Biofera
Related Articles
Our goal is to give you the tools and confidence you need to improve your finances. Although we receive compensation from our partner lenders, whom we will always identify, all opinions are our own. Credible Operations, Inc. NMLS # 1681276, is referred to here as “Credible.”
If you have high-interest debt, consolidating that debt might help you save money and even pay off your balances faster. One way to do this is through a debt consolidation loan — https://www.paydaychampion.com/payday-loan-consolidation/ a type of personal loan that lets you combine your debts into one new loan with a single payment.
There are also other options available for debt consolidation.
Here’s what you should know about personal loans vs. debt consolidation loans:
Is a debt consolidation loan the same as a personal loan?
Yes — a debt consolidation loan is simply a type of personal loan. Here’s how these loans work:
Personal loan
A personal loan is a kind of installment loan that can be used for almost any personal expense, such as home renovations, a dream vacation, or debt consolidation.
These loans are available from online lenders, banks, and credit unions and generally range from a few hundred dollars up to $100,000 or more, depending on the lender.
Keep in mind: Most personal loans are unsecured, meaning you don’t have to worry about collateral. Instead, the lender will review your credit, income, debt-to-income ratio, and other factors to determine your creditworthiness.
Learn More: How Do Personal Loans Work?
Debt consolidation loan
A debt consolidation loan is a type of personal loan that lets combine existing debts into one loan. Depending on your credit, you might also qualify for a lower interest rate than you’ve been paying, which could help you save money over the life of your loan.
In some cases, you’ll need to specify a loan purpose when you apply for a personal loan. While many lenders will let you use a personal loan for debt consolidation, others might have restrictions on how you can use your loan.
It’s a good idea to shop around and compare as many lenders as possible to see what rates you might qualify for.
Check Out: Credit Card Consolidation Loans
16 personal loans to consider for debt consolidation
Here are Credible’s partner lenders that offer personal loans for debt consolidation:
| Lender | Fixed rates | Loan amounts | Min. credit score | Loan terms (years) |
|---|---|---|---|---|
| View details | 9.95% – 35.99% APR | $2,000 to $35,000** | 550 | 2, 3, 4, 5* |
Avant personal loans review *If approved, the actual loan terms that a customer qualifies for may vary based on credit determination, state law, and other factors. Minimum loan amounts vary by state. **Example: A $5,700 loan with an administration fee of 4.75% and an amount financed of $5,429.25, repayable in 36 monthly installments, would have an APR of 29.95% and monthly payments of $230.33. |
||||
View details |
6.49% – 29.99% APR | $5,000 to $35,000 | 740 | 1, 2, 3, 4, 5 |
Axos Bank personal loans review |
||||
View details |
5.99% – 29.99% APR | $5,000 to $35,000 | 600 | 3, 5 |
Best Egg personal loans review |
||||
View details |
6.99% – 24.99% APR | $2,500 to $35,000 | 660 | 3, 4, 5, 6, 7 |
Discover personal loans review |
||||
View details |
7.99% – 29.99% APR | $10,000 to $35,000 | Not disclosed by lender | 2, 3, 4, 5 |
FreedomPlus personal loans review |
||||
View details |
10.68% – 35.89% APR | $1,000 to $40,000 | 600 | 3, 5 |
LendingClub personal loans review †Based on a majority of borrowers from LendingClub’s marketing partners who were issued loans between 1/1/19-12/13/19. The time it takes for your loan to be funded may vary. |
||||
View details |
15.49% – 35.99% APR | $2,000 to $25,000 | 580 | 2, 3, 4 |
LendingPoint personal loans review |
||||
View details |
3.99% – 19.99% APR | $5,000 to $100,000 | 660 | 2, 3, 4, 5, 6, 7 (up to 12 years for home improvement loans) |
LightStream personal loans review LightStream disclosure |
||||
View details |
6.99% – 19.99% APR1 | $3,500 to $40,0002 | 660
(TransUnion FICO®️ Score 9) |
3, 4, 5, 6, 7 |
Marcus personal loans review 1Rate reduction of 0.25% when enrolled in autopay. 2You may be required to have some of your funds sent directly to pay off outstanding unsecured debt. 3After making 12 or more consecutive monthly payments, you can defer one payment as long as you have made all your prior payments in full and on time. Marcus will waive any interest incurred during the deferral and extend your loan by one month (you will pay interest during this extra month). Your payments resume as usual after your deferral. Advance notice is required. See loan agreement for details. 4Your loan terms are not guaranteed and are subject to our verification of your identity and credit information. To obtain a loan, you must submit additional documentation including an application that may affect your credit score. Rates will vary based on many factors, such as your creditworthiness (for example, credit score and credit history) and the length of your loan (for example, rates for 36 month loans are generally lower than rates for 72 month loans).Your maximum loan amount may vary depending on your loan purpose, income and creditworthiness. Your verifiable income must support your ability to repay your loan. Marcus by Goldman Sachs is a brand of Goldman Sachs Bank USA and all loans are issued by Goldman Sachs Bank USA, Salt Lake City Branch. Applications are subject to additional terms and conditions. |
||||
View details |
18.00% – 35.99% APR | $1,500 to $20,000 | None | 2, 3, 4, 5 |
OneMain Financial personal loans review |
||||
View details |
5.99% – 24.99% APR | $5,000 to $40,000 | 640 | 2, 3, 4, 5 |
Payoff personal loans review |
||||
View details |
5.99% – 17.99% APR | $600 to $35,000 (depending on loan term) |
670 | 1, 2, 3, 4, 5 |
PenFed personal loans review |
||||
View details |
6.95% – 35.99% APR | $2,000 to $40,000 | 640 | 3, 5 |
Prosper personal loans review |
||||
View details |
5.99% – 18.83% APR | $5,000 to $100,000 | Does not disclose | 2, 3, 4, 5, 6, 7 |
SoFi personal loans review |
||||
View details |
5.94% – 35.97% APR | $1,000 to $50,000 | 580 | 3, 5 |
Upgrade personal loans review |
||||
View details |
8.27% – 35.99% APR4 | $1,000 to $50,0005 | 580 | 3 to 5 years4 |
Upstart personal loans review 4The full range of available rates varies by state. The average 3-year loan offered across all lenders using the Upstart platform will have an APR of 25.79% and 36 monthly payments of $37 per $1,000 borrowed. There is no down payment and no prepayment penalty. Average APR is calculated based on 3-year rates offered in the last 1 month. Your APR will be determined based on your credit, income, and certain other information provided in your loan application. Not all applicants will be approved. 5This offer is conditioned on final approval based on our consideration and verification of financial and non-financial information. Rate and loan amount are subject to change based upon information received in your full application. This offer may be accepted only by the person identified in this offer, who is old enough to legally enter into contract for the extension of credit, a US citizen or permanent resident, and a current resident of the US. Duplicate offers received are void. Closing your loan is contingent on your meeting our eligibility requirements, our verification of your information, and your agreement to the terms and conditions on the www.upstart.com website. Your loan amount will be determined based on your credit, income, and certain other information provided in your loan application. Not all applicants will qualify for the full amount. Loans are not available in West Virginia or Iowa. The minimum loan amount in MA is $7,000. The minimum loan amount in Ohio is $6,000. The minimum loan amount in NM is $5100. The minimum loan amount in GA is $3,100. 6If you accept your loan by 5pm EST (not including weekends or holidays), you will receive your funds the next business day. Loans used to fund education related expenses are subject to a 3 business day wait period between loan acceptance and funding in accordance with federal law. |
||||
Avant: Best for borrowers with poor credit
Avant offers personal loans from 2,000 to $35,000* with terms from two to five years••. If your credit is less than perfect, you might still qualify with Avant.
Axos Bank: Best for fast loan funding
If you’d like to quickly consolidate your debt, Axos Bank could be a good choice. You can borrow $5,000 to $35,000 and could have your money as soon as the next business day if you’re approved.
Best Egg: Best for borrowers with fair credit
Best Egg could be a good option if you want to borrow between $5,000 and $35,000 and have less-than-stellar credit. If you’re approved, you could have your funds within one to three days after successful verification.
Discover: Best for longer loan terms
With Discover, you could have up to seven years to repay your loan. This could get you a lower monthly payment, easing the strain on your budget. However, keep in mind that a longer interest term also means paying more in interest over time.
FreedomPlus: Best for consolidating high-interest debt
You might qualify for a lower interest rate on a FreedomPlus loan if you use at least 85% of the loan proceeds to pay off existing debt.
Adding a cosigner or showing proof of retirement savings could also get you a lower rate with FreedomPlus.
LendingClub: Best for borrowers who need a cosigner
LendingClub is one of the few lenders that allow cosigners on personal loans. If you have poor credit, applying with a cosigner could help you get approved.
LendingPoint: Best for borrowers with bad credit
LendingPoint specializes in working with borrowers who have near-prime credit — generally meaning a credit score in the upper 500s or 600s.
With LendingPoint, you can borrow $2,000 to $25,000 with a term ranging from two to five years.
Learn More: 3 Steps to Get a Debt Consolidation Loan for Bad Credit
LightStream: Best for large loan amounts
If you need to borrow a large amount, LightStream could be a good choice. You can borrow $5,000 to $100,000 with funding as soon as the same business day if you’re approved.
Marcus: Best for flexible repayment options
Marcus personal loans are available for $$3,500 to $40,0002 with terms from three to six years. Keep in mind that if you make on-time payments for 12 months, you can defer one payment interest-free.
OneMain Financial: Best for below-average credit
Unlike many other lenders, OneMain Financial doesn’t require a minimum credit score, which means you might qualify even if you have less-than-prime credit.
OneMain Financial also uses an in-person “ability to pay” evaluation to help determine your loan options.
Payoff: Best for consolidating credit card debt
Payoff personal loans can only be used to consolidate credit card debt. You can borrow $5,000 to $40,000 with a term ranging from two to five years.
PenFed: Best for small loan amounts
If you only need a small loan amount, PenFed could be a good option. You can borrow as little as $600 up to $35,000 with a term from one to five years.
Prosper: Best for borrowers with good credit
Prosper operates an online, peer-to-peer loan marketplace where you can borrow $2,000 to $40,000.
Note that when you apply for a Prosper loan, investors will need to commit to funding it, which means the loan process might take longer compared to other lenders.
SoFi: Best for borrowers with excellent credit
With SoFi, you can borrow $5,000 to $100,000 with a term from two to seven years. Although SoFi doesn’t disclose its credit requirements, most SoFi borrowers have very good to excellent credit.
As a SoFi borrower, you’ll also enjoy perks like unemployment protection and free financial advising.
Upgrade: Best for fast loan decisions
Upgrade personal loans are available for $1,000 to $50,0000 with terms of three or five years. If you’re approved, you could have your loan funded within a day of clearing necessary verifications.
Upstart: Best for borrowers with thin credit
Upstart will consider your education and job history to determine potential not reflected in your credit score. This means you might qualify even if you have thin credit — meaning you don’t have enough of a credit history to have a credit score.
Learn More: Pay Off Credit Card Debt ASAP With a Personal Loan
How to qualify for a debt consolidation loan
If you’re ready to get a debt consolidation loan, follow these three steps:
- Check your credit. Before shopping for a loan, it’s a good idea to make sure your credit is as strong as possible. You can check your credit reports from each of the credit bureaus for free through AnnualCreditReport.com. If there are any errors, dispute them with the appropriate credit bureaus to potentially boost your score.
- Compare lenders and pick a loan option. Be sure to compare as many lenders as possible to find the right loan for you. Consider not only rates but also repayment terms, any fees charged by the lender, and eligibility requirements. After comparing lenders, choose the loan that best suits your needs.
- Complete the application and get your funds. You’ll need to fill out a full application and submit any required documentation, such as tax returns or pay stubs. If you’re approved, the lender will have you sign for the loan so you can get your money — typically within one week or less, depending on the lender.
If you’re struggling to qualify, you could also consider applying with a cosigner. Not all lenders allow cosigners on personal loans, but some do. Even if you don’t need a cosigner to qualify, having one might get you a lower rate than you’d get on your own.
It’s also important to consider how much a debt consolidation loan will cost you over time. This way, you can prepare for the new monthly payment and adjust your budget accordingly. You can estimate how much you’ll pay for a loan using our personal loan calculator below.
Enter your loan information to calculate how much you could pay
Total Payment
$
Total Interest
$
Monthly Payment
$
With a
$
loan, you will pay
$
monthly and a total of
$
in interest over the life of your loan. You will pay a total of
$
over the life of the
loan.
Need a personal loan?
Compare rates without affecting your credit score. 100% free!
Check Personalized Rates
Checking rates won’t affect your credit score.
Check Out: When to Use a Personal Line of Credit
What are the benefits of a debt consolidation loan?
Debt consolidation loans offer several benefits. For example, a debt consolidation loan could:
- Streamline your payments: Instead of juggling multiple debt payments, consolidating your debt combines your balances and leaves you with just one payment going forward. This can help you more easily manage your debt.
- Potentially reduce your interest rate: Depending on your credit, you might qualify for a lower interest rate compared to what you’ve been paying. This could help you save money on interest charges over time and maybe pay off your debt faster.
- Give you a set payoff date: Debt consolidation loans have fixed repayment terms, so you’ll know exactly when you’ll be out of debt.
Learn More: Average Personal Loan Interest Rates
Can a debt consolidation loan hurt your credit score?
A debt consolidation loan could either help your credit score or hurt it — though keep in mind that the positive effects will likely outweigh any negative impact over time.
Here’s how a debt consolidation loan might negatively impact your credit:
- Hard credit inquiry: The lender will perform a hard credit inquiry to determine your creditworthiness, which might cause your score to drop by a few points. However, this effect is usually only temporary, and your score will likely bounce back within a few months.
- Missed payments: If you miss any of your loan payments, your credit could be damaged.
And here’s how a debt consolidation loan could you build your credit:
- Build positive payment history: Payment history makes up the biggest part of your FICO score — 35%. If you make all of your payments on time, you might see your credit score go up.
- Reduce credit utilization: Your credit utilization is the total amount of debt you owe divided by the amount of credit you have available, and it makes up 30% of your FICO score. If you reduce your debt with a debt consolidation loan, you could improve this ratio and potentially raise your credit score.
Check Out: Home Equity Loan vs. Personal Loan
Debt consolidation loan alternatives
If a debt consolidation loan doesn’t seem right for you, here are some other options to consider:
- Credit card: Balance transfer cards allow you to move your balances to one card to help you pay off credit card debt. Some cards also offer a 0% APR introductory period, which means you could avoid paying any interest if you repay your balance by the time this period ends. However, keep in mind that if you can’t pay off your card in time, you could be stuck with hefty interest charges.
- Home equity line of credit (HELOC): If you’re a homeowner and have equity in your home, a HELOC could be another way to consolidate your debt. Because a HELOC is secured by your home, you might get a lower rate compared to a personal loan — but this also means you risk losing your house if you can’t make your payments.
- Debt management: If you’re overwhelmed by your debt, a nonprofit credit counseling agency — such as the National Foundation for Credit Counseling — could help you develop a debt management plan. The agency will work with your creditors to distribute your payments so you can become debt free within five years.
If you decide to take out a debt consolidation loan, remember to consider as many lenders as possible to find a loan that works for you. Credible makes this easy — you can compare your prequalified rates from multiple lenders in two minutes.
Ready to find your personal loan?
Credible makes it easy to find the right loan for you.
Find My Rate
Checking rates won’t affect your credit
Find Your Loan:
About the author
Source link
