How to Consolidate Payday Loans

Three Methods:Finding a Company or Organization to Consolidate Your LoansConsolidating Your LoansPaying Off Your Consolidated Loan

If you have several payday loans that you have been having a hard time paying off, you may want to consider consolidating your loans so that you can pay them off simultaneously. However, there are many consolidation companies out there that are hoping to scam you out of more money, so it is very important that you look over the company’s policies very carefully before you sign up for a consolidation plan.

Method 1
Finding a Company or Organization to Consolidate Your Loans

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    Watch out for consolidation scams. Just like payday loan companies, many consolidation companies are looking to turn a profit off of your debt. Because of this, it is important that you find a company or organization that you trust. Before agreeing to any program:
    • Read the terms of use. Will the company be charging you their own interest to help you pay off your loans? If so, how much is that interest?
    • Take a look at the fee the company will charge you to consolidate your loans.
    • Does the company offer you a free initial consultation during which they answer all of your questions? If they do not, you may want to find a different company.
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    Familiarize yourself with what a consolidation company will do. The consolidation company or organization will work with your lenders to lower the interest rates you are paying, and potentially get rid of fees that you owe.
    • The main goal is to make your loan payments more affordable, and to negotiate with lenders so that the fees you are are lessened or eliminated completely.
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    Make sure that the company can do everything you need it to do. When deciding which company to use, look at the things that they say they will do when they take over your loans. These things should include:
    • Negotiating with the lender so your interest rate is lowered.
    • Getting a lower monthly payment for your debts.
    • Giving you a free initial consultation.
    • Wiping away or reducing any late fees that you owe the lender.
    • Helping you to consolidate your loans so that you only pay one payment a month.
    • Offering help with finance management and budgeting.
    • Stopping the harassing calls and letters from the payday lender.
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    Look for a non-profit group that can help you consolidate your payday loans. Some non-profit and community-based organization will help you to consolidate your loans for free, or for a very minimal charge. To find out if there is such an organization in your area, run an internet search.
    • There are also online non-profit debt consolidation agencies that are designed to help people consolidate their loans and balance their budgets.
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    Read online reviews of the consolidation companies you are considering. Before you decide on a company to use, you should find out what other people have to say about the company. Going online and read the reviews that people have left.
    • Keep in mind that the reviews listed on the consolidation company’s website will only be the good reviews, so they should not be trusted. Instead, look at reviews found on Yelp, or on the (Better Business Bureau) BBB website.

Method 2
Consolidating Your Loans

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    Fill out an application and get a quote, or speak to an employee directly. As mentioned above, most consolidation companies will not charge you for your initial consultation, or for applying. When you fill out the application, the company will then come up with a quote. This may take one to two business days.
    • You can fill out a form online, speak to someone directly on the phone, or go into a consolidation company and fill out the form in person.
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    Discuss the consolidation fees. If you go to a consolidation company, rather than a non-profit organization, you will be charged a fee to use the consolidation company’s services. These fees will be different for each person. Some of the factors that will help the company to determine the fee charge include:
    • The total amount that you own the payday lender(s).
    • Your individual needs (do you only need help consolidating your loans, or do you also need help negotiating with the lender, etc.).
    • The interest that the payday loan lender has charged you.
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    Work with the company to consolidate all of the loans you owe. Hand over your payday loans to the company so that they can deal with the lenders who have (most likely) been harassing you with calls. The company will negotiate with the lenders so that all of your loans will be combined. The company will then work to reduce the amount that you owe and set up a payment plan with the payday company.
    • Some companies claim that they can cut your payments by large percentages, though each situation is different.

Method 3
Paying Off Your Consolidated Loan

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    Begin paying off your consolidated loan. Once the consolidation company has negotiated with the lender, you will have one lump sum that you pay every month until your consolidated loan is paid off. It is up to you to do this and end the cycle of fees and loans.
    • Set reminders for yourself to keep yourself on track with your payments each month.
    • Cut out unnecessary expenses, like cable TV, until you have paid off you loans.
    • Put off large expenses until after you have paid off your loan. For example, if your car needs some expensive repairs, bike or take public transportation to work until you have paid off your loans.
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    Manage your finances. While paying off your loan, it is important to keep your finances in check so that you do not find yourself in this situation again. Create a budget for yourself and your family.
    • Consider talking to a financial advisor to keep your budget and finances on track. Talk to your consolidation company and find out if they offer financial advice.
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    Be prepared to work with the consolidation company for six to twelve months. If you are enrolled in a consolidation program with a consolidation company, it may take up to 12 months for your to pay off your debts with the help of the consolidation company.
    • However, this will differ for every person and their individual loans; some people may be able to pay their consolidated loans off much more quickly than other people.
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    Consider using the consolidation company to help you overcome bad credit scores. Some consolidation companies will offer to work with you after you have paid off your loans so that your bad credit is reduced. The company may offer to:
    • Help you manage your finances.
    • Boost your credit and get your name removed from bad credit score lists when your credit is better.
    • However, take into consideration your own ability to fight bad credit without the company’s help. Consider reading How to Build Good Credit to learn about ways that you can boost your credit score.


  • Payday loans are dangerous and often lead to much deeper debt than you were in when you got the loan in the first place. Avoid them in the future.

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Categories: Mortgages and Loans | Managing Your Money