Managing multiple credit card bills can put you under a lot of stress and affect your standard of living. Moreover, paying off every one of these individually can, at times, take forever. If you are stuck in a similar situation, considering taking a debt consolidation loan should be your ideal next step. This type of credit helps you combine all your existing credit card dues into a single monthly payment. While it comes with its own sets of perks, the use of such a loan is permanently recorded in your credit history, which can cause your credit to fall. Needless to say, you have to think this through to make the most of it.
Choosing the right lender can save you from the wrath of paying interest worth hundreds or even thousands of dollars. So before you finalize on a lender, you need to factor in certain crucial elements including origination or prepayment fees, minimum credit score, interest rates, debt-to-income ratio, the loan amount being offered, repayment term, and late payment penalties. Comparing all these features at once can, however, get confusing; so to help you get a clearer picture, we have curated a list of the top providers that can help you streamline your credit card debt smartly.
Marcus by Goldman Sachs®
A popular choice among borrowers, Marcus by Goldman Sachs® offers competitive interest rates, typically ranging anywhere between 6.99% and 24.99%. The best part is that they don’t impose any kind of processing fees, including origination or prepayment costs. Furthermore, they don’t levy any penalty fees for late payments. However, it will always be in your best interest to pay your installments on time.
Marcus requires its potential borrowers to have at least 3 years of credit history. Similarly, the minimum credit score to qualify for their debt consolidation loan is 660. This could limit borrowers with a poor or an average credit score from applying. Marcus by Goldman Sachs® can lend you a minimum of $3,500 and a maximum of $40,000 as a debt consolidation loan. Post-approval, Marcus takes approximately 1 to 4 days to process the funds.
Discover
If you have an excellent or good credit score, then you can consider Discover for a consolidation loan to help restructure your credit card debt payments. You can borrow funds from around $2,500 to $35,000 from this lender without any origination costs. Like Marcus, Discover provides you an interest rate ranging from 6.99% to 24.99% which is determined using your credit history. The loan term with Discover, on an average, can last between 3 and 7 years. To be eligible for a debt consolidation loan from Discover, you will require to have a minimum credit score of 660. In most cases, they take around a week to loan you the money.
SoFi
Tracing back its humble beginnings as a small lender for student loans, SoFi has gradually expanded and rebranded itself as a financial institution for all types of credits, including debt consolidation loans. Apart from your credit history, SoFi also considers some non-traditional criteria such as your educational background and career when you apply for a loan. Additionally, they don’t charge any upfront or penalty fees.
To qualify for a debt consolidation loan, you need to have a minimum credit score of 680. From SoFi, you can borrow anywhere between $5,000 and $100,000. As compared to other popular lenders, their interest rate window is significantly lower, starting from 6.99% up to 14.99%. A loan term of 3 to 7 years is generally granted by SoFi.
Best Egg®
If you need to borrow a big amount to consolidate your credit card debt, then you can check out the plans offered by Best Egg®. They offer competitive interest rates to both, people looking to borrow a high credit as well as the ones with low credit scores. Best Egg® renders fixed APRs between 5.99% and 29.99% depending on the applicant’s credit history.
You would require a credit score of 640 or above to qualify for a debt consolidation loan by Best Egg®. Normally, they offer 3- to 5-year long loan terms. To secure a loan, you will have to pay an origination fee which is usually around 0.99% to 5.99% of your credit amount. Additionally, they charge borrowers with a penalty of $15 for every late payment. With Best Egg®, you can secure a loan of up to $35,000. Best Egg® can process the funds within a day once the paperwork gets approved.
LendingClub
Like other financiers, the LendingClub is not a bank or a self-funding lender. Rather, it is a marketplace where the loans are raised via crowdfunding, peer-to-peer lending, and microfinancing wherein small as well as big contributions are welcomed. This is a one-of-a-kind marketplace with a credit worth almost $38 billion under its supervision.
This company provides funds of up to $40,000 with a loan term of 3 to 5 years. To get your loan application considered, you will need to have a credit score of 600 and above. The interest rate can, however, get considerably higher; at the moment, it starts at around 6.95% and can go up to 35.89%. You will also have to manage origination fees that can fall between 1% and 6% of the borrowed money. Additionally, LendingClub levies extra charges for personal-check processing, late payments, and unsuccessful payments.
Payoff®
Payoff® markets itself as a lender that specializes in consolidation loans to help clear credit card debt. Besides lending money, it also designs a customized payoff strategy that could help get rid of the credit card debt once and for all. This lender offers varying rates between 5.99% and 24.99% along with origination fees that constitute around 2% to 5% of your credit. The origination fees are often determined by your loan term. The longer the term, the higher the fees will be. When it comes to your credit score, you will need to maintain at least a 640 to qualify for the debt consolidation loan. You can apply for a loan amount from around $5,000 to $35,000 which will need to be paid off within a term of 2 to 5 years.
OneMain Financial
OneMain Financial is great for you if bad credit is in the picture. They require no minimum credit score. However, you will have to bear the brunt of high interest rates that can range between 16.05% and 35.99%. Also, they charge origination fees which can vary across states. Unlike popular lenders that use online mediums for managing documentation, OneMain Financial requires you to visit their office to complete the application procedure.
The can lend you funds worth around $1,500 to $30,000 that will need to be repaid within 2 to 5 years. If the paperwork is in place, then OneMain Financial might even transfer the funds in a day. They also offer secured loans, but you will have to pledge an asset as collateral. Opting for such loans can give you an opportunity to score a lower rate of interest.
FreedomPlus®
Qualifying for a debt consolidation loan can, at times, be challenging, especially when you wish to borrow a higher credit. To tackle this situation, FreedomPlus® gives you an alternative of getting a co-signer on board. Not only will this help you secure a loan but it might also enable you to land a better APR. To stand eligible for a FreedomPlus® debt consolidation loan, you need to have a minimum credit score of 640. You can apply for a loan amount ranging from $10,000 to $30,000. Depending on how good your credit report is, they will offer interest rates ranging from 5.99% to 29.99%. FreedomPlus® might also charge an origination fee of up to 5% of the loan.
LightStream
Like Marcus and Discover, LightStream can be a perfect fit if you have an excellent or good credit score. They not only offer high credit but also render reasonable interest fees. The minimum credit score required to qualify for a debt consolidation loan is 660 and you can borrow around $5,000 to $100,000 from LightStream. Their standard APR window is between 3.99% and 16.99%. Furthermore, they don’t charge origination, prepayment, or late fees. The loan term for credit card debt consolidation can be anywhere between 2 and 7 years. You can also get a co-signer to get your loan sanctioned in case you have an average credit score or are borrowing a high credit.
While you are shopping for debt consolidation loans, apart from scrutinizing the essential parameters, beware of any personal loan scams. Any lender that guarantees loan without proper paperwork and credit check cannot be trusted.
If consolidation loans for credit card debts are not the right option for you, you can consider opting for balance transfer cards. This alternative makes more sense if your credit card debt is low and that you can pay it off quickly. Some balance credit card issuers may also allow you to pay off your debt without charging interest; however, this will only be applicable for a limited time. You might also have to pay a fee to transfer the debt to the new credit card; moreover, some lenders might even charge annual fees.
Unlike debt consolidation loans, balance credit cards offer you with repayment flexibility; therefore, it is imperative for you to have a debt payment plan in place. Flying blind can easily wane your motivation and tempt you to get back to old habits. This can further worsen your financial woes and damage your credit report.
