Hanneh Bareham specializes in everything related to personal and student loans and helping you finance your next endeavor. She aims to help others reach their collegiate and financial goals through making loans easier to understand.
Overview: Happy Money (formerly Payoff) offers low APRs of 10.50 percent to 29.99 percent, making it an ideal lender for borrowers trying to consolidate credit card debt at a lower interest rate. This lender also offers free monthly FICO updates and reports payments to major credit bureaus in order to help borrowers build credit.
Please Note: JGW Debt Settlement, LLC does not offer loans. They provide debt resolution services. You must have $10,000 in unsecured debt to qualify. Not all debts are eligible for enrollment. This service is not provided in all states and is subject to additional terms and conditions.
Overview: Happy Money is specifically designed for borrowers who want to pay off their credit card debt. The application and approval process are completed online, and borrowers can get free monthly FICO updates.
Overview: Pentagon Federal Credit Union, known as PenFed, offers unsecured, fixed-rate personal loans for debt consolidation. While you'll need to become a member of the credit union in order to receive loan funds, you can do so by opening a savings account with a $5 initial deposit.
Overview: OneMain Financial is a bank based out of Indiana. Its loan amounts are smaller and rates are higher than typical debt consolidation personal loans, but the lender is still a good alternative to the high interest rates and hidden fees that can come with payday loans. Your credit history, income and debt load determine whether you qualify.
Overview: Discover offers unsecured personal loans for debt consolidation, with the option to pay creditors directly. Plus, its minimum APR for the most creditworthy applicants is lower than most lenders, coming in at 6.99 percent.
Overview: Upstart offers unsecured personal loans for borrowers with a less-than-perfect credit score or a thin history with its unique underwriting criteria. Instead of just basing approval on credit, the lender also looks at factors like schooling and employment history.
However, a debt consolidation loan is one of the most common and easiest ways to consolidate debt. With fixed interest rates and monthly payments, it's possible to save money over the life of your loan by securing a lower rate than what you had on your previous debts.
Applying for a debt consolidation loan is like applying for any other lending product, but you'll want to pay special attention to each lender's interest rates. Debt consolidation only makes sense if you can secure a lower rate than that of your previous debts.
Debt consolidation loans are offered through online lenders, banks and credit unions. While most applications can take place completely online, there are some in-person lenders that may require you to go to a physical location for the application process.
It's important to find a debt consolidation loan that fits your budget and helps you reach your goal of eliminating debt. Many lenders offer prequalification, which gives you a prediction of the rate, loan amount and loan term that you could qualify for without making a hard credit inquiry.
Home equity loan versus debt consolidation loan: Home equity loans and HELOCs may offer lower rates than debt consolidation loans, though they come with more risks, since your home is used as collateral.
Debt relief services versus debt consolidation loan: Unlike debt consolidation loans, debt relief services aim to eliminate some of your debt without you having to pay it. With that said, pursuing debt relief is a risky move, and it can damage your credit score.
Another option that can help you get debt under control is credit counseling. Credit counseling companies are often (though not always) nonprofit organizations. In addition to debt counseling, these companies may offer a service known as a debt management plan, or DMP.
With a DMP, you make a single payment to a credit counseling company, which then divides that payment among your creditors. The company negotiates lower interest rates and fees on your behalf to lower your monthly debt obligation and help you pay the debts off faster.
Credit counseling versus debt consolidation loan: With a debt consolidation loan, you're in control of your payoff plan, and you can often apply with few fees. With credit counseling, a third party manages your payments while charging setup fees.
With a balance transfer card, you shift your credit card debt to a new credit card with a 0 percent introductory rate. The goal with a balance transfer card is to pay off the balance before the introductory rate expires so that you save money on interest. When you calculate potential savings, make sure you factor in balance transfer fees.
A debt consolidation loan is also going to offer higher borrowing limits, enabling you to pay off more debt, as well as fixed monthly payments, which make it easier to budget and stay disciplined with paying off debt.
In an effort to combat rising inflation, the Federal Open Market Committee (FOMC) raised interest rates seven times in 2022. Most recently, the Fed hiked rates by 0.25 percent during the first Fed meeting of 2023. These rate hikes have caused interest rates on personal loans to rise.
Most personal loans have fixed rates, meaning that borrowers who already have a personal debt loan for debt consolidation do not need to worry. However, those looking to take out a new loan may face higher rates.
To select the top debt consolidation loan lenders, Bankrate reviewed 33 lenders across the personal loan space. Several factors related to consolidation were considered, including a variety of credit profiles accepted, loan amounts, terms and whether the lenders had specialized consolidation loan products or services.
If you have multiple student loans you may be able to combine them into one loan with a fixed interest rate based on the average of the interest rates on the loans being consolidated. Learn more about loan consolidation.
Through your completion of the free Federal Direct Consolidation Loan Application and Promissory Note, you will confirm the loans that you want to consolidate and agree to repay the new Direct Consolidation Loan.
Annual Percentage Rates (APR), loan term and monthly payments are estimated based on analysis of information provided by you, data provided by lenders, and publicly available information. All loan information is presented without warranty, and the estimated APR and other terms are not binding in any way. Lenders provide loans with a range of APRs depending on borrowers' credit and other factors. Keep in mind that only borrowers with excellent credit will qualify for the lowest rate available. Your actual APR will depend on factors like credit score, requested loan amount, loan term, and credit history. All loans are subject to credit review and approval.
Debt consolidation can be an excellent way to get multiple debts under control and paid off quicker. It allows you to merge them into one loan with a fixed interest and a single monthly payment. This eliminates the stress of managing multiple bills and due dates and may also save you money on interest.
Unfortunately, qualifying for a debt consolidation loan with less-than-ideal credit (a score of 669 or lower) can be challenging. Just like with any type of loan, borrowers with a strong credit profile have better chances of being approved. They're also more likely to receive more favorable terms.
It's possible to find options without a good credit score. However, it's crucial to pay attention to interest rates and other added costs, such as sign-up fees. You may end up with terms that will make your loan even more expensive than the debt you're currently paying off.
To determine the best debt consolidation loan offers for bad credit, CNBC Select compared dozens of lenders by credit score requirements, interest rates, fees, repayment terms and other factors. (Read more about our methodology below.)
Who's this for Achieve is an excellent debt consolidation loan option for those with imperfect credit, thanks to its flexible terms, fast approval, quick funding and relatively reasonable interest rates.
If your credit leaves a lot to be desired, you're more likely to qualify for an interest rate on the higher end of the APR range. Most debt consolidation loans for bad credit can charge interest of up to 36%, but Achieve's highest interest rate is considerably lower.
Who's this for Avant can be an excellent option if you're looking to save on the upfront costs of your debt consolidation loan. While other lenders on our list charge 7% or more in origination fees, Avant will charge you 4.75% or less. If you're borrowing a large amount of money, this can lead to significant savings.
It's possible to qualify for a debt consolidation loan with bad credit (a credit score of under 670). However, it's important to pay attention to the terms. Interest rates on personal loans for poor credit may at times exceed APRs on credit cards, especially if you apply with a low credit score.
When that's the case, taking out a loan to get rid of your debt might not be the best option. Instead, consider other ways to tackle your balances. For instance, you might be able to negotiate repayment terms with your current creditors. It can also be a good idea to look into credit counseling and get help creating a debt management plan.
Even with debt consolidation loans for bad credit, approval isn't guaranteed. Lenders typically look at multiple factors when evaluating a loan application. For example, you might be denied if you don't meet income requirements or if your debt-to-income ratio is too high.
It's important to do the math before taking out a debt consolidation loan. Check the APR before applying if the lender offers this option and factor in origination fees to determine whether a debt consolidation loan will save you money. If not, you might be better off finding a different strategy to deal with your debt. 59ce067264