Best Debt Consolidation Loans To Improve Your Financial Health.
Taking out a debt consolidation loan can be an excellent way to save thousands of dollars future on interest expenses. Consolidation can help you pay off existing debt more quickly, improve your credit score, simplify your life and in general help improve your personal finances. Find details on the best debt consolidation loan products, lenders, banks, and programs below.
Debt consolidation loans are typically unsecured, fixed-rate personal loans used by borrowers to payoff some or all of their financial obligations, and at the end of the day it is a form of refinancing. You can use the loans to payoff existing credit card debts, payday loans, student loans, medical bills and other long-term debt and in effect replace those bills with a single monthly loan repayment.
The best loans are generally available from traditional banks and credit unions, non-profits, online banks and peer-to-peer lenders. Application qualifications and borrowing provisions differ with each lender, so it is wise to shop around for the best deals when it comes to a debt consolidation loan.
There are different application criteria, based on lender. Typically, borrowers need a credit score above 600, steady income and a low debt-to-income ratio. Those applicants will get the best terms and conditions. However, there are great debt consolidation loans available for persons with poor to fair credit and with credit scores below 600 although interest rates will likely be higher.
When looking for a loan, primary factors to consider to find the best loan are the amount needed, interest rates, fees, length of payoff periods and how quickly funds can be made available. Ideally, you should find a consolidation loan with an interest rate significantly lower than the rate charged on bills you are currently paying.
Carefully consider origination fees to get the best deal, as there are some that can often run as high as 8%. The fees in effect reduces the amount of money you will get from the lender. If you take out a $10,000 loan with an 8% origination fee, you will only receive $9200 and be expected to repay $10,000 plus interest.
Also consider whether there is a penalty for paying off the loan early, as the top lenders or banks should not charge you a repayment fee. Look into whether all types of debt you want to pay off can be consolidated by the lender and how debts will be paid. Some lenders will pay creditors you designate while other lenders will simply give you a lump sum and leave you to pay the debts as you choose.
Some of the best banks or lenders offer extra bonuses such as flexibility to change monthly payment dates or hardship periods that give you extended time to make your monthly payment without incurring late fees. The bottom line is to find a lender that offers an amount to pay the targeted debt, low fees, a reasonable interest rate and payment terms that make the monthly payments affordable. These are some of the most popular or highly-rated lenders for debt consolidation loans. Some lenders even offer specialized medical debt consolidation loans.
List of banks and lenders with best debt consolidation loan products
Payoff provides loans of $5,000-$40,000 with interest rates from 6% to 25% for periods of two to five years. However, loans can only be used to pay credit card debt, so if you want to retire other debt, you'll want to look for another lender. On the plus side, there are no application fees, late fees or prepayment penalties. Loan origination fees can be as high as 5%. You'll likely need a credit score of at least 640 to qualify.
Bank of America is a great option if you are a current customer. They offer debt consolidation loans, with the interest rate based on the borrowers credit scores, income, payment history and other factors. In general, they are one of the best options for consolidating either (1) credit card debt or (2) auto loan payments. The lender operates nationwide with thousands of local branches. More on Bank of America debt consolidation loans.
Upstart is maybe the best choice for borrowers with poor, bad or limited credit scores. They are often cited as the best debt consolidation loan option for low income families as well as borrowers with minimal credit history but who have regular income. Loan amounts range from $1,000-$50,000 with repayment terms from three to five years.
Potential drawbacks are interest rates and fees. Interest rates run from about 8% to as high as 36%. Loan origination fees may be as high as 8%. Late fees are at least $15. Applicants must have a U.S. bank account. Upstart will consider an applicant's education, earning potential and job history as part of the application process.
Upgrade, which is a different company from Upstart, is among the few lenders that allow co-signers, joint loans, and collateral to secure loans. Upgrade is a favored lender for persons with poor to fair credit and who can add a co-borrower. Loans range from $1,000-$50,000 with the average being about $10,000. Borrowers can choose a three or five-year repayment plan as part of the consolidation program. You'll need a credit score of at least 580 and three years of credit history.
Interest rates vary from 7% to 36%. Borrowers can reduce interest rates by signing up for autopay and having Upgrade directly pay creditors. Using a vehicle as collateral may also reduce the interest rate, and borrowers who encounter financial hardships may be able to temporarily reduce monthly payments or extend the repayment term.
Loan origination fees run between 3% and 8%. There is no prepayment penalty, and borrowers are given a 15-day grace period for late payment. Applications can be completed online and approved within minutes.
Marcus by Goldman Sachs is a popular choice for persons with little credit history or that have low credit scores and that want to consolidate various types of debts. The loan limit is $40,000 with interest rates from 7% to 20% and repayment terms of three to six years. There are not any loan origination fees or prepayment penalties. An added bonus is the ability to change your payment due date as many as three times during the repayment period. Co-signers are not allowed and it can take up to five days to get loan funds.
Marcus tends to be popular, especially for lower income borrowers or those with bad credit, because it offers substantial loan amounts with interest rates, even at the high end, substantially below rates of many lenders. The lender is owned by financial services company Goldman Sachs, a premier bank that operates nationally.
Prosper is a peer-to-peer landing platform, and about 2/3 of all borrowers take out loans for debt consolidation. Loans range from $2,000 to $40,000. There is no minimum income requirement, but you'll need an established credit history. You must not have filed for bankruptcy in the previous 12 months. Repayment terms are three or five years, but there is no penalty for early payment. A peer to peer lender means that you are in fact borrowing from others in the community – it is a form of social network debt consolidation loans.
Origination fees run from 2.4% to 5%. Late fees begin at 15% if payment is more than 15 days overdue. Interest rates run from 8% to 36% on a debt consolidation loan. You can calculate your potential interest rate online before actually applying for a loan.
Prosper loans cannot be used to pay off postsecondary education costs. Because funds for loans are provided by private investors, it can take as long as two weeks to obtain funds once the loan is listed. As there is a “bidding” and transfer process.
Prosper loans are typically best for borrowers who need relatively small loans, who have fair or good credit and who do not need funds immediately. Learn more abut consolidating debts with Prosper loans.
Lending Club is a good choice to get a debt consolidation loan for applicants with fair to good credit. Co-signers are allowed which can make approval more likely for applicants with credit issues. Applicants should have credit scores of at least 600. Loans from this peer to peer lender run from $1,000-$40,000 with repayment period of three or five years.
Borrowers can have Lending Club pay as many as 12 creditors directly. There is a 15-day grace period for late payments. Drawbacks include origination fees of 3 to 6%, late fees and interest rates which run between 8% and 36%. There is no discount for using autopay. For persons with decent credit, other options will likely provide better interest rates. continue to lern
Avant is an online lender that has generated numerous positive reviews from customers, thus making it won of the best debt consolidation lenders on the market. This companies only operates online, thus reducing costs for borrowers. About half of the loan applicants seek funds for debt consolidation. Avant is a good choice for persons with poor to fair credit or those who need funds quickly.
Applicants should have a minimum credit score of 550. Loan amounts are offered from $2,000 to $35,000 with interest rates from about 10% to 36%. Repayment periods run from two to five years. Avant charges origination fees of 1.5% to 4.75%. A late fee of $25 will be assessed for payments more than 10 days overdue. There is no prepayment penalty.
During the pre-qualification process you will be able to see your potential loan amount and interest rate. Avant does not pay creditors directly. Funds are usually available within a couple days and often within 24 hours, which makes it a great option for an emergency debt consolidation loan. Borrowers may change the loan payment date any time during the repayment period. Avant accepts vehicles as collateral to secure loans but does not allow co-signers.
Citibank debt consolidation loans are for customers of this bank. They can help their customers with credit card bills, student loans, and automobile payments. In addition to this form of consolidation, Citi will also offer other assistance such as payment plans, debt management plans, and more. Continue with Citi low cost debt consolidation loans.
SoFi works well for borrowers with good credit who need a large loan at a low cost, and they are one of the best places to turn to for student loan debt consolidation assistance and that is their focus. Loans range from $5,000 to $100,000 with interest rates from about 6% to 21%. Borrowers get a slight discount for using autopay. There are no origination or late fees and no prepayment penalty. Co-signers are allowed. Repayment periods run for three to seven years.
Borrowers must have a credit score of at least 680 which is higher than many lenders require. You can calculate your potential interest rate on SoFi's website. The debt consolidation loans issued from this business may take up to four days for approval and up to two weeks for self-employed borrowers.
SoFi provides unemployment protection that allows borrowers to suspend loan repayments for up to 12 months following a job loss. Interest will still accrue, but your credit rating will not be affected. Most lenders do not include this option.
Lightstream may be another good choice if you need a higher loan amount and a longer repayment term. Loans are available for up to $100,000 with repayment periods from two to seven years. Interest rates range from 6% to 21%. Applicants should have a credit score of at least 660 and, for higher amounts, you'll need excellent credit plus sufficient assets and income.
There are no origination fees or early repayment penalties on the Lightstream debt consolidation loans. The application process can be completed online, and money can be made available on the same day the application is processed.
Debt Consolidation Loan Benefits
Since typical loans are fixed-rate, you'll be able to determine how much you will pay each month for a specific time period. Each and every one of these lenders has a free calculator you can use on their website to determine how much money you will save per month as well as per year. The loan payment amount will not change, and you'll know the latest date when the debts will be paid off.
By taking out a loan with a lower interest rate than most, if not all, of the debt you want to pay off, you can save hundreds or thousands of dollars in interest payments and fees. Of course the exact savings depend on the terms of the loan you want to consolidate. In many cases, the combined debts will be paid off sooner than if you had continued to pay each debt separately.
By leaving paid-off accounts open, your credit score will improve as your credit utilization ratio changes. Lower credit card balances result in having more credit available which is a key component used to determine credit scores. You'll make your life simpler by just remembering one monthly loan payment date rather than keeping track of multiple payment due dates.
To get the full benefit of a debt consolidation loan, avoid making late payments or acquiring substantial new debt using the credit cards you have paid off. This is always to best way to make them as effective as possible. When used properly, debt consolidation loans provide an excellent method to significantly improve your overall financial health in a relatively short period of time.
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