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Consolidate Payday Loans: Combine Emergency Loans for the Low APR

[Jan 12, 2009.]


Despite the negative press that payday loans have gotten over the past decade, the fact still remains that they are a viable vehicle for handling monthly emergency expenses. Partner with a reputable company, know the terms and conditions of the loan, and payday loans can save you from some sticky situations. Another key strategy for making payday loans work for you is what you do after the loan. To keep potentially high APRs from growing your balance due, consolidate payday loans. Here’s how.

What Does It Mean to Consolidate?
Consolidation is certainly not a new term; borrowers have been doing it for years as a strategy for improving their financial health. According to HSBC, debt consolidation is a strategy typically used by consumers to better manage their outstanding debts. Rather than paying off several separate payments each month, a consumer consolidates his or her debts with a financial institution that will arrange for one lower monthly payment extending over a period of time.

The result? Typically hundreds, and even thousands, of dollars in savings over the long haul. For example, if you have a litany of loans that equal $15,000, paying the minimum on each can result in 187 payments at a grand total of more than $30,000 repaid. However, combine those loans and you could be making only 46 payments at just over $12,000 repaid. That’s a savings of over 50%. And when you’re talking about the potentially high APRs that several payday loans can incur, consolidating just makes sense.

Consolidate Payday Loans: How to Do It
It’s not uncommon to seek out several payday loans in times of need. In fact, some financial strategists recommend it: by keeping loan amounts low, it places you in a better position to repay them. However, holding on to those loans for an extended amount of time can be deleterious to your fiscal health. Just the sheer effort of writing several checks each month is stressful. The answer? Find a low-fee consolidation loan, credit card, or other loan type to combine your payday loans into one, convenient payment.

Payday loans are given quickly, so there’s not much time or room to negotiate APRs. Once you’ve handled your money needs, you’ll have more time to shop around for a friendlier long term loan for consolidation. In that spirit, there’s room for both types of loans.



About Author:

Kelly Richardson is a freelance writer, marcomm consultant and digital entrepreneur. He’s written content for Fortune 500s Google, Yahoo!, Microsoft and Wells Fargo. Find out more about him at kellyrichardsoncopywriting.com.

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