Payday Loan Consolidation: How to Get Relief that Works

For many stuck in the payday loan trap, payday loan debt consolidation is one of the only forms of payday loan debt assistance that can help.

See How Much You Could Save

Are you stuck in payday loan debt? Rest assured that you’re not the only one looking for a bit of payday loan relief.

Payday loans are short-term loans that seem like an easy solution when you’re short on cash.  

You just need a bit of cash to make ends meet. But then you miss a payment, so you roll over your loan. Or you take out a new one to cover the payments on a previous one. Before you know it, you’ve got multiple payday loans you just can’t pay back.

You’re stuck. It’s called the payday loan trap for a reason.

But you’re not alone…

Did you know…

Does that seem fair? No, it sure isn’t.  

Fortunately, payday loan consolidation is a way to reduce your debt amount and avoid paying high-interest rates.

A Company that Can Help: DebtHammer

Our Top Pick for Help With Payday Loans
  • Can help reduce payday loan debt
  • Extremely transparent process, no shadiness
  • Friendly and helpful customer support – no judgment

Explore Your Options and Learn How to Consolidate Payday Loan Debt

Not only is it possible to consolidate your payday loan debt, but it’s also the most effective way to break the cycle and escape the payday loan trap.

Most people who fall victim to payday lending usually will have trouble getting any other type of loan because of their credit history. But there are exceptions. If you need payday loan help, it’s worth figuring out if one of the following options will work for you.

In this guide we’ll cover:

What is Payday Loan Consolidation?

Payday loan consolidation is exactly what it sounds like. Rolling up all your payday loans into a single payment with repayment terms that are fairer to you.

That’s right. One lower payment, with lower fees, that’s easier to repay.

There are really two types of ways to consolidate your loans: payday loan relief programs and debt consolidation loans.

Here we’ll cover these two.    

Do You Need Payday Relief?

Get lower payments and immediate cash relief with a payday loan consolidation program.

Type 1: Payday Loan Relief Programs

The best way to consolidate your payday loans is through a payday loan consolidation program.  Also known as a payday relief program, debt consolidation program, or debt settlement, this involves working with a firm that interacts with the payday lenders on your behalf.

A payday loan consolidation company will typically charge you on a monthly plan that’s less than the amount you owe. They will then negotiate with your payday lenders, in some cases reducing your debt load from them.

DebtHammer (Top Pick)

READ MORE: Here are the 4 Best Payday Loan Consolidation & Relief Companies


  • Lower monthly payments: These types of programs sell borrowers on the fact that they dramatically reduce their monthly payments. Giving them immediate cash relief in addition to long-term savings.
  • Lower debt amount and no interest: Consolidation programs don’t require you to pay interest — just a monthly or biweekly payment. If you do work with a firm providing payday loan relief services, make sure that the amount you’re paying is less than what you’d have to pay the lenders.
  • Less work: With a debt consolidation loan, you need to handle the payments and negotiations (if applicable) on your end. You need to make sure you take the new cash and pay the lenders. With a payday loan consolidation program, you don’t need to worry about that part. The firm handles all of it.
  • Professional advice: In addition to the money, a firm that provides payday relief services is available to help you with your financial situation. They’ll educate you on payday lending laws (however, they won’t give legal advice), offer personal finance advice and help you with whatever you need.


  • Lots of scams out there, beware
  • Only works with certain lenders
  • Not designed to prevent debt collectors from calling

Will it Work for You?

Payday loan consolidation/relief programs don’t check credit scores. But they will ask you for all of your loan documents. They know which lenders they can negotiate with to secure better terms — and which they cannot. Then, they’ll use this information to decide how much to charge you. You should never have to pay for a program upfront.

Typically a firm will only take you on if you have over $1,000 in debt.

In summary, if you’re drowning in payday loan debt owing over $1,000 with subprime credit and don’t know what to do, then a payday loan consolidation program may work well for you.

Pro tip: Make sure to research debt consolidation companies and check customer reviews. There are plenty of scammers out there trying to get your banking information. If you think you’ve found a debt consolidation program that isn’t legitimate, please notify the Consumer Financial Protection Bureau (CFPB.)

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Type 2: A Debt Consolidation Loan (Do it Yourself Consolidation)

debt consolidation loan is a personal loan that you take out to pay back your lenders.

The simplest way to consolidate your debts is through a debt consolidation loan. A debt consolidation loan is a personal loan you take out to pay off your various other high-interest debt. Typically you can get a lower interest rate when you do so and it can simplify your repayment plan by grouping everything onto one plate.

The way it works is simple.

First, you apply for the loan to see if you can get approved.  Once approved, you take that cash and pay off your lenders.  Now you pay back the new loan.

When considering a consolidation loan, we want to be able to achieve four main goals:

  1. Does a loan consolidate all of your unsecured debt?
  2. Is the interest rate below 20% or lower than your current interest rate?
  3. Is the monthly payment less than what you are currently paying on your monthly minimum payment, and is the payment affordable?
  4. Will the loan get you out of debt in 48 months or less?

If the answer is yes to all four questions, then a debt consolidation loan will solve your debt problem. If the answer is no to any of these questions, then a debt consolidation program may be the better solution for you.


  • Lower interest rates: Just because it allows you to make a single payment doesn’t mean you should take out a debt consolidation loan. You should only take out a debt consolidation loan if the interest rates are lower than what you are currently paying with the payday loans. Additionally, you’ll want to make sure that there aren’t any hidden fees that make your effective annual percentage interest rate higher.
  • More legitimate lenders: When you take out a debt consolidation loan, you’re not dealing with some shady payday lender. Instead, you’re working with a bank or credit union that is probably more reputable. They actually care about your ability to repay, which is why a credit check is probably necessary to get one of these loans.
  • Predictable monthly payments: A consolidation loan usually is broken into monthly payments, rather than every payday. You only need to make a single payment, and to keep track of one bill.
  • No rollovers: One of the ways payday lenders get you is with rollovers. They allow you to easily roll over your balance into another term, still at a higher interest rate and usually with added fees. This isn’t the case with debt consolidation loans. If you want to extend it, you need to apply for a whole new loan. This will keep you disciplined and force you to make your full payments on time.


  • Difficult to qualify
  • Need to completely understand loan terms

Will it Work for You?

Ability to repay matters when it comes to debt consolidation loans. Don’t worry, they aren’t looking for a perfect credit score, but the lender will do a credit check and assess whether you have the ability to repay the loan.

If you have the ability to win approval for a larger loan and have the discipline to ensure that you won’t use more payday loans or run up your credit cards once your debts are consolidated onto the new loan, this is a good option for you.

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Other Types of Debt Consolidation Loans

Here are two other types of debt consolidation loans that you may not be aware of: balance transfer credit cards and Payday Alternative Loans (PALs). We review both options below.

Balance Transfer Credit Card

If your credit is good enough, apply for a new credit card that offers a 0% introductory rate. Most of these rates are good for 12 to 21 months. You will probably have to pay a small fee to transfer your debts onto the new credit card (though there are a few offers that don’t involve transfer fees) but even though you’ll pay a fee, you will save a considerable amount of money by paying down your debts during the period where interest is not accruing. If you can boost your credit score enough during the initial introductory period, you can repeat the process again when the initial offer expires.

How it Works

Depending on the card and credit limit, you can transfer payday loans, private student loans and auto loans to the new credit card. If you have an expensive personal loan with a high APR and need extra time to pay it off, use the new credit card to pay off the loan. You can usually transfer multiple debts to the one new card, but most credit card companies won’t allow you to transfer any debts you have on existing accounts.

For example, if you have three Citi credit cards with $3,000 each, you can apply for a new card with a different issuer and transfer all $9,000 (plus any fees) onto that one card — as long as your credit limit is high enough. But you will not be able to transfer these balances onto a new Citi card. You will need to obtain a card through a different issuer, which can include one of the major issuers, or a local bank or credit union. The approval process may be easier if you already have a bank account with the lender.

Most issuers won’t allow transfers from existing accounts with the same issuer, but some allow transfers of multiple debts to one card. You’ll also want to check with your creditors to see if they have any restrictions or fees associated with transferring the balance over to another creditor.

CitiWells Fargo and Bank of America all offer multiple cards with introductory rates.

READ MORE: Best balance transfer credit cards

  • You can make real progress: By consolidating everything onto one card, you can put as much as possible toward that card each month and really make progress on reducing your total debt amount during the interest-free period.
  • You can boost your credit score: As you make payments on time over the introductory period, it will give your credit score time to rebound. Even though late payments stay on your credit report for seven years, your creditworthiness will improve as you establish a pattern of on-time payments.
  • It’s one of the least expensive options: Many loan consolidation services are expensive. This is a way that you can take control of the process on your own, at a minimal cost.
Will it Work for You?

If you have a credit score of 670 or higher, this is going to be the most affordable way to get out of debt. You’ll need to have discipline, though. Once your debts are consolidated onto the new card, it’s important that you don’t use the card for day-to-day charges, which will accrue interest, and that you don’t run up the credit cards that are now empty. You don’t need to close the accounts, but pack the cards away where it’s difficult to access them, and stash one away for emergencies.

However, this may not work if you already have a lot of credit card debt, because some credit card issuers won’t allow you to transfer debt within different products from the same credit card company. And you’ll need to have good credit to qualify.

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Payday Alternative Loan (PAL)

Payday Alternative Loans (PALs) are short-term loans offered by credit unions. This makes them much more reliable, lower interest loan, because they are federally backed with a maximum interest rate of 28%. Loan terms are usually for 6 months with no rollovers to prevent borrowers from falling into a debt trap.

How it Works

You can take out up to 3 PALs per year, but cannot have more than one out at the same time. There is a maximum of a $20 application fee. PALs do not require a credit check, but usually, you must be part of the credit union for a certain amount of time before you can apply for a PAL. PAL IIs, a slightly different variant of PALs, are offered at some credit unions and you can usually apply immediately upon joining the institution.

  • Fixed interest rate: You won’t pay more than 28%.
  • No rollovers: PALs are issued one at a time to borrowers; borrowers will not be allowed to have more than three PALs within a six-month period.
  • Low fees: Credit unions are already known for low fees, but PAL application fees are capped at $20.
  • No credit check: As long as you’re a member of the credit union, you’re eligible to apply.
Will it Work for You?

This is a good way to break free of the payday loan debt cycle. If you are struggling to pay off multiple payday loans but don’t need to deal immediately with other debts, these are an ideal way to break the cycle and reset your financial situation.

READ MORE: How do Payday Alternative Loans work?

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Benefits of Consolidating Your High Interest Loans

If you’re stuck in the payday loan trap, you can most likely benefit from a payday loan consolidation plan. Here are several of the benefits of consolidating your debt.

Reduced Fees and / or Interest Rates

Payday loans can have astronomically high interest rates. In fact, often these types of loans have APRs of 300-400%! A typical credit card APR range is 20-30%, so it’s easy to see why so many fall into the trap.

A consolidation loan can lower your interest rates significantly, especially compared to payday loan interest rates. If you instead use a consolidation program, they will eliminate the burden of interest completely and negotiate a settlement on the principal balance instead. Either way, that’s hundreds or even thousands of dollars saved over the course of your loan’s lifetime.

Unlike payday loans, which usually must be repaid within two to four weeks, personal loans offer a variety of repayment terms that generally range from 12 to 84 months. You can choose the term that works best for your budget.

Flat Monthly Payments

Most do not realize what happens when they are late on a payday loan, and that’s understandable: the fine print is so confusing even some of the world’s best lawyers have trouble comprehending it. Late fees, high interest rates, and rollover options; it’s almost impossible for anybody to understand them.

When consolidating your loans into one, a great credit consolidator will package everything up into a plan that’s much easier to understand. They will give you a much more straightforward monthly payment plan, where all you need to do is pay a flat amount each month.

Flexible Terms of Repayment

Unlike most payday loans, a personal loan designed for debt relief will give you some flexibility on the monthly payment amount, the timeframe of the loan, and the other associated components. Most payday loan borrowers will find that a debt resolution plan is actually quite reasonable compared to payday debt.

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Alternatives to Consolidation

You don’t need to consolidate your loans to get out of payday loan debt.

But if you really need relief from payday loans and you can’t get approved for a personal loan or payday loan debt relief program, there are other debt relief options. Here are a few debt relief options:

Ask for Extended Repayment Terms

Both storefront and online cash advance companies know that they will not get all of their money back. That’s why the interest rate is so high. So it can’t hurt to call your lender and ask for a repayment plan with reduced interest charges. From their perspective, they’d rather get half of their money than none of it.

READ MORE: Can You Get an Extension on a Payday Loan?

Work with a Credit Counselor

There are people who have dedicated their entire lives to fight payday loan lenders and help get clients debt free. These are called credit counseling services.

Credit counseling services have wide expertise in many areas of personal finance, including credit card debt, mortgages, student loans, unsecured loans and more. But one area they focus on is payday loans and helping people get out of the deadly payday loan cycle. Be sure to do your research to understand whether your credit counselor has experience with payday loan consolidation. They can seriously help your financial situation.

This video by Michael Bovee does a great job at explaining credit counseling.

Additionally, credit counselors stay in tune with guidelines and laws put forth by the Consumer Financial Protection Bureau (CFPB), a government organization that does all it can to fight predatory lenders. To find a local credit counselor, call your local credit unions and see if they have any recommendations.

ALSO READ: Credit Counseling: How Does it Work?

Talk to Legal Aid Attorneys

Many payday lenders operate in the gray area of the law, and there are some attorneys that will work with you in order to fight these predatory lenders and reduce your debt amount. A competent lawyer will help explain your debt settlement rights and the best way to get out of your payday loan problem. Contact the National Consumer Law Center for more information.

RELATED: Can a Payday Loan Company Sue You?

File Chapter 7 Bankruptcy

Note: this should be a last resort. Talk to a lawyer before exploring this option.

Chapter 7 bankruptcy is a legal process that allows you to discharge some or all of your debt. It requires you to follow a very rigid legal process and can result in asset seizures or wage garnishment.  It most definitely involves time in court. State law governs bankruptcy, so your options differ by state. Around 800,000 Americans declare bankruptcy every year.

Also, there’s no way to keep a bankruptcy from being reported to the credit bureaus, so bankruptcy will hurt your credit score. So be sure to only use this as your last resort. For more info on filing for bankruptcy, watch this video below.

Borrower Stories

Jeanine D.


“I owed over $4,000, and half of that was in fees. Thanks to payday loan consolidation I was able to reduce my amount owed to only $200 which I’ve almost completely paid back!”

George F.


“My payday loan debt got to the point where I would never pay it back, and I went into extreme depression. My health and family suffered more than I can say. I’m so glad I consolidated my loans and will never go back to the payday loan store ever again”

Grace B.


“Thanks to payday loan consolidation, I was able to reduce my fees to only $200 per month. I started saving, working overtime, and was debt free in about 12 months. A huge burden off my shoulders.”

The Bottom Line

There are numerous ways to consolidate your payday loans. Once you’ve settled on a consolidation strategy that works best for you and your money, shift your focus to becoming debt-free as soon as you can. Consistently pay down your debt, save money, and build an emergency fund so you never have to turn toward a payday loan again.

Have more questions? Request a free consultation, and we’ll help you decide which options are best for you.


Can the Government Help with Payday Loans?

Unfortunately, the government provides very little help to individuals struggling with payday loan debt. As far as legislation, very little has been done at the Federal level. Several states have outlawed payday loans, but often tribal lenders use their tribal immunity in order to give loans in these states. So, unfortunately, Uncle Sam isn’t much help to payday borrowers.

Can I Consolidate ALL of my Payday Loans?

This depends on a few things.

First off, if you’re working with a payday loan relief company, they may not work with certain lenders. This is particularly true for payday loan consolidation companies that rely on negotiating with lenders.

If you’re using a debt consolidation loan, you can consolidate as many of your loans as the debt consolidation loan will allow. So if you are approved for a $1000 loan and you have two payday loans with $500 each outstanding, you can pay off both of them. However, if you have three payday loans with $500 outstanding, you can only consolidate two of them. If you’re in this scenario, always pay the highest interest loans first.

What is the Consumer Financial Protection Bureau (CFPB)?

The CFPB is a U.S. federal agency that protects consumers from unfair or illegal practices from banks, lenders or other financial companies.

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