Is Payday Loan Consolidation a Good Idea?
Payday loans are some of the most popular sources that debtors use when they need quick cash and short-term loans. Debtors get payday loans because the lenders usually don’t require a perfect credit score to issue them. Some aspects of payday loans make them difficult to keep up with, however. Many debtors get stuck in the cycle of refinancing their payday loans and having to give away their entire paychecks sometimes because of it.
A payday loan consolidation could be a solution for getting out of overwhelming payday loan debt. We’ll talk about consolidations, how they work, and whether signing up for one would be a good idea for you if you owe money for payday loans. We’ll also give you some tips and some other alternatives for getting out of debt with payday loans.
What Is a Payday Loan Consolidation?
A payday loan consolidation is a process by which you merge all of your existing payday loan balances into a single payment. You can achieve this using several processes, but the most common process is to apply for a consolidation loan. If approved, the loan will pay the balances of all your payday loans. You’ll then be square with the payday lenders, and you will only have to worry about paying the company that issued you the payday loan consolidation advance. You will most likely have a monthly payment that you have to adhere to if you want to maintain a positive credit profile.
How Does a Payday Loan Consolidation Work?
The first thing you’ll need to do is apply for a consolidation loan. You should perform a comparison first to ensure that you get the best rates on the loan. Next, you’ll have to apply for the advance. Most providers offer several ways for interested parties to contact them. You can call them on the phone to complete an application or use an online form. The online form will most likely be quicker for you to do.
After you submit your application, the lender will check all qualifying criteria and ensure that all employment information and other information you submitted to them is correct. They will let you know if you receive approval, and they will issue you the funds. You’ll use the funds to pay your existing payday loans, and you’ll receive a bill from the consolidation lender for your first monthly payment.
It’s a good idea to take care of your payday loans before they cause you too much trouble. If you pay them off, then you might be able to qualify for payday loans based on income if you ever come across another emergency you need to handle.
Who Qualifies for a Payday Loan Consolidation?
You’re probably now wondering who qualifies for a payday loan consolidation. You’ll have to meet a few requirements to qualify for such a loan:
- First, you’ll have to be at least 18 years of age. Indeed, a consolidation lender will require you to sign a contract. Thus, you must be of the legal age to sign one.
- Secondly, you will have to show the lender that you are employed or have another means to repay the loan.
- Thirdly, the consolidation lender may run your credit and use the score to approve or deny your consolidation loan.
How Do You Get a Payday Loan Consolidation?
You get a payday loan consolidation by applying for the loan from a reputable lender. We are not lenders, but we can help you find a reliable lender that can give you the funds to pay off your payday loans. We are in business to perform such tasks for our visitors. Once you find the right provider through our app, you can complete your application. You can complete several applications if you want to.
However, you must be advised that each application you complete will place an inquiry on your credit report. It may even cause your score to drop.
If you want to have a first look at different loans you could consider, we partnered with HiFiona and developed the widget below. Have a look at it to see what you could get based on your current situation.
What Are Some of the Benefits of a Payday Loan Consolidation?
A payday loan consolidation has many benefits to it. The greatest benefit is that it will allow you to pay off all your outstanding payday loans at once.
Secondly, the interest rate you pay the consolidation lender will almost certainly be much lower than the interest you’d have had to pay on your individual payday loans. It’s always good to save money.
You’ll also be protecting the integrity of your credit score if you obtain a consolidation loan. Payday lenders might not report your regular payments to the credit bureaus. However, they are likely to report you to the credit bureau if you default on the loan they gave you.
Taking steps to apply for a payday loan consolidation is the right thing to do to save your credit.
What Are Some of the Disadvantages of a Payday Loan Consolidation?
There aren’t too many disadvantages to getting a payday consolidation loan. The inquiry and the new account may drop your credit score temporarily. However, it will rise again once you get into the habit of making your payments on time every month. You should see a significant improvement within three months of paying on the account.
The other disadvantage is that not everyone qualifies for a consolidation loan. It depends on the health of your credit score and profile. Lenders may not be willing to approve the loan if they see that you’re stretched very thin and your credit score is on the low side.
Is a Payday Loan Consolidation a Good Idea?
Whether a payday consolidation loan is a good idea depends on your situation. It’s a great idea to meet the qualifying criteria, and you can get one huge loan that takes care of all your outstanding payday loan debts. It’s an excellent idea in that case. However, there are other alternatives that you might deem more suitable for your situation, however.
Tips for Qualifying for a Payday Loan Consolidation
You should never apply for a payday loan consolidation advance without first preparing to do so. Here are some of the things you can do to try to increase your chances of getting approved and taking care of your payday advances.
1. Order Your Credit Report
Ordering your credit report is the first thing you should do before you complete any major applications. It’s a necessary process because you’ll need to know where you stand. It won’t make sense to apply for a consolidation and put another inquiry on your report if you hardly have a chance to get approval.
The bureaus are obligated by law to provide you with at least one free credit report per year. Therefore, you should take the opportunity to order it, look it over, and see if you can improve any areas of it.
2. Clear up Inaccuracies
The majority of debtors have something wrong with their credit reports. Some of them have inaccurate address information and other personal information on them. Some of them have inaccurate balances. Others have entire accounts that do not belong to them on their credit reports.
Review your report for items that you can dispute and do just that. The bureaus will have to examine anything you dispute, and they will have to remove it if they cannot validate it. Anything that gets removed from your credit report could raise your score.
3. Talk to Possible Cosigners
It would be a good idea for you to talk to possible cosigners that might help you get approved for the loan. A cosigner is a person who has excellent credit who is willing to take responsibility for the loan if you default. This may be a relative, a significant other, or a very close friend. Sometimes, lenders will approve applicants only if they have a cosigner.
Alternatives to Payday Loan Consolidation
There are some other options for you if you cannot obtain a payday loan consolidation advance for some reason. These are five alternatives you can consider.
1. Home Equity Loan
If you own a home, you may qualify to receive a home equity loan. You can use the funds from that loan to pay off your payday loans. Home equity loans use the equity in your home to lend you money. It might work well for you if you’ve lived at your current home for a long enough time to accrue equity.
2. Credit Card Balance Transfer
A credit card balance transfer is another great way to pay your payday loans. For this to work, you will need to have a limit high enough on your balance transfer card to cover the various payday loan advances. If you have an existing card with enough available credit, you can contact the card provider to initiate the balance transfer.
All you need to do is give them the account information for your payday loans. They will send checks to your providers for the remaining balances and add the funds to the amount of money you owe the credit card company.
3. Debt Management Program
You may also consider signing up for a debt management program. A debt management program is not a lender. They do not issue loans of any kind. However, they will help you take care of your payday loan debt another way. A counselor will review your situation and first contact your lenders. The counselor might be able to get your lenders to agree to let you pay back a percentage of the balance in exchange for wiping it from your records. He will then come up with a monthly figure that you need to give them each month to pay all of your creditors. The counselor will be the one to distribute those funds. It may take a few years to get out of debt this way, but it works.
4. Debt Settlement
Debt settlement is more of a negotiation process. A lender agrees to resolve your debt for a lesser payment in a debt settlement than what you owe them. Some lenders are willing to accept such terms when they believe there’s little chance of them receiving the full payments.
Bankruptcy is an option that you should choose unless you have no hope of recovering from your situation any other way. You can schedule a consultation with a bankruptcy attorney who will give you the means test to see if you qualify for a Chapter 7.
It’s possible for you to have all your payday loans dismissed in a bankruptcy hearing if you can prove your inability to pay your bills.
Alternatives to Applying for Payday Loans
We also wanted to give you some information on how you can use alternative methods to get fast cash instead of applying for payday loans with bad credit. These are some of the other alternatives you might want to consider before you apply for a payday advance:
If your need for funds is several hundred dollars or less, you can visit a pawnshop with some items you own. A pawnshop will loan you money equal to about 50 percent of the value of the items.
Therefore, you could take a musical instrument, gaming system, or something similar to a pawnshop and get the funds you need that way. The best part about using a pawn shop is that you can go back and retrieve your items for a small fee. You’ll have to pay the loan amount plus any interest and finance charges the pawnshop assesses. It usually doesn’t work out to be too much, however.
2. Garage Sale
A yard sale can bring you money quickly. You can consider having a garage sale if you have items that you don’t mind parting with. You could gather a few hundred dollars if you have many items, and you hold the yard sale at a reasonable time. The weekend is the best time to have them because most people are off from work at that time.
3. Family and Friends
Your family and friends should really be the first place you turn for financial assistance. They might be willing to help you with your plight. Let them know what you need the money for, and they might offer you some help.
4. Online Auction
An online auction might be better for you to raise funds quickly than a yard sale or something local. Online auction sites will allow you to reach out to people in other parts of the world.
Your items are likely to sell quickly if you have an online auction for something popular. Gaming systems and all of their games are popular. Cell phones are pretty popular too. You might want to think about signing up and putting something on sale before you request a payday loan.
5. Odd Jobs
You can always seek to find odd jobs that pay the same day you do the work. You can sign up with a temporary work service that pays the same day. Another alternative is to look in the classified ads for people who need babysitters or people to mow their lawns. You may also find some people planning to move. They may need someone to help them load their truck for the journey. Alternatively, you can try delivering food as a side gig or giving people rides if you don’t mind them getting into your car.
Consider your other options before you take a payday loan and make sure you receive the best terms possible if you decide to take a payday loan. That’s the best advice we can give you.
Contact Us for Additional Help
We’re here for you if you need answers to any additional questions, or you have some concerns. We are not a lender, but we have plenty of resources and connections to help you find consolidation loans as well as other products and services. As a matter of fact, we recently designed an access center and application called the Goalry Mall. We designed it just like a mall with different layers and “stores” to help you meet your financial needs. We think you’ll love this mall, and it’s definitely worth a visit.
Sign up With the Goalry Mall
Our Goalry Mall can help you reach your goals, no matter what they are. You can use it if you’re looking for a payday loan, and you can use it if you’re searching for a consolidation. It only takes a few seconds to sign up for access to the mall and request a member ID. You’ll have access to all of our amazing floors once you receive your member ID. You can visit the lower level if you want to connect with people who share goals with you. You can visit the middle level if you want to find educational materials.
Alternatively, you can visit our third floor if you’d like to access all the stores that have the connections and information you need.
Try the Debtry, Billry, or Creditry stores and see if you can find what you need there. Don’t hesitate to contact us if you need us, but we think you’ll love the Goalry Mall.
Timiarah Spriggs is a personal finance writer who specializes in credit score growth and smart budgeting. She share budgeting, saving, and financial planning advice with various renowned finance shows, podcasts, and finance sites. Timiarah discovered the world of personal finance out of necessity. Her passion lies in helping consumers stay afloat in the world of finance and become masters of their profiles.