Debt consolidation loan
Hello there, I bet you are looking for more information about debt consolidation loan. Well, this is a type of personal loan that can helps to combine several high interest debts into one new loan. In most cases, one with lower interest is combined with one with high interests. Therefore, you pay multiple debts with single loan that has a fixed monthly payment.
This type of loan can help an individual manage their debts more effectively but only if one can find a loan that works for their situation. When looking for the best debt consolidation loan, try to find the lowest interest rate, a loan that will meet your demands, affordable and one that is easy to be paid based on your cash inflow and more important a loan with low to no fees. The top lenders are listed in the lenders’ websites for the latest information. The lenders are categorised based on their APR, loan amount, fees, credit required and accessibility.
How to choose the best loan consolidation lender
The following information will help you compare the lenders’ rates;
Annual percentage rates: This is determined by your credit score and other financial factors. This amount is charged in top of your principal amount every month.
Loan cost: You should compare the total cost of each loan along with origination fees and other charges. This is to avoid fees from outweighing the benefit of the low APR.
Lender characteristics: consider whether the lender is new to the industry and make direct payments to your previous creditors, check the lenders’ credit monitoring, hardship programs and other customer service programs.
Best debts consolidation lender in 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|
Importance of debt consolidating loan
- Low interests’ rates
- Combining all the debts into one single bucket, makes it easier to pay off.
- It simplifies the finances since it puts everything in one place and helps to keep track
- It helps to set repayment schedule.
- It improves your credit score
Alternative to debt consolidation loans
This type of loan are useful but not for everyone. If you are looking for other alternative debt consolidation loans, these are as follows;
Debt relief services
This is commonly known as debt settlement companies which offer a reliable way of dealing with your debt if you cannot qualify for a consolidation loan. These companies get information from creditors and debt collectors for you and settle the debt for a lesser amount. If you choose debt relief services, be aware of fees charged by these companies. Therefore, take your time before you commit to them. The debt relief aim to eliminate some debt burden but it can also reduce your credit score.
This is another option one can use to get debt under control. These companies are often nonprofit organizations. They offer services known as debt management plan. In this case, you can make a single payment to credit counseling company which divides the payment among your creditors. The companies will negotiate a lower interest rates fees for you and allow you to pay the debts off soon.
This is one of the most popular way people use to pay off debt. They let the borrowers to use their homes as collateral in exchange for financing. This can be risky because the lender can seize your home of you cannot clear the debt.
Balance transfer credit card
With this type of alternative, it means you shift credit card debt to a new credit card with 0% introductory rate. The goal of this plan is to pay off the balance before introductory rate expires so that one can save money on interest.
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