Payday Loan Consolidation- Debt Help & Relief

All about payday loan consolidation and the alternatives

Consolidate Payday Loans

Payday loan consolidation means paying off multiple insecure debts using a single loan within manageable payments.

The main aim of payday loan consolidation is to reduce the burden that comes with paying multiple loans every month.

Apart from simplifying the payments, payday loan consolidation can also get people out of a debt trap that comes with applying for multiple payday loans within a short period of time.

Consumers can consolidate their payday loans in different ways. These can be applying for a personal loan, home equity line of credit or home equity loan.

In this article, we are going to explain in detail how payday loan consolidation works, when you apply for it and how you can apply for the loan. Using a payment plan, credit counselors we can consolidate any short term loan and help you become debt free. 

When can I consolidate my payday loans?

You can consolidate payday loans when you find yourself in a debt cycle. Payday loans are short term in nature and require payments within 2 to 4 weeks.

Actually, you have to pay the loan as soon as your next paycheck arrives. However, a payday loan lender can decide to extend this term if you are not able to pay within this time.

By doing so, the lender will only need you to pay the interest, not the whole amount. The due date is extended by a few weeks with extra interest charged on the loan.

According to the Consumer Financial Protection Bureau, up to 80% of payday loan borrowers tend to renew these loans. 

If you have been in this situation, then you already know how expensive rollovers can be. They result in additional fees on top of the interest rate.

In fact, the APR for payday loans can be as high as 400%, thanks to the high interest and fee charges.  So people who are already trapped in debts as a result of taking out too many payday loans can apply for payday loan consolidation.

But still, payday loan consolidation won’t prevent you from paying the additional fees and interest from your past payday loans.

Consolidation will only shield you from taking additional loans thus accumulating your payday debts.  You can then pay the balance on outstanding payday loans at more convenient terms and at times, at a lower rate.  Over time your credit report will improve and credit bureaus will help you obtain unsecured debt once more if you so choose.

Your bank account and checking account will not be overdrawn as long as you select a good payday loan consolidation company like KillerKash.

Process of consolidating payday debts

  • Go through the different ways of consolidating payday loans and choose one that suits you best. Credit credits can also help consolidate the debts. But personal loans are more convenient since they feature a faster approval. Unlike personal loans and credit cards, home equity loans and home equity lines of credit need collateral and the application and funding process can take some time.  Still, they are the cheapest option that you can consider.
  • Apply for the loan. Personal information will be required, which is your name and address, social security number etcetera.  Financial information like your income and housing payments will also be needed.
  • It may take a few days up to a month to get the money, depending on the option you choose.
  • Use the funds to pay off all your outstanding payday loan balances. Some payday loan consolidation lenders can even pay the debts to your creditors directly.

After consolidation, you will only have to pay the new lender and the interest rate may be lower than your original loans. This will relieve you of the burden that comes with paying too many payday loans.

Now that you already know how payday loan consolidation works, we will now look in detail at the different ways you can use to consolidate payday debts.

Comparing different payday loan consolidation options


Category Personal Loan Home equity loan Balance transfer card Home equity line of credit
Credit score requirements 585+ 620+ 700+ 620+
APR 6% to 36% 4% to 8% 19% 4% to 8%
Collateral requirements non house non house
Funding time 1-7 business days Over 1 month 14-24 business days Over 1 month

This table gives you an idea of how each of the payday loan consolidation options works. We are also going to explain what you should expect when considering any of these methods;

Personal loans

You can apply for personal loans when you need funds for anything, including payday loan consolidation. Most unsecured loans require a credit score of more than 585, but if you apply for a secured personal loan, it is easy to qualify even with a bad credit score.

You, however, have to provide collateral for the loan. Before getting a personal loan, you first need to check for prequalification.

This will give you a clue on the rates you can qualify for, the expected rates and the loan term.  You can even compare these rates to your outstanding payday loan rates.

After this, you can send a loan application to a lender who offers the best terms.

Use the personal loan to clear your payday debts. Some personal loan lenders can even pay directly to your creditors.

Balance transfer credit card

It is also possible to transfer your outstanding payday loans to a credit card. If you choose this option, you will owe the credit card company and not your creditors.

The best way is to find a card with a 0% introductory APR of balance transfers. Most credit cards allow for balance transfers. In fact, even the expensive credit cards have a lower APR compared to what you can get in payday loans.

Home equity loans

Home equity loans, just like personal loans can be used for different purposes. However, these loans are not insecure.

They require collateral, which, in this case, is your home. So if you fail to pay the loan, you may risk losing your home. On the positive side, home equity loans have a lower APR than credit cards and personal loans.

Home equity line of credit

Home equity loans and home equity lines of credit HELOC work the same way. The only difference is that with HELOC, you won’t get a lump sum amount.  Instead, you can borrow up to your credit limit. The loan terms are the same as those of home equity loans.

The benefits of payday loan consolidation

There are many benefits of payday loan consolidation. The main one is that you will save money. Come to think of it, consolidating your payday loans is far cheaper than renewing the loans which come with extra interest and fees.

Additionally, consolidating payday loans means that you will have adequate time to pay the new loan (which is usually paid in instalments) so you won’t have to worry about paying in a lump sum like for payday loans.

Alternatives to payday loans

 These are some of the reasons why payday loan consolidation is the best way to go. But this is not the only means to get out of a payday loan cycle. There are other alternatives that you can also consider, which are summarized in the table below;

Category Debt counseling Debt management Debt settlement
How it works An organization can advise you on the best way to get rid of debts An organization helps you come up with a repayment plan for your debts You pay a lump sum amount you have and the remaining amount is written off. Mostly applies in student loans
When to choose When you need professional help to get rid of debts If you are willing to make smaller payments on your outstanding loans When you default
Further sources Debt counselling explained Debt management explained Debt settlement explained


These three alternatives to payday loan consolidation work differently.

Debt settlement

Here, you can inform your lender that you won’t afford to pay the loan anymore but can give a lump sum while the rest is written off. 

Most lenders can accept this if all their efforts to recover the loan have failed. Besides, it is an easy way of solving the situation rather than the long and endless case proceedings.

Debt management

Here, you have to work with an organization that offers the debt settlement program at a fee. You have to pay this organization, the payments are sent to your payday loan lenders.

The debt management company can negotiate with your lenders to lower the interest rate.  However, not all debt management companies are reputable. The best way to use this program is working with a non-profit organization.

Credit counseling

There are also organizations that advise consumers on how to get rid of payday loans. Most of these organizations offer free advice. Others can charge monthly or even a one-time fee. Beware of companies that charge too much considering that you also have a loan to pay.


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