Paying off Multiple Payday Loans

How To Pay off Multiple Payday Loans

Payday loans are short-term loans with exceptionally high-interest rates. When you take out a payday loan, you usually receive the money within 24 hours in your bank account.

The drawback to payday loans is that they tend to be expensive compared to other types of financial aid. There are no credit checks involved, and the company doesn’t care about your ability to repay it.

The fees on payday loans can reach more than 300% APR (although not all lenders charge over 100%). Because this number is so large, many people don’t even realize how much they’re repaying when they borrow $100 for two weeks for $15 in fees.

Payday loan consolidation

Payday loan consolidation is a way for borrowers to get out of constantly having to refinance their loans. Instead, they can take all their payday loans and transfer them into one big payment with just one company.

If you have more than one payday loan, several companies will consolidate them. You only have to make one repayment each month instead of managing multiple bills.

Applying for a consolidation loan

Applying for a payday loan consolidation is precisely the same as any other payday loan. Except that there’s usually no credit check involved.

You’ll need to provide proof of income, which can be your last pay stub if you’re employed. Proof of benefits is required if you receive social security or disability checks.

You may also prove that someone has paid you child support in the past 90 days if you don’t work but are still receiving funds from elsewhere.

The lender will also ask you to show them your checking account information so that they can deposit the payday loan funds directly into your account. You’ll receive a statement explaining precisely what has happened and when you’ll have to start making repayments.

Important consideration

It’s important to remember that most consolidating payday loans don’t charge a fee to transfer the payday loan debt from your old payday loan to a new one. This often leaves many people stuck in an endless cycle of payday loan debt.

One where they continuously owe more money than they make, putting them ever deeper in the hole without any means of getting out.

Bottom line

Payday loans are increasingly popular among these hardworking Americans. Payday loans are expensive, high-interest payday loan debt that can take years to pay off.

The average annual percentage rate for these loans is over 400%. Combined with late fees and other charges, this can quickly snowball into thousands of dollars in debt.

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