If you are financially incapable of paying off your loans, getting out of debt and keeping a good credit score might be challenging. Debt consolidation loans can help you reduce your debts and deal with this situation. We have selected some of the best low-interest debt consolidation loans you can choose from, to save you and help you get out of debt.
To better understand this article, you must first discuss what Debt Consolidation Loans are and how the loan works.
What are Debt Consolidation Loans?
A debt consolidation loan combines several unsecured debts, such as credit card debt, medical expenses, and payday loans, into a single fixed monthly payment.
If the interest rate is less than the total interest rates on your existing debts, getting a debt consolidation loan is typically a wise decision. With this lower rate, you’ll potentially pay off your loan more quickly and save on interest.
To qualify for this loan, you will need to maintain a good credit score. Although getting a debt consolidation loan with bad credit might be possible, you’d need to get a cosigner for your application to be considered.
How does Debt Consolidation Loan work?
Debt consolidation can be done in various ways, but it always involves obtaining a new loan to pay off existing debt. Personal loans and credit cards with balance transfers are two of the common debt consolidation strategies.
One of these options might be more effective for you depending on your situation, including the amount of debt you need to consolidate, your credit score, how quickly you need the money, the sort of debt you have, and other elements.
Major Benefits of Debt Consolidation Loans
There are three major benefits of taking a debt consolidation loan;
- Save Money on Interest
Ideally, you’ll utilize a financial solution with lower interest rates than those applied to your current loans. You’ll be able to save more by paying less interest.
- It helps build your credit score.
By reducing your credit utilization ratio, paying off credit card debt with a loan can immediately impact your credit score.
- Easy track of debt repayment.
Regardless of the option you choose, you’ll have one bill to pay once you combine your debts. It might assist you in keeping track of your finances and establishing a realistic debt repayment strategy target.
Best Debt Consolidation Loans Available for you
- Avant
For debt consolidation, Avant offers personal loans between $2,000 and $35,000 that you can repay over 24 to 60 months. There are two drawbacks to be aware of: Some customers with bad credit may find it difficult to qualify because of the origination fee, which might be as high as 4.75%, and the inability to apply with a cosigner. Here are some features of Avant;
APR range: 9.95% – 35.99%
Loan Amount: $2000 – $35000
Credit score required: 600
Origination Fee charged: Up to 4.76%
Repayment term: 24 – 60 months
- Happy Money
Happy Money has a reasonable credit score requirement of 640, making it a good choice for borrowers with average credit scores. You can borrow up to $40,000 from this lender and repay it over 60 months. You can only utilize a personal loan from Happy Money to combine your credit card debt. Here are the features of Happy Money;
APR range: 7.99% – 29.99%
Loan Amount: $5,000 – $40,000
Credit score required – 640
Origination fee charged – Varies (0 to 5.00%)
Repayment term: 24 – 60 months
To be qualified for this loan, you must have a credit history of at least three years, no current payment delinquencies, and a debt-to-income ratio below 50%
- LightStream
LightStream is considered one of the best debt consolidation loans for several significant reasons. With rates beginning at just 6.24%, it offers one of the lowest APRs at the time of writing. It provides substantial loans up to $100,000 with a maximum repayment period of 144 months. LightStream does not, however, provide the option to obtain loan pre-approval. Here are some of the features;
APR range: 6.24% – 21.49%
Loan Amount: $5,000 – $100,000
Credit score required – Not specific
Origination fee charged – Zero fee
Repayment term: 24 – 144 months
Several other debt consolidation loan companies include SoFi, Best Egg, Proper, Upgrade, and many more. Be sure to go through the terms and conditions of the institution before you decide to take a loan from them. You can also use the debt consolidation calculator online to choose the right rates for you.
Also Read: Best Options for Short-Term Loans
