Feeling Trapped? Here’s How to Pay Off Multiple Payday Loans

Many people who turn to payday loans take out multiple rather than one. This leads to a vicious debt cycle that can take months or even years to end.

If you’re struggling with multiple payday loans, here are the most effective ways to pay them off quickly.

How to pay off multiple payday lenders and be debt-free

If you have multiple payday loans and are trapped in an endless cycle of debt, you’re not alone.

A recent survey shows 93% of respondents regret ever taking out a payday loan. Additionally, 39% of those surveyed couldn’t afford to pay back their loan on or before the due date. This meant they had to take out at least one new loan to cover the first.

If you need payday loan help, there are some effective ways to get out of debt. This includes debt consolidation loans, payday relief programs, payday alternative loans (PALs) and debt settlement programs. Keep reading to see which is right for you.

Debt consolidation: How does it work with payday loans, and is it right for me?

Consolidating multiple payday loans means rolling them all into one loan with a single payment, usually with a lower interest rate and better repayment terms. This helps borrowers escape the payday loan trap and get back on their feet.

The two ways to consolidate payday loans are with a payday loan relief program or a debt consolidation loan.

Payday loan relief programs (professional help)

Payday loan relief programs exist under many names, including payday loan consolidation programs, debt settlement programs and debt management programs.

These programs are available through professional agencies and are designed to help people pay off multiple high-interest, short-term debts. Once you enroll, an expert will represent you and work with your lenders to reduce or settle your debts.

Sometimes, the company will negotiate directly with the lender to reduce the loan fees or interest rates. Other times, they’ll pay the lender the full balance and give you a new loan you must repay over time.

As with anything else, payday loan relief programs have their pros and cons. So, before signing onto anything, make sure you know what you’re getting into.


  • Reduce the amount of total debt owed
  • Get help from experts who can negotiate better terms on your behalf
  • Charge simple monthly payments


  • Debt relief companies won’t work with all lenders
  • There’s no guarantee of success
  • Most agencies charge a flat monthly fee that can be a financial burden for those already struggling with debt
  • There are many scams

Stuck in payday debt?

DebtHammer may be able to help.

Debt consolidation loan (DIY consolidation)

A debt consolidation loan is an unsecured personal loan that combines multiple smaller debts into one. These loans have a lower interest rate than payday loans and come with a single, fixed monthly payment and term. This makes them easier to repay than several high-interest debts.

To qualify for the best rates, you’ll either need good credit or a cosigner with good credit. Shop around for the best loan before applying.


  • Reduced fees and interest rates
  • Longer repayment periods make paying off the debt easier
  • Option to consolidate other unsecured debts such as credit cards
  • The borrower is in more control than with payday loans


  • Difficult to qualify without good credit, a low debt-to-income (DTI) ratio, and a stable income
  • Loan terms and interest rates vary by lender
  • Depending on the loan amount, it might not be enough to cover all unsecured debts

Other types of loans that can help with debt consolidation

For anyone looking to pay off multiple payday loans, several types of loans and credit cards help with debt consolidation.

Balance transfer credit cards

A credit card balance transfer is where you move one high-interest debt to a new, low-interest account. These credit cards usually come with a 0% or low introductory APR that lasts 6 to 18 months. Some also come with a balance transfer fee that’s between 3% and 5% of the transferred amount.

You won’t be charged any additional interest if you pay off the full balance before the period ends. However, if the card still carries a balance at that point, you might have to pay deferred interest.

Before getting a balance transfer credit card, use a calculator to make sure it’s a smart financial move. These calculators estimate your monthly payments based on the starting balance, balance transfer fee and APR.

If you can’t afford to pay it in full, a balance transfer might not be your best option. Instead, consider taking out a cash advance on an existing credit card to pay off high-interest payday loans. This will incur additional fees and interest, but it’ll be less than what you were paying.

Personal loans

You can use a personal loan for nearly any expense, including renovations, high-ticket items and consolidating debt. They’re offered through credit unions, banks and online lenders — and sometimes even for those who have declared bankruptcy.

If you’re interested in taking out a P2P loan, check out Upstart and Peerform. These online marketplaces let you compare different options for the best rates.

Benefits of payday loan consolidation

If you’re stuck in the payday loan cycle, payday loan consolidation can help in several ways.

Reduced fees and lower interest rates

Payday loans usually come with astronomical interest rates. It’s not uncommon to find APRs ranging from 300% to 400%. For context, a standard credit card or personal loan usually caps out at between 20% and 30% APR.

Considering the high interest rate of payday loans, it’s no wonder why many people fall into the payday debt trap. But with a credit consolidation service or personal loan, you can save hundreds or thousands of dollars over the course of the loan’s lifetime.

Flexible repayment terms

Personal loans usually have more flexible repayment terms that last between 12 and 84 months. Traditional lenders are also usually more willing to work with borrowers to adjust the plan based on their budget.

While longer loan terms typically mean paying more in interest over time, it also means more affordable monthly payments. This makes these loans harder to default on.

Flat monthly payments

Payday loans can quickly become complicated, especially for those who roll over previous loans into new ones. With debt consolidation, you’ll only need to keep up with one straightforward payment plan and pay a fixed amount each month. As long as the loan covers the full balance of your short-term loans, this can alleviate financial stress for those in over their heads with payday loans.

To learn more about the pros and cons of debt consolidation, check out this video:

Alternatives to debt consolidation

Although debt consolidation can work, it’s not the only way to pay off multiple payday loans. If you can’t get approved for a personal loan or payday loan debt relief program, here are several other options that can help.

Ask for extended repayment terms

Some storefront and online cash advance companies offer borrowers an extended payment plan (EPP). This gives the borrower the chance to pay back the existing payday loan over a longer period. Typically, lenders offer this either because of state law or because they know they won’t get their money back otherwise.

If you currently have payday loans, contact your lender and ask for an extended repayment plan. They might charge a fee for this service, but it typically means lower interest or more affordable monthly payments.

If you’re not sure that you have a payday loan, click here to learn how to find out whether you do.

There’s no guarantee the lender will agree to this plan. However, it doesn’t hurt to call and ask since most lenders would rather get some of their money rather than none of it back.

Work with a debt settlement company

A debt settlement company — sometimes called a payday loan consolidation company — is a company that offers debt relief by communicating and negotiating with your lenders for you. They work to settle your debts for a lower percentage of what you initially owed.

Most debt settlement companies charge either a monthly service fee or a percentage of each debt settled. During debt settlement, the company may also advise you against making payments on your debts. This could result in late fees if negotiations fail, but it could also make the lender or creditor more likely to agree to settle the debts.

Debt settlement is not a guarantee. However, the average consumer sees a range of 20% to 50% reduction in their debts after paying the company’s fees.

Beware of scams, though, as there are many in this industry. Before working with a company, check their ratings on BBB.org or see if they’re licensed.

Work with a credit counselor

Nonprofit credit counseling agencies have certified credit counselors that will work with you to navigate your finances and get a handle on your debts. These companies often offer services like general credit counseling and debt management plans (DMPs).

DMPs are 3- to 5-year plans that let you combine eligible, unsecured debts into one monthly plan. You must make regular, on-time payments to the associated account until the enrolled debts are fully repaid. These plans usually come up with a small startup fee and a monthly fee of $25 to $75.

The advantage of a debt management plan is that it can consolidate your payments into one and reduce how much interest you pay. Additionally, credit counselors know the current guidelines and laws set by the Consumer Financial Protection Bureau (CFPB), so they can provide the best guidance and support.

For a list of approved credit counseling agencies, go to the United States Department of Justice’s official website.

Talk to legal aid attorneys

If you’re still having trouble paying off multiple payday loans, seek out a lawyer who’s well-versed in debt settlement. A good lawyer can explain your rights as a consumer and advise you on how to get out of your payday loan problem. Some will work with you for free or at a reduced fee.

The Consumer Finance Protection Bureau has a list of legal aids in every state you can use to find a good lawyer. Alternatively, you can contact your state’s bar association for a lawyer referral service in your area.

File Chapter 7 bankruptcy

Around 800,000 Americans declare bankruptcy every year. However, bankruptcy is a last resort and should only be done if advised by a lawyer. With Chapter 7, you can discharge certain debts, including payday loans and other unsecured debts.

Keep in mind, filing for bankruptcy comes at a high cost, and not just financially. It could result in the seizure of your assets or garnished wages. It also stays on your credit report for 7 to 10 years and will ruin your credit. It will become more difficult to qualify for loans during that time, and though some financial services offer loans for people who have filed for bankruptcy, the interest rates will be very high.

Laws that govern bankruptcy vary by state, so speak with a professional about your rights and what you can expect before filing.

Why do my credit score and credit report matter?

A person’s credit score and credit report help potential lenders and other entities like future employers or landlords gauge their creditworthiness. It also helps determine the rates they’ll receive when applying for financing and how much money they can potentially borrow.

Both the credit score and report come from the three major credit bureaus — Equifax, TransUnion and Experian. However, you can also get a copy of your credit report from all three bureaus at annualcreditreport.com.

It’s a good idea to review your reports annually for errors like accounts that shouldn’t be there or duplicate balances. Any errors could negatively impact your credit score and future financing opportunities. If you spot an error, dispute it immediately.

Try to build up your credit by paying your bills on time, keeping older accounts in good standing active and keeping your credit utilization low.

Read more: How to Improve Your Credit Score in 26 Steps

What is the payday loan cycle?

Payday loans run on a predatory lending system that keeps bad credit borrowers in debt. These lenders primarily target people who are already struggling with their finances. Since they have such short repayment terms and high fees, people often can’t pay them back on time. So, they have to take out a new one to pay off the first.

However, every loan comes with its interest, fees, and repayment terms, making each one more expensive than the last. Some lenders offer rollover loans to those who know they won’t be able to pay off their loans on time. This gives the borrower more time to come up with the money, but it also means a larger loan balance and more fees. This is what’s known as the payday loan cycle.

More than 80% of all payday loans are rolled over into a new loan or renewed within 14 days of taking out the initial one. Around half of these are part of a loan sequence of at least 10 loans.

Even with a rollover loan, there’s no guarantee the payday loan borrower will be able to repay it when it’s due. In fact, around 20% of people who get a rollover loan eventually end up defaulting on their debt.

Better payday loan alternatives (that you might not have heard of)

Instead of taking out a payday loan, consider alternatives like cash advance apps or payday alternative loans (PALs).

Cash advance app

If you have a stable job and need cash quickly, a cash advance app could help. These apps let you request a small portion of your upcoming paycheck early. They’re best for those with an emergency expense or bill due shortly before they get paid.

We listed some of the best cash advance apps here.

Payday Alternative Loans (PALs)

A PAL is a short-term loan offered to members of credit unions. The two types of payday alternative loans are:

  • PAL 1: You can borrow between $200 and $1,000 if you’ve been a member of a participating credit union for at least one month. Loan terms range from 1 to 6 months.
  • PAL 2: Current credit union members can borrow up to $2,000 without a waiting period. Loan terms are 1 to 12 months.

Payday alternative loans are much more regulated than traditional payday loans. They have a maximum APR of 28% and have an application processing fee of around $20. Eligible borrowers can take out a maximum of three PALS within any six-month period.

Installment loans for bad credit borrowers

Installment loans are a type of personal loan. Common types are auto loans, student loans and debt consolidation loans. These loans are highly dependent on factors like your credit score, DTI ratio and income. In general, a higher credit score means better terms and rates.

With an installment loan, you’ll have to make regular, fixed monthly payments on a specific date. Typically, these loans have repayment terms of at least 6 months, which makes them more manageable than payday loans.

Since installment loans are essentially personal loans, you can use them to consolidate multiple payday loans. Just make sure you can make the monthly payments on time until the balance is fully repaid.

Read more: Payday Loan vs. Installment Loan: Which is Better?

Peer-to-peer loans

If you don’t qualify for traditional forms of financing, consider peer-to-peer (P2P) lending instead. This form of lending cuts out the third party and lets borrowers and investors work directly together.

P2P loans function similarly to personal loans, so you can use the funds for nearly anything, including paying off multiple payday loans. However, these loans do come with their interest rates (usually 6.4% to 36%), loan terms, and lender fees.

The bottom line

If you’re having trouble paying off multiple payday loans, you’re not in this alone. There are several legitimate ways to manage or reduce your debts, including debt settlement and debt consolidation. It will take time to become debt-free, but the best thing you can do right now for your financial situation and credit is to take immediate action.

DebtHammer: Legitimate payday loan relief that works

Getting out of debt isn’t easy, but we’re here for you every step of the way. We can help you negotiate with your lenders with an easy-to-understand plan with no hidden fees or “gotchas” and offer a simple monthly payment plan. Click here to start your free consultation.


Do I need good credit to consolidate my payday loans?

Generally, the better your credit score, the better the terms you’ll get when applying for a debt consolidation loan. For decent rates, shoot for a 650+ FICO score. However, some financial services offer debt consolidation for borrowers with lower credit score, so you still have a few options.

Will the government help with payday loans?

The government will not help you make your payday loan payments, but there are some rules in place to protect you. Laws vary by state, but many state governments have put into place different rules and regulations related to payday loans. For example, states like Arizona and North Carolina ban payday lending entirely. Other states, like Montana and New Hampshire, have caps in place on the interest rates lenders can charge. At the federal level, the FTC also works to govern payday lending and protect consumers from deceptive advertising or predatory practices.

Are there any nonprofit payday loan consolidation organizations?

Some nonprofit debt consolidation organizations, such as credit counseling agencies, offer debt relief to those who need it. Some services, such as general counsel, are free. Others, like debt management programs, come with a fee. Since they’re non-profit, these agencies don’t charge any fees before using their service.

Can I consolidate ALL of my payday loans into one loan?

Yes, but it depends on how much you owe and how much you qualify for with a singular loan. For example, a Payday Alternative Loan 2 will only allow you to consolidate up to $2,000. With good credit and income, a debt consolidation loan could cover a much higher balance.

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