is to get you back in control of your finances, and let you actually keep a paycheck for a change, without forking it over to the soulless payday loan companies.

Online Loans
Online loans can be the devil if you’re not careful, but they can also serve as a way to get out of the payday loan cycle. If you’ve racked up a considerable amount of payday loans, then you’ll quickly find that your weekly or biweekly paychecks just aren’t cutting it. What an online loan will do is give you a larger lump sum that you can pay off over time. This immediately gives you relief from watching your entire paycheck be consumed by payday loans.

The danger is that you have to keep paying ridiculous interest payments to the online loan company until your loan is paid off. Some of these companies have it set up so that you just pay a monthly fee of around $250 but none of that goes towards the principal, and you have to keep paying that amount monthly until you satisfy the loan. This can really add up fast, so you shouldn’t consider using this as a method unless you have an iron clad way of paying it off on a certain date, like with your tax refund.

The reason that online loans can’t be considered consolidation loans for your payday advances is because their interest rates and fees are pretty outrageous. Consolidation loans, by definition, are not supposed to cost more than your smaller loans put together. But with online loans you probably will be paying more or at least similar amounts than you currently are, it’s just a way to instantly wipe out your payday loans and then just have one lender to deal with.

Installment Plans
Many payday lenders will be forced by the state they’re in to offer you some sort of installment plan if you don’t have the funds to pay for your loan on your repayment date. There are usually stipulations that will require you to have a certain number of loans in a given time frame, but most people that are drowning in payday loan debt will qualify.

The installment plan will keep you in good standing with the lender, and will allow you to ease out of your loan. However, breaking up a loan into 3 payments might not make small enough payments for you, and having the payments due in a week or two does not provide much relief if you’re already in over your head. That’s why we recommend instituting your own installment plan as a way out.

On Your Own Terms
Remember that it’s all just a game, and you can play it on your own terms. No one is going to come and break your kneecaps if you don’t pay the money back on your due date. So instead of taking out more debt to pay off your payday loans, just hit the relax button and pay them off when you’re good and ready. There’s no reason to turn your life upside down in order to keep the payday lenders happy. You have to survive, first and foremost. They’ll be ready to take your money whenever you’ve decided it’s time. The only person that can put the sense of urgency behind paying them off is you.

If you don’t follow our system above, use your own judgement to decide what’s right in your case. Remember that you’re in control no matter what happens because you’re the one that they’re waiting on. You’re the one that has what they want. Let them wait for it, and don’t be too worried about when it happens.

Our Recommendation
No one wants to hear about what they should have done. Obviously hindsight is 20/20 but the best way to consolidate payday loans is to not bite off more than you can chew in the first place. If getting one payday loan is horrible, then getting more than one is horrible squared. If you find yourself in the situation of too many payday loans out at one time, do whatever is in your power to get out of it.

There’s no reason to juggle these financial burdens a moment longer. Let the balls fall to the floor and pick the pieces up. There’s really no clean way to consolidate payday loans.

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