Payday Loan Debt Consolidation

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With more and more people living paycheck to paycheck, payday loans are becoming increasingly common. When you find yourself unable to cover an unexpected expense when you cannot put it on a credit card, it’s only natural that you will consider a payday loan. 

Such a loan gives you extra cash until your next paycheck. The goal is to pay off the payday loan with your next paycheck.

But payday loans are the most expensive loans available. Their stratospheric interest rates, often reaching 300%, means you are getting an extremely expensive loan that you have to pay within weeks. 

Very often, people find it impossible to repay their payday loan and they get another loan to pay the first one. The sky-high interest charges compound quickly and create a debt spiral that seems almost impossible to escape from. 

It has been calculated that on average, people get 10 payday loans although their initial intent was to get only the first one. The subsequent payday loans are taken to pay off the first one.

A debt consolidation loan can group all the previous payday loans into one single loan with a more favorable interest rate. A debt consolidation loan simplifies your financial budgeting and helps you stay on track with your debt repayment obligations. 

What Is a Payday Loan?

A payday loan is a short-term loan that you agree to repay when the next paycheck comes through. 

Payday loans have high-interest rates with an APR (Annual Percentage Rate) of up to 300%. 

Most payday loan creditors do not run background credit checks on their borrowers, which is why they charge such exorbitant interest rates. 

Payday Loan Debt Spiral

When a household asks for a payday loan, it typically is because their salaries are unable to cover their daily expenses or because they had an unexpected incident they had not budgeted for. 

With low salaries and the prices of consumer goods going up, it is no wonder that people often find themselves short of cash. A minor car repair, a small health issue, or a necessary home repair can wreak havoc with household finances. 

The problem with payday loans is that they come with very high-interest rates. While some people manage to repay their payday loan by the agreed time, many households struggle to do so and apply for another payday loan to repay the first one. This loan strategy can trap borrowers in a perpetual debt cycle that is impossible to break out of, even with careful budgeting.

As more sky-high interest accrues on the debt, borrowers end up owing much more than they initially borrowed. Their financial state deteriorates significantly and they struggle to finance their household needs. 

Benefits of Payday Debt Consolidation Loan

Instead of asking for more payday loans to repay the previous ones, a debt consolidation loan can help you recover your financial freedom with an extended repayment period and on better terms. 

A debt consolidation loan groups all your previous payday loans under a single loan. Debt consolidation loans come with much lower interest rates that are calculated based on your credit score and your financial history. You have one single monthly payment to make instead of several payments. 

A fixed monthly payment

A debt consolidation loan comes with a fixed monthly payment that is easy to include in your monthly budget. There are no unpleasant surprises or unexpected increases. As long as you keep up with your monthly payments, you are on your way to repaying your debts in full, thus gaining financial stability and a debt-free life. 

Lower interest rate

A debt consolidation loan comes with a manageable, lower interest rate compared to the interest rate of a payday loan. 

The lender will review your financial health, including your credit score and debt-to-income ratio, and evaluate how you can repay your loan. The goal of a reputable and legitimate payday loan consolidation lender is to secure the loan repayment and help you to improve your borrowing and savings habits, and credit report without jeopardizing your household budgeting. 

One payment instead of many

It is much easier to keep track of a single monthly payment instead of paying back multiple payday loans every month. Keeping a schedule to pay off multiple payday loans can get complicated, and you are bound to lose track of your loan payments plan. Interest rates and fees accrue and you end up owing money you never borrowed.

Debt consolidation for payday loans aims at keeping things simple. You agree to repay your loan within a certain time frame—usually 24 to 48 months, depending on the amount you borrowed—and with one monthly payment. It is almost impossible to miss a payment and it makes your financial life simpler and more straightforward. 

You can improve your credit score

Once you have secured payday loan debt consolidation, you can start rebuilding your credit score. If you keep up with the required monthly payments, your credit score will gradually improve and you will be looking forward to creating a sound financial future. 

Payday Loan Debt Consolidation and Your Credit Score

When you apply for a debt consolidation loan, an institution like Credit9 will run a ‘hard credit check’ on you. The check is run with the purpose of lending you money because you have applied for credit.

Hard credit checks can affect your credit score but only slightly. You risk losing 5 to 10 points off your credit score. Hard credit checks stay on your credit record for two years. 

Credit9 for Your Payday Loan Debt Consolidation

Credit9 is a legitimate loan consolidation company. There are many unscrupulous lenders who promise quick loans to unsuspecting customers. 

With Credit9, you never have to wonder if we are a legit payday loan consolidation company. We are a member of the FDIC and can legitimately and legally extend payday debt consolidation loans to our customers. 

We offer a simple and easy online application process to help our customers find the right financial solution for their payday loan consolidation. 

We give you lower interest rates compared to payday loans and extended payment periods providing more breathing space for your finances.

Frequently Asked Questions