Do you know getting a debt consolidation loan can help you reduce debts in a more effective way? The answer is Yes. This however depends on you finding the best debt consolidation loan from a very good lender that can help your situation with their offers. This is because there are some factors you must consider before you apply for the loan. These include finding the lowest interest rate loan, a cheap and feasible payment term and low to no fees, and a loan that can take care of your needs. To get a debt consolidation loan from a lender, it is best to check the lender’s websites for the latest information regarding the loan you want to apply for the personal loan. You can get the loan from some popular online lenders, credit union, and possibly some banks. But what then is a debt consolidation loan.
What is a Debt Consolidation Loan?
A debt consolidation loan is a lending platform that combines all multiple debts into a single loan. In other words, multiple debts incurred from high-interest credit cards, medical loans, and other forms of debts that are not backed up with collateral are combined into single payment system.
The benefit of debt consolidation loan is to help you manage your debts so that you can pay it off faster than you could ever imagine. With this loan, you can lower your total interest payment. When you apply for this loan and you qualify after meeting the lender’s requirements. The lender will deposit the loan into your bank account so that you can use that money to clear off your debt. In other words, if you want to pay off your debt quickly, it is best to apply for Debt consolidation loan.
Once you are able to clear off your debt, you can then begin a monthly recurring repayment plan to your debt consolidation loan. This payment varies depending on the life of the loan. Some lasts for two to seven years. To enjoy Debt consolidation loan, you have to control your spending attitude to avoid you from accumulating more debt in the future.
Requirements for a Debt Consolidation Loan
To qualify for a debt consolidation loan, you must meet certain requirements.
- Applicants must be at least 18 years old
- Must be a U.S resident residing in the U.S with a valid bank account
- You must have a bankruptcy record
- Applicant must have a good or excellent credit score of 690 or higher
- Borrowers with bad or fair credit score of 689 or lower but with steady source of income may qualify but the interest rate may be higher.
Easy Ways on how to Get a Debt Consolidation Loan
Below is a quick step on how to get a consolidation loan.
- Check your credit score if it is good or bad. Borrowers with a bad credit score (300 to 629 on the FICO scale) may not qualify but those with good to excellent credit scores (690 to 850 FICO) are likely to get an approval and a low interest rate.
- Highlights the list of debts and payment you want to clear off
- Compare the loans options and offers from the lenders
- If you have met all the requirements, apply for a loan
- When you receive the debt consolidation loan, make your first patyemnt
How to choose the best debt consolidation loan lender
There are certain factors you must consider when you want to choose the best consolidation loan. They include the following;
- Annual percentage rates (APR) – this is determined by credit score.
- Lender features
- Loan cost – compare the cost of the loan, fees, and other charges
Best debt consolidation loan rates for December 2021
| LENDER | EST.APR | LOAN TERM | LOAN AMOUNT | BEST FOR | MIN.CREDIT SCORE |
| Best Egg | 5.99%–35.99% | 3–5 years | $2,000–$50,000 | High-income earners with good credit | 640 |
| Payoff | 5.99%–24.99% | 2–5 years | $5,000–$40,000 | Consolidating credit card debt | 600 |
| LightStream | 4.98%–19.99% (with autopay) | 2–7 years | $5,000–$100,000 | High-dollar loans and longer repayment terms | Not specified |
| PenFed | Starting at 5.99% | 1–5 years | $600–$50,000 | Smaller loans with a credit union | Not specified |
| OneMain Financial | 18%–35.99% | 2–5 years | $1,500–$20,000 | Fair to poor credit | Not specified |
| Discover | 5.99%–24.99% | 3–7 years | $2,500–$35,000 | Good credit and next-day funding | 660 |
| Upstart | 5.31%–35.99% | 3 years or 5 years | $1,000–$50,000 | Consumers with little credit history | 300 |
| Marcus by Goldman Sachs | 6.99%–19.99% (with autopay) | 3–6 years | $3,500–$40,000 | Consolidating large debts | 660 |
(Credit: Bankrate.com)