After you get a payday loan, it is often hard to pay it back when it is due in just a couple of weeks. Rather than rolling over the debt every two weeks and paying a fee each time, consolidate payday loans with a loan from another source that you can repay over a longer time period. Your options for payday loan consolidation depend on your credit and financial status.
Credit Union Loan
If you are a member of a credit union and have a decent credit score, you might be able to get a small loan for the amount of your outstanding payday loans. Credit unions offer competitive interest rates that are much lower than those of your payday loans. You can repay the loan with monthly payments spread out over a year or more. Make a household budget to ensure that you can afford the monthly payments and will not need to take out any more payday loans.
Credit Card
If you have a credit card or can obtain one, you can use the card to consolidate payday debt. The simplest method is to get a cash advance from your credit card and use that advance to pay off your payday loans. However, cash advances often have fees and higher interest rates than regular purchases. If you are a disciplined spender, the other option is to put some of your regular household expenses on the credit card, which will free up the cash you would have spent on those items to repay the payday loan instead. Then make monthly payments of the highest amount you can afford until you pay off the credit card.
Friends and Family
If you have trusted friends or family members, they might be willing to lend you some money to help you get out of payday loan debt. If you borrow from someone you know, work out a contract in writing and be diligent to make the payments as agreed so you do not harm the relationship. For example, if you borrow $1,000 from a friend to consolidate your payday loans, you might agree to pay your friend $50 out of every paycheck until you have repaid the full $1,000 plus an extra $50 for interest.
Home Equity Loan
If you own a home that is worth more than you owe on it, you might be able to get a home equity loan. You can add up your payday loan amounts and get a home equity loan for an equal amount. The closing costs on the home equity loan can be expensive, though, so this might not be cost-effective if you do not owe much in payday loans. In addition, borrowing against your home equity is risky because you could face foreclosure if you fail to make payments on your home equity loan. Therefore, you should only consider this option as a last resort.
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