How to find the best loans to consolidate debt 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, and in general help improve your personal finances. Find the best debt consolidation loan products and leading lenders as well as aggregators that specialize in offering funds to help people consolidate debt.
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 money to payoff existing credit card debts, payday or student loans, medical bills and other long-term debt and in effect replace those bills with a single monthly loan repayment at a lower interest rate. It is always important to “shop” around for the best rates, payment terms and other critieria when applying for a personal loan.
Types of lenders that issue debt consolidation loans
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The best loans are generally available from traditional banks and credit unions, non-profits, online banks and even some peer-to-peer lenders. However there are some lenders (as listed below) that specialize in issuing loans to help people consolidate their debt(s), in particular credit cards. Application qualifications and borrowing provisions differ with each lender, so always spend time to research and look around for the best lender that will help you.
There are different application criteria, based on lender. Typically, borrowers need a credit score above 600 (some offer funds at lower FICO scores though), steady income and a low debt-to-income ratio. Those applicants will get the best terms around interest rates, the lowest fees and other benefits. 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.
Some of the leading 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 applicants need to shop around to find the best lender for their situation that offers an amount to pay the targeted debt, low fees, a reasonable interest rate and payment terms that make the monthly payments affordable. Some lenders even offer specialized medical debt consolidation loans with various options below.
List of specialized lenders that provide loans to consolidate debt
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Happy Money (formerly Payoff) provides loans of $5,000-$40,000 with interest rates from 6% to 25% for periods of two to five years and the average interest rate is around 11%. The company emphasizes psychological and emotional wellbeing in addition to financial outcomes and they also provide free advice to borrowers on getting back on track - which is rare in the industry.
- A key advantage is the lender offers support from "Happy Money" member advocates and offers some of the best deals as the company is backed by non-profit credit unions and local community lenders. Happy Money also partners with non-profit credit counseling agencies. 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. You'll likely need a credit score of at least 640 to qualify. Call 1-800-878-0901 or information is here. https://happymoney.com/contact.
Online loan aggregator sites can also help people find a personal loan for consolidating their debt(s) and they operate similar to one stop marketplace where people can shop for a deal. There are options such as LendingTree, AmOne and others. Learn how online loan aggregators help people get the best deal on a loan.
Achieve Personal Loans is for applicants with so called mid-credit scores that range from the low 600s to low 700s. Note the company was previously known as FreedomPlus. They do offer good deals as the loan rates are based on "human underwriting" (not strictly some algorithm), meaning applicants will most likely talk to a real person about your financial situation to example the best loan products for their personal situation.
- The interest rates offer as a debt consolidation loan tend to be under 10% as again Achieve focuses on people with slightly higher FICO scores. You may also qualify for a lower rate if you use the loan for debt consolidation and allow Achieve to pay your creditors directly. Dial 1-800-920-0045.
Best Egg helps borrowers with fair-to-good credit looking get an unsecured debt consolidation loan with expedited applications and approvals. Applicants credit scores need to be 640 or higher. They focus only on debt consolidation products which helps the lender offer low, competitive interest rates. Best Egg also offers a “Best Egg Financial Health” tool to help borrowers improve spending, increase their FICO scores and help with budgeting habits. Dial 855-282-6353.
Upstart is maybe the best choice for borrowers with poor, bad or limited credit scores. It also stands out for its AI-driven underwriting that considers education, job history, and other variables beyond just credit score. 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. Someone with a modest credit score but a steady income and good educational background might get a better offer here than with traditional FICO-based lenders. Dial 1-855-438-8778 or details are here https://www.upstart.com/contact.
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 (with FICO scores as low as the 580 range) 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.
Marcus by Goldman Sachs is a popular choice for persons that have ”Fair” credit scores of at least 660. 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 as they a focus on simplicity and transparency when providing loans to consolidate debt. They provide fixed-rate loans with no up front origination fees, making them an attractive option for borrowers seeking straightforward terms. 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 to use for debt consolidation. Loans range from $2,000 to $45,000. 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 1% to as high as 10%. Interest rates run from 8% to 36% on a debt consolidation 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. Prosper's P2P platform allows for potentially more competitive rates by connecting borrowers directly with investors. Learn more abut consolidating debts with Prosper loans.
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 as they issue the money within 1-2 business days.
- 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%. There is no prepayment penalty. Avant accepts vehicles as collateral to secure loans but does not allow co-signers.
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.
Debt consolidation loan products from leading banks
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Bank of America is a great option if you are a current customer. They offer personal loans which can be used to consolidate 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.
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 personal loan at a low cost, and they are one of the best places to turn to for student loan debt consolidation. Loans range from $5,000 to $100,000 with interest rates from about 6% to over 20%. 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. Another benefit is that 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. Dial 855-456-7634 or contact them here. https://www.sofi.com/contact-us/
Lightstream is own by national lender Truist however they provide debt consolidation loans to applicants with higher credit scores. The lender 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 mid 20% based on amount borrowed and repayment length. Applicants who apply for a higher amount loan, they’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.
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