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What is Payday Loan Consolidation?

By November 23, 2021May 5th, 2022No Comments
What is Payday Loan Consolidation?

What is Payday Loan Consolidation?

Payday loan debt can be difficult to get out of because of the high interest rates and short repayment terms. Most payday loan borrowers end-up rolling over existing payday loans into payday loans. This can lead to higher interest rates and a vicious cycle of debt.

Consolidating payday loans is taking out a loan to pay off multiple payday loan debts and ending the cycle of high-interest debt re-borrowing.

Consolidating payday loans: How does it work?

Payday loans are designed for consumers who require fast cash without a credit check. Payday loans can be hard to get out of because they have high annual percentage rates and short repayment terms.

Payday loan borrowers who are unable to repay their loan may be able to open a new loan to pay the original. This is sometimes called “rolling over” and can incur higher fees. Payday loan debt can become more costly and more difficult to repay.

Consolidating payday loans allows borrowers to combine multiple high-interest payday loan debts into one type of loan such as a personal loan or a payday alternative loan.

Consolidating payday loans: The pros and cons


  • Fees and APRs that are lower. Payday loans have high APRs.  Consolidating with another type of financing could save you money.
  • Longer repayment terms. Payday loans for short-term must be paid back within two weeks. Personal loans and payday alternatives loans can take borrowers up to a year or longer to repay their debt.
  • Avoiding wage garnishment and delinquency. Payday loan defaults can lead to wage garnishment and a lawsuit by the lender.


  • There are minimum borrowing amounts. You may need to borrow a minimum amount for debt consolidation.
  • Consolidation means paying off debt with more debt. If you can get better terms on your new debt, you will want to avoid taking out any debt to pay off debt.
  • Payday loan consolidation might not be the best option to eliminate payday loan debt. You can always consider other options

Choose the right debt consolidation strategy for you

Consolidating your debt can be done in many ways, including personal loans and payday alternative loans. 

There are other ways to get your payday loan paid off

Talk to a non-profit credit counselor about how to manage your debts

There are options for those who need payday loan assistance but do not qualify for the consolidation payday loan. Many non-profit credit counselors offer free advice and educational materials, as well as low-cost or free management services such as payday loan debt. Credit counselors can help you evaluate your options and recommend debt management plans that will allow you to repay the debt more quickly.

Ask your lender for an extended payment plan

Ask your lender for help with a payday loan. They might offer extended payments at no cost to borrowers in financial hardship. The terms of your extension will depend on where you live. Get in touch with your payday lender to learn more. A payday loan extension can be applied for once per year.

Borrow money from family and friends

Payday loans are usually small amounts, typically a few hundred dollars. It might be better to borrow money from family or friends if you are able than to repay the payday loan.

If you borrow money from your loved ones, remember that there is no cost to borrowing or contract and you risk ruining the relationship if it doesn’t pay. Trust is the foundation of financial transactions between family members and friends. Make sure you have a plan to repay the money.



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