Payday loan consolidation is a debt management service that can help borrowers manage their payday loans more easily. Payday loans, also known as cash advances or post-dated checks, are designed to be paid back on the date you receive them. There are many reasons people may need to consolidate their payday loan debts. Below are some examples.

Consolidation of multiple payday loan payments into a single loan makes financial sense for borrowers. Payday loans are short-term, high-interest loans that must be repaid in a few weeks or months. Payday loan debt relief usually works by consolidating multiple payday loan payments into one new, lower-interest loan. Borrowers usually take out the new, lower-interest loan with all of the money from the previous consolidation loan, spreading the repayments over several months. Many payday loan companies target consumers with bad credit histories who require fast cash without credit check. In these cases, payday loan companies will require borrowers to verify employment and present personal credit history information.

When debt consolidation seems like the best option, don’t do it. Payday loans carry a high interest rate and, in some states, borrowers are not allowed to roll them over to another payday loan, nor are they allowed to roll-over balances from credit cards, department store charge cards or car title loans. If the consumer cannot pay back the consolidated amount, he or she can end up in deep financial trouble. Worse, multiple payday loans can pile up quickly, leaving borrowers with small amounts to pay back. It is tempting to roll them over only to discover that the small payments do not go far.

Another common reason for payday loan relief is a lengthy, unexcused delay in repayment. When this happens, the lender will start the collection process and, if there is still no payment, may refer the borrower to credit counseling. Credit counseling can cost hundreds of dollars. But, if the problem goes unresolved and the borrower does not get the help he or she needs, credit counseling could result in a negative credit rating that lasts a number of years. The longer the borrower remains in debt, the worse his or her credit will be.

Borrowing more money than you need can also cause problems with debt consolidation loans. If you are taking out multiple payday loans to cover emergency bills, this will just add up to more expenses. And, even if you are getting by with only one payday loan to cover a variety of expenses, you may be adding up to significant fees on a regular basis. Instead of taking out a single large debt consolidation loan to cover your payday lender charges, why not save the money to use it on other pressing priorities?

There are several reasons for consulting with a debt consolidation company before choosing to go with a payday loan lender. First, there may be negative marks on your credit reports that reflect the amount of money you were borrowing. By going with a payday loan lender, instead, you can work with a debt settlement program to repay much or all of what you owe to your creditors. This will help improve your credit scores in the long run.

You should also consider whether you are comfortable with the repayment terms offered by the company that lends you the money. Payday lenders offer different rates of interest and terms of repayment. Some are very strict about how much they can lend. Others have much looser lending standards. Before you borrow any more money, you should carefully consider the repayment plan and terms offered by the payday loan borrowers that you do business with.

Wage garnishments can also negatively affect you in more ways than one. If you have to repay a portion of your loan to a lender in order to avoid wage garnishment, it can put a significant strain on your financial situation. Wage garnishment is not just a problem for people who can’t repay their payday loans. Even people who are perfectly able to pay back their loans often find themselves forced into a wage garnishment agreement by their lender if they fall behind. A debt consolidation payday loan lender may be able to prevent wage garnishment by negotiating with your creditor.