Debt Consolidation: How to Pick your Debt Consolidation Loan Provider

Whether you have just lost your job or fallen behind on your credit card bills, debt can make you feel like you are starting to run out of options. However, debt consolidation loans provide individuals with a way out. Debt consolidation loans are designed to bundle all or most of your debt into one account and one loan. This way you are paying only one company and your interest rate is uniform across the board. Another advantage of getting a debt consolidation loans is that it might allow you to extend the term of your loan thus lowering your monthly payments.

In this article, we will list the benefits of debt consolidation loans and look at several popular companies that provide debt consolidation loans.

Benefits

  • Small and Big Loans – While many other types of personal loans may be limited to $1,000-$5,000 in total principle, debt consolidation loans tend to range from $5,000 to $35,000.
  • Better Interest Rates – One of the primary reasons people choose to get these loans is because they typically offer better interest rates than credit cards. Ultimately, the interest rate that you receive will depend on your credit history.
  • Flexible Loan Terms – Debt consolidation loan companies tend to offer a wide selection for the payback period. The loan terms typically range from 12-72 months.
  • Peace of Mind – Instead of paying five times for five different credit card statements, with a debt consolidation loan you will be making one monthly payment to a single provider.
  • Improved Credit Score – Paying off your credit cards and then successfully paying off your loan will help improve your score by showing banks that you are trustworthy and reliable.

There are many companies that offer debt consolidation loans. We have outlines the best ones below.

Lending Club

Lending Club is the largest peer-to-peer lender in the U.S. It offers personal loans that are crowdfunded by investors, not banks. Due to this, even if you are approved for a loan, it may take several weeks for you to get enough people to fund your loan. However, there are many advantages to using Lending Club as well. Here is a breakdown of what you can expect:

  • Loans range from $1,000 to $40,000
  • APR’s range from 5.99% to 35.89%
  • Minimum credit score of 640 is required
  • 36 or 60 month terms
  • Easy to use website and transparent rates

Prosper

Prosper is the second largest peer-to-peer lender in the U.S. It is almost identical to Lending Club except with a few small differences.

  • Loans range from $2,000 to $35,000
  • APR’s range from 5.99% to 36%
  • Minimum credit score of 640 is required
  • Origination fee of 1-5% is charged for your loan

Upstart

Upstart is an excellent alternative for borrowers who have been turned away by other companies due to a short credit history. This peer-to-peer lender tends to focus on recent college graduates and considers academic factors, such as your GPA, when calculating APR.

  • Loans range from $1,000 to $50,000
  • APR’s range from 7.16% to 29.99%
  • 36 and 60 month terms are available

Avant

Avant is great alternative for borrowers who have a lower credit score. It is not a peer-to-peer platform so approved borrowers can get their money as soon as the next business day. However, since it is focused on borrowers with lower credit scores, the rates tend to be higher on Avant than other lending companies.

  • Loans range from $1,000 to $35,000
  • APR’s range from 9.99% to 36%
  • Payment terms range from 24 to 60 months
  • Funds available as soon as the next day

Wrap It Up

There are many aspects to consider when searching for a debt consolidation loan. Most of the companies are similar and have competitive rates. Your decision should ultimately depend on what APR you will receive and how long the term of the loan is. Using the information provided in this article should make it easier to narrow down your choices and find the right match for your loan needs.

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