What is Debt Consolidation?
- Combines multiple debts into one loan with a single monthly payment.
- Often aims to lower interest rates and streamline payments, though it may extend repayment terms.
Top Debt Consolidation Companies
- Upgrade
- Loan Amounts: $1,000 - $50,000.
- APR: 8.49% - 35.99%; origination fee up to 9.99%.
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Features: Available for all credit scores, flexible terms, co-signers allowed.
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Marcus by Goldman Sachs
- Loan Amounts: $3,500 - $40,000.
- APR: 6.99% - 24.99%; no fees.
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Features: Direct creditor payments, flexible terms, fee-free loans.
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Achieve Personal Loans
- Loan Amounts: $5,000 - $50,000.
- APR: 7.99% - 35.99%; origination fee 1.99% - 4.99%.
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Features: Same-day approval, co-signers allowed, high loan limits.
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SoFi
- Loan Amounts: $5,000 - $100,000.
- APR: 7.99% - 23.43%; no fees.
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Features: Direct Pay offers 0.25% APR discount, unemployment protection, no prepayment penalty.
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LendingClub
- Loan Amounts: $1,000 - $40,000.
- APR: 7.04% - 35.89%; origination fees 3% - 8%.
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Features: Flexible terms, quick funding, supports fair-to-good credit.
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OneMain Financial
- Loan Amounts: $1,500 - $20,000.
- APR: 18% - 35.99%; origination fees vary by state.
- Features: In-person service, flexible terms, accepts co-signers.
Pros and Cons of Debt Consolidation Loans
Pros
- Simplifies finances with one monthly payment.
- Fixed repayment schedules.
- May offer lower interest rates or faster debt repayment.
Cons
- Monthly payments can be high.
- May have fees (e.g., origination fees).
- Extended repayment terms may increase overall costs.
How to Get a Debt Consolidation Loan
- Check Rates: Prequalify online without affecting your credit score.
- Apply: Provide details like income, Social Security number, and address.
- Receive Funds: Approval can take as little as one day; some lenders pay creditors directly.
- Pay Off Debts: Use loan funds to clear existing debts.
Alternatives to Debt Consolidation Loans
- Home Equity Loans/HELOCs
- Leverage home equity for low-interest borrowing.
- Balance Transfer Credit Cards
- 0% APR offers for up to 21 months; fees apply.
- Credit Counseling
- Nonprofits help create debt repayment plans.
- Debt Settlement
- Negotiate to pay less than owed but may harm credit.
Key Considerations When Choosing a Lender
- Fees: Prefer lenders with low or no fees.
- APR: Look for rates under 36%.
- Loan Terms: Choose flexible repayment options.
- Funding Speed: Prioritize lenders offering quick disbursements.
- Co-Signer Options: Beneficial for borrowers with low credit.
- Creditor Payments: Direct payment to creditors avoids delays.
Customer Feedback Highlights
- Upgrade: Customers praise the smooth process and helpful service, though origination fees are high.
- Marcus: Reviews emphasize no fees and credit improvement, but complaints note slow payment posting.
- Achieve: Praised for fast approvals; origination fees are a drawback.
- SoFi: Noted for reasonable rates and excellent customer experience, but some report bait-and-switch rate offers.
- LendingClub: Easy process with flexible terms, though high origination fees can be a concern.
- OneMain: Customers value in-person service, but rates and fees are higher than competitors.
Pro Tip: Compare fees, APR, and terms across lenders to ensure the loan meets your financial needs. Use a co-signer if needed to improve approval chances and secure better rates.
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