When you’ve fallen behind on your payments, it can feel like there’s nowhere to turn. One potential option to get organized and streamline your bills is debt consolidation. Debt consolidation lets you roll several debts into one loan with a lower interest rate and longer payment term. That means you’ll pay less each month to just one lender instead of many.
While it’s not as drastic as debt settlement or debt management, debt consolidation has its own pitfalls that you need to be aware of. If you need help educating yourself on your debt consolidation options, you can start with the section titled “What is Debt Consolidation?” If you already know debt consolidation is the right path for you, here is a preview of the best debt consolidation loans revealed by my research:
Next, I’ll dive into more detail on each company. I’ll later describe my methodology for choosing these three companies as the best debt consolidation loans online. I’ll also explain what debt consolidation is, different types of debt consolidation loans, where to get debt consolidation loans, alternatives to debt consolidation, and how to avoid scams.
Prosper, the first of the Web’s peer-to-peer lenders, is among your best choices. Peer-to-peer lending is a form of crowdfunding that allows several individual investors to fund your loan. Prosper offers unsecured personal loans from $2, 000 to $35, 000 and competitive APRs from 5.99% to 32.99%.
Though it requires a minimum credit score of 640, Prosper takes into account a range of factors other than your credit history when determining your APR. Its website is easy to navigate, with clearly disclosed rates and fees. Prosper does charge an origination fee of 1% to 5% of your loan, and there are fees for late payments ($15 or 5% of the outstanding amount) and unsuccessful payments ($15 per occurrence).
- Available in 47 states
- Funds loans up to $35, 000
- Competitive interest rates
- Thorough, transparent website with easy-to-find rates and fees
- Will look at more than credit history when determining APR
- No check-processing fee
- BBB accredited with A+ rating
- Will allow only 36- or 60-month terms
- You might have to wait a week or more for your loan to be funded
#2: Lending Club
Lending Club is the nation’s largest peer-to-peer lender. Personal loans via Lending Club range from $999 to $35, 000 at APRs from 5.99% to 32.99%. The website is clean and transparent, with easy-to-find rates and fees, a clear description of the lending process, and a streamlined rate-quote tool.
Lending Club also requires a minimum credit score of 640 and has slightly stricter criteria for making a loan than Prosper, including a stricter debt-to-income ratio and more reliance on credit history. Its fees are very similar to Prosper’s, but unlike Prosper, it does charge a $15 check-processing fee every time you pay with a check.
- Available in all states except Iowa
- Will only allow 36- or 60-month terms
- Slightly pickier about borrowers
- Charges a check-processing fee
Avant focuses on loans for borrowers with slightly lower credit scores than Prosper and Lending Club. Unlike those two companies, it is not a peer-to-peer lender and instead directly funds each loan itself. That can be an advantage for borrowers who need cash more quickly because Avant can get you your funds in as little as a day.
I received answers to my questions through a helpful online chat service, which was a nice bonus, and there are no origination fees with Avant. However, you’re subject to higher APRs with Avant, which means this probably won’t be the best choice for those with good or excellent credit.
- Available in 46 states
- More flexible payment terms, ranging from 12 to 48 months
- Borrowing limit of $35, 000
- Funds available in as little as a day
- No loan origination or unsuccessful payment fees
- BBB accredited with A rating
- Higher advertised APRs (9.95% to 36%)
- Shorter grace period (10 days) and heftier fee ($25) for late payments in most states
PersonalLoans.com can help connect you with lenders in all 50 states. APRs range from 5% to 36% for loans up to $35, 000. Several types of loans are on offer (though eligibility will vary by state): peer-to-peer loans, bank loans, and installment loans.
The site is informative and well designed, but this is only a referral site. That makes it difficult to know in advance what kind of APR you will be offered, what fees might come attached to your loan, and other crucial information that can be easier to discern with a direct lender.
LightStream, a division of SunTrust Bank, offers debt-consolidation loans from $5, 000 to $100, 000 at extremely low APRs: 5.99% to 9.99%. It also offers flexible terms from 24 to 84 months, and there are no fees whatsoever. The catch? You’ll need top-notch credit, significant income, and substantial assets to qualify. That’s a tall order for most people who are considering debt consolidation, so this is definitely a niche service.
Upstart, which makes loans from $3, 000 to $25, 000, focuses on younger buyers who might be having trouble getting loans due to a shorter credit history. This new peer-to-peer lender will consider factors such as your alma mater, job history, major, and even your grades and test scores when deciding on APRs, which range from 6.68% to 24.58%. Unfortunately, you probably won’t be able to get a loan here if you aren’t a college graduate. Upstart also only makes three-year loans, so if you want a longer or shorter term, you’re out of luck.
Springleaf Financial is a solid option for borrowers who may not have the best credit. Though you can apply online, the company has over 820 branches around the country for those who want to do business in person. Secured loans may be an option at Springleaf, too.
The company has an A++ rating and is accredited with the BBB. Springleaf is only an option in 41 states, however. The company’s website also offers some nice educational information about loans.
How I Picked the Best Debt Consolidation Loans
BarNone (1-800-BarNone) is a lead generation company based in Oakland, California. BarNone was founded in 1995 and was later purchased by the First Advantage Corporation in 2005 for their Dealer Services segment. They were later sold to Centrro, Inc. in August 2009.
BarNone connects consumers seeking an auto loan with auto dealerships...
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