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How do I Consolidate my Payday Loans?

Consolidating payday loans means that you combine all your existing payday loans into one loan. Consolidating payday loans is a way to reduce borrowing fees and to set more manageable repayment terms for the loan.

There are several ways to consolidate payday loans: you can take out a personal loan, go through a program for debt management, or settle your debt in a settlement.

When is it a good idea to consolidate payday loan? 

Consolidating payday loans may seem easy because of the promise of lower rates and a simpler repayment plan. However, it is not always the best option. To determine if consolidating your payday loans is a good idea for you, it’s important that you evaluate your financial situation.

 When you have financial issues

Consolidating is a good idea if you are constantly renewing payday loans or have multiple payday loans and don’t have the funds to pay them. This is especially true for those who are experiencing financial hardship, such as losing a spouse or job.

When you get  harassing collection calls

Your well-being is another important thing to think about. Consolidating is an option if your payday lenders are harassing you for not being able to pay your loan payments.

 Important considerations for debt consolidation

  • You may be limited from opening new credit accounts depending on which company you choose to consolidate. It is important that you are ready to pay off your debts and stick to a budget if you choose this route.
  • consolidating should only be done if you have done your research and found a company you trust. Otherwise, you could fall for a scam and end up with a consolidation company that does more harm than good.
  •  You shouldn’t consolidate if you can afford your monthly payments and have a stable job.
  • If you don’t have a plan to change your spending habits, stick to a budget and avoid creating additional loan debt, consolidating is not advisable. This is especially true if you are looking to work with a settlement or debt management company.
  • If you haven’t taken the time to weigh your options and speak with several companies before making a decision, you shouldn’t consolidate.

You should consider these things when looking for a program to consolidate your debts. It is important that you research and choose a credible company that you can trust when you are looking for a consolidation company. 

Choosing a debt consolidation company

 Confirm their eligibility

 What is the length of time that the company has been in operation and where is it based? Do they claim to be a nonprofit? If so, verify their nonprofit status. It is important to only work with accredited and licensed companies.

 The company should be accredited by the National Foundation for Credit Counseling, Financial Counseling Association of America, Council on Accreditation. 

How will you communicate with them and where are they located?

It is important to understand what you can expect from a company, both in terms of how your first interaction will be and the support that you will receive throughout the course of your consolidation process. 

It is recommended that you meet with the company in person rather than by phone for your first consultation.

Ask important questions

You should also ask questions about the company’s customer support. What hours are they available for support? What are their support hours? Do they provide phone support or can they communicate via email or chat with customers? What is their average response speed?

Are they open about their procedures and the fees they charge?

Pay attention to the transparency of a company’s fees and processes when looking at its website. The more information they provide upfront, the better. A website should give you a clear understanding of the process and the fees involved.

What do other people think about them?

Review the company’s BBB ratings and online reviews. It is unlikely that you will find a company without a complaint. However, some companies will have more complaints than others.

 It is important to see how responsive they are to customer complaints and whether they respond promptly. For example, many complaints regarding debt-management companies stem from customers being contacted by loan lenders because they still make a monthly payment to them but the company does not pay the lenders on time. It’s almost like someone is causing you harm, but you are doing the right thing.

Trust your guts

The feeling of being in your gut is real. You can use it to your advantage, and remember that your finances are your responsibility. You shouldn’t feel pressured when you get to know a company. Do not be intimidated by companies who reach out to you. Be the first one to reach out. Be wary of promises that seem too good to be true. They can negotiate your fees with payday lenders but cannot guarantee an outcome.

Consolidate your payday loans to build credit

The consolidation of payday loans debt will vary depending on which consolidation method you choose and what company you work with. Below is a summary of the main processes.

Personal debt consolidation loan

Take a look at all your payday loan balances, and then apply for a personal loan to consolidate debt through a bank or credit union that is sufficient to pay the entire amount. 

Once you have been approved, you will repay your payday lenders with the money you get. The payday lenders are no longer your creditors. Instead, you make monthly payments to the lender with which you took out the loan in order to become debt-free. When looking for debt relief, make sure you shop around to find the best rates.

Credit counseling

A one-on-one credit counseling session with a consultant to help you manage your debt. They will evaluate your financial situation and determine what debt you owe to whom, the interest rates at which your debts are charged, your income, monthly bills, and what monthly payments you are able to afford. Then, they will propose a plan.

 After you have accepted, they will work closely with your payday lenders to reduce your monthly payments and fees. While you are still indebted, the debt management company will make your monthly payments and pay your payday lenders the agreed-upon amount.

Debt settlement

Debt settlement is similar to debt management. You will likely begin with a credit counseling session in which your consultant reviews your financial situation. They will then propose a plan. After you accept their plan, they will negotiate with your payday lenders.

Difference between debt settlement and debt management

There is a difference between debt management and debt settlement. Your payday lenders will negotiate with debt-settlement experts to reduce your total debt, including your principal balance. Your debt settlement company will pay your payday lenders in one lump sum once an amount is agreed upon. The debt settlement firm will now pay you monthly.

Consolidating your debt will take many years, regardless of the method you choose. A personal debt consolidation loan repayment can take up to five years depending on the terms that you have agreed upon. 

Consolidating payday loans: The pros and cons

Consolidation can be a long-term commitment. It’s worth taking the time to fully understand your obligations before agreeing to any type of consolidation. These pros and cons will help you make a decision.


  • There are ways to reduce your interest rates and fees. Experienced consultants can negotiate on your behalf if you work with a debt management or debt consolidation company.
  • A monthly payment plan will be set up that is affordable and manageable.
  • The company that you work with might offer financial education workshops, webinars, or other online resources as part of its debt management program.
  • Payday lenders will not contact you often. This can help to reduce stress and improve well-being.


  • It could take as long as five years to consolidate your payday loans and pay them off completely.
  • You will have a lower spending limit and a smaller credit limit if you work with a debt management or debt settlement company.
  • If you choose to work with a debt management or debt-settlement firm, there will be an initial setup fee and a monthly fee.
  • If you choose to work with a debt management company, you’re likely paying more than you could for something that you can do yourself. You can for instance negotiate your fees or apply for a personal loan to consolidate debt.
  • If the debt management company you are working with isn’t paying on time, your credit score could be affected

Consolidating payday loans is not the only option

Consolidating payday loans can help. It however is not the only option available when you are stuck in debt. You have other options to get debt relief with payday loans. These are some other options to consider:

Extended payment plans

Talk to your payday lender and see if they can arrange an extended payment plan. This will prevent your account from going into collections and make it easier for you to repay the loan. You may be subject to late fees depending on the policies of your payday lender. You must be prompt with your request. Call the number before your payment is due.

Credit Counseling

Numerous nonprofit organizations offer credit counseling services that are free and can help you create a plan for your finances. This includes a budget, as well as coaching you on how to negotiate your rates and payments.

Payday Alternative Loans

Locate a federal credit union that offers payday alternatives loans (PALs). The loan amounts are between $200 and $1000, with rates capped at 28%. Repayment terms can be extended up to 6 months if necessary.

Credit-building apps

If you’re unable to get approval for a personal loan to consolidate your debts, you might consider a credit-building application. They allow you to borrow up to $500 and then repay it over time, while also building your credit.

You should file for bankruptcy

Because of the significant impact it has on your credit, bankruptcy is almost always considered a last resort. This is an option if all other options have failed and you don’t have enough money to repay your debts. Although it will take many years to rebuild credit, it is possible.



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