Payday loans are short-term loans that give you a small amount of cash with the agreement that you’ll pay it back, along with additional fees, at your next paycheck. Although they may be an easy way to get cash fast, relying on these loans can quickly pull you into a cycle of debt.
Why Are Payday Loans Bad?
Some of the biggest disadvantages to payday loans are the high interest rates and short repayment terms. If you aren’t able to pay back your loan in full on the due date, which is usually within 14 days or by your next paycheck, most payday loan companies will encourage you to roll your loan over into a new loan. They’ll also add more fees and excessive interest charges with each rollover, which can quickly grow into a massive amount of debt.
Additionally, if you default on your payday loan, you risk your debt being sent to collections. This can negatively impact your credit and make it more difficult to obtain loans in the future.
How to Get Out of Payday Loans
Unfortunately, there isn’t a magical way to make your loans disappear, but there are a few strategies you could use to make your debts more manageable. Consider these options for dealing with payday loans:
- Debt Consolidation Through a Personal Loan: This strategy requires you to take out a new personal loan from a lender, like your bank, to pay off the total amount of your payday loan. If you are dealing with multiple debts with varying due dates, you could use one personal loan to cover them all, which helps organize your payments into one monthly payment. A personal loan usually has a much longer repayment period than a payday loan, so you won’t have to worry about rollovers. However, you’ll still have to consider the fees and interest that may be associated with your new loan.
- Working With a Debt Consolidation Company: This method involves working with a trustworthy debt relief company to consolidate your payday loans. An account is set up for you, into which you’ll deposit a monthly payment. While you’re making those deposits every month, a debt negotiation specialist works with your creditors on your behalf to reach a new legal settlement, which is often lower than what you originally owed. When you’ve saved enough in your designated account to cover the new legal settlement, you’ll use that money to pay off your debts. It’s important to find legitimate consolidation companies with plenty of five-star reviews and BBB accreditation, such as Accredited Debt Relief.
Is Debt Consolidation Right For You?
Depending on your unique financial situation, consolidating your payday loans could help you work your way out of debt. However, debt consolidation isn’t the best for everyone. You may want to consider consolidation if any of the following are true:
- You’re unsure you’ll ever be able to pay off the total amount you owe.
- You’re considering bankruptcy to get out of debt.
- You continue to be trapped in the payday loan cycle and want help getting out.
Payday Loan Help With Accredited Debt Relief
Accredited Debt Relief has been BBB accredited with an A+ rating since 2014, and we have helped many individuals throughout the U.S. take back control of their debt. Our team of experienced debt consolidation professionals are ready to review your payday loan situation to determine what debt relief options are best for you. Break the payday loan cycle today - contact us for your free consultation.