Every year, 12 million Americans take out payday loans. And what’s worse is, most of them stay in debt for 5 months and renew their loans because they can’t pay off the high fees. As a result, many are trapped in a cycle of debt.
If this sounds like your situation, then you might be wondering what to do to consolidate payday loan debt. In that case, you’re in the right place. In this article, we’ll give you a quick guide to payday loan consolidation so you can get back on your feet.
Get a Personal Loan
It might sound weird to tackle debt by adding more debt on top, but in this case, it’ll be much better for you. Payday loans come with APRs of around 400% to over 520%, while personal loans come with much more reasonable APRs of up to 35%.
By applying for a personal loan, you can then pay off your payday loan once and for all. Then, you can focus on paying off your personal loan, which will be much quicker to do, thanks to its significantly lower APR. You’ll also enjoy longer repayment periods when compared to payday loans.
If you don’t have good credit, then you can apply for installment loans with companies like Liquid Loans. They’re specifically dedicated to helping people with consolidating payday loan debt.
Apply for Credit Cards
Applying for credit cards is an idea that’s similar to getting a personal loan. This method of debt consolidation allows you to swap out a ridiculously high APR for a more reasonable one. In fact, many credit cards have an introductory rate of 0% APR (anywhere between half a year to a year), so this lets you solely concentrate on chipping away at your debt instead of paying off interest.
Using a credit card to consolidate payday loan debt can be a great idea if your credit isn’t good enough to get approved for a personal loan. Like with personal loans, you’ll get a longer repayment period.
Consult With a Credit Counselor
Simply chipping away at debt on your own isn’t good enough, especially if you don’t have good spending habits or financial sense.
A credit counselor can help you manage your finances better so you don’t end up in a cycle of debt again. Not only that, but they can also help you come up with a personalized plan of attack for eliminating your payday loan debt.
Consolidate Payday Loan Debt With Our Advice
It might seem impossible, but you can consolidate payday loan debt if you’re wise about it. The main idea is to opt for routes that drastically reduce the interest rate you’re paying, as well as extend the repayment time.
Get out of the cycle of debt and you’ll be on your way to a much healthier financial position!
If you need more financial help, make sure to read the rest of our blog!