Voyager program – Canal Voyagers http://canalvoyagers.com/ Thu, 30 Sep 2021 04:41:53 +0000 en-US hourly 1 https://wordpress.org/?v=5.8 https://canalvoyagers.com/wp-content/uploads/2021/09/icon-6-83x150.png Voyager program – Canal Voyagers http://canalvoyagers.com/ 32 32 15 best debt consolidation loans for fair credit https://canalvoyagers.com/15-best-debt-consolidation-loans-for-fair-credit/ https://canalvoyagers.com/15-best-debt-consolidation-loans-for-fair-credit/#respond Thu, 30 Sep 2021 04:00:22 +0000 https://canalvoyagers.com/?p=86 Our goal here at Credible Operations, Inc., NMLS Number 1681276, referred to as “Credible” below, is to give you the tools and confidence you need to improve your finances. Although we do promote products from our partner lenders who compensate us for our services, all opinions are our own. The best debt consolidation loans for […]]]>

Our goal here at Credible Operations, Inc., NMLS Number 1681276, referred to as “Credible” below, is to give you the tools and confidence you need to improve your finances. Although we do promote products from our partner lenders who compensate us for our services, all opinions are our own.

The best debt consolidation loans for fair credit have low interest rates and no fees. (iStock)

If you’re digging out from under a stack of credit card bills, you might consider a debt consolidation loan. With these loans, you can take out one new loan to pay off all your other personal debt — potentially at a lower interest rate.

With fair credit, you’ll likely have multiple options when it comes to shopping for a debt consolidation loan. But depending on your specific credit score, the interest rate and loan terms you’re offered can vary. The better your score, the better deal you’re likely to get. 

Each lender has different guidelines for its debt consolidation loans, so be sure to shop around and compare several options before settling on the best loan for your financial situation. 

What’s a debt consolidation loan and how does it work?

A debt consolidation loan is a type of personal loan that you can use to pay off your current debts and replace them with a new, single payment. 

Personal loans have the advantage of fixed rates, meaning your monthly payment won’t change for the life of the loan. They’re also generally unsecured, so you don’t have to use your house or car as collateral for the loan. You won’t risk either if you fail to make your payments, unlike with a mortgage or auto loan.

You can use a debt consolidation loan to pay off many different kinds of debt, from medical bills to other personal loans. But they’re especially useful for consolidating credit card debt because they typically have lower interest rates than most credit cards. Using a debt consolidation loan to pay off your high-interest credit card balances can leave you with a lower monthly payment. 

A debt consolidation loan for people with fair credit can come with fees and other costs that you won’t face if you have good credit. But you’ll have more (and better) options than people with bad credit.

What’s a fair credit score?

A credit score is a gauge of how likely you are to pay back your loan, expressed as a number calculated by one of the three main U.S. credit bureaus. FICO scores can range from 300 to 850, and the higher your score, the better.

A number of factors determine your score. The most important is your payment history on accounts you’ve opened, especially how often you make your payments on time. Other factors include:

  • Your current amount of debt
  • How many loans you have
  • How long you’ve had your accounts
  • How much of your credit you’re using
  • When you’ve applied for new credit
  • Any recent bankruptcies, foreclosures or debt collection actions

A fair credit score typically falls between 650 and 699. Below this range is bad credit, which can make it harder to qualify for a loan. Once you reach a score of 700, you’re considered to have good credit, and a score of 750 or higher is considered excellent.

Credible lets you compare personal loans to see what rates you may qualify for.

Best debt consolidation loans for fair credit: 15 lenders to consider

While qualification requirements can vary based on your credit score, here are 15 lenders you might consider for a debt consolidation loan with fair credit. The following 13 lenders are Credible partners.

Avant

Avant has a relatively low minimum credit score requirement, so you may still qualify with a score on the lower end of the “fair” range.

Minimum credit score: 550

Loan terms: Two to five years

Loan amounts: $2,000 to $35,000

Fees: Administration fee of up to 4.75%

Good for: People with lower credit scores

Best Egg

Best Egg says that roughly half of its borrowers receive their loan funds by the next business day.

Minimum credit score: 600

Loan terms: Two to five years

Loan amounts: $5,000 to $50,000

Fees: Origination fee of 0.99% to 5.99%; $15 late payment fee

Good for: People who want to get their money quickly

Discover

Discover offers you the chance to return the money you borrow within 30 days with no interest charged, so if you change your mind, you’re in luck.

Minimum credit score: 660

Loan terms: Three to seven years

Loan amounts: $2,500 to $35,000

Fees: None, though a late payment fee of $39 may apply

Good for: People who aren’t sure if they’ll need a loan

LendingClub

Even with fair credit, you might still get multiple offers from LendingClub investors who want to fund your loan.

Minimum credit score: 600

Loan terms: Three or five years

Loan amounts: $1,000 to $40,000

Fees: Origination fee of 3% to 6%; late payment fee of $15 or 5% of the overdue monthly payment

Good for: People who want to evaluate multiple lenders in one place

Compare personal loan rates from these and other lenders using Credible.

LendingPoint

LendingPoint says it can decide whether to approve you for a loan within just a few seconds.

Minimum credit score: 580

Loan terms: Two to five years

Loan amounts: $2,000 to $25,000

Fees: Origination fees from 3% to 6%

Good for: People who want to know quickly if they qualify

LightStream

LightStream could be a good option if you need a large loan and a long time to repay it.

Minimum credit score: 660

Loan terms: Two to 12 years for home improvement loans; two to seven years for all other loans

Loan amounts: $5,000 to $100,000

Fees: None

Good for: People who need to borrow a large amount of money

Marcus by Goldman Sachs

Marcus allows you to defer a monthly payment after a year’s worth of on-time payments. While you’ll still pay interest during this month, this feature can give you some breathing room when you need it.

Minimum credit score: 660

Loan terms: Three to six years

Loan amounts: $3,500 to $40,000

Fees: None

Good for: People who want to defer a payment 

Payoff

Payoff specializes in debt consolidation, and even offers in-house experts to talk you through paying off your debt.

Minimum credit score: 640

Loan terms: Two to five years

Loan amounts: $5,000 to $40,000

Fees: Origination fee of 0% to 5%

Good for: People who want help paying off their debt

OneMain Financial

If you’re just starting out and don’t have a long credit history, OneMain’s offer to lend to people without a minimum credit score can help you qualify.

Minimum credit score: None

Loan terms: Two to five years

Loan amounts: $1,500 to $20,000

Fees: Origination fees apply. These can be flat fees between $25 and $500 or a fee of 1% to 10% of the loan amount.

Good for: People with a limited credit history

PenFed Credit Union

PenFed’s minimum loan amount of $600 might be the smallest you’ll find.

Minimum credit score: 670

Loan terms: One to five years

Loan amounts: $600 to $35,000

Fees: None

Good for: People who need a small loan

Prosper

Prosper matches you with investors who are interested in funding your loan. If you have a special circumstance, you might have a better chance of qualifying.

Minimum credit score: 640

Loan terms: Three or five years

Loan amounts: $2,000 to $40,000

Fees: Origination fee of 2.4% to 5%; late payment fee of $15 or 5% of the unpaid monthly payment

Good for: People who have a unique financial situation 

Upgrade

Upgrade considers people with lower credit scores, and loan funds may be available in as little as one business day.

Minimum credit score: 580

Loan terms: Three or five years

Loan amounts: $1,000 to $50,000

Fees: Origination fee of 2.9% to 8%

Good for: People who are building credit 

Upstart

Upstart doesn’t just look at your credit score — the lender also takes your education and job history into account. With a fair score and a solid history at work and school, you might get a better deal.

Minimum credit score: 580

Loan terms: Three to five years

Loan amounts: $1,000 to $50,000

Fees: Origination fee of 0% to 8%; late fee of $15 or 5% of the past due balance (whichever is greater); ACH return or check refund fee of $15

Good for: People who have a stellar job or education history

Other lenders to consider

The following lenders are not Credible partners, so you won’t be able to easily compare your rates with them on the Credible platform. But they may also be worth considering if you’re looking for a debt consolidation loan with fair credit. 

Earnest

Earnest is an online platform that matches you with different lenders. But take note that its loans aren’t available in AL, DE, KY, NV or RI. 

Minimum credit score: 680

Loan terms: Three to five years

Loan amounts: $5,000 to $75,000

Fees: Does not disclose

Good for: People who want to comparison shop before applying for a loan

Laurel Road

Laurel Road doesn’t charge any fees on its personal loans and offers an autopay discount. 

Minimum credit score: 660

Loan terms: Three to five years

Loan amounts: $5,000 to $45,000 (depending on loan type)

Fees: None

Good for: People who want to borrow money without paying fees

Methodology: How Credible evaluated lenders

Credible evaluated debt consolidation lenders based on a variety of categories, including the minimum fixed rate, customer experience, time to fund, maximum loan amount, term length and fees. Credible’s team of experts gathered information from each lender’s website, customer service department and via email support. Each data point was verified to make sure it was up to date.

How to get a debt consolidation loan for fair credit

If you’re interested in getting a debt consolidation loan for fair credit, here are the steps you should take.

  • Check your credit score. Your score dictates what loans you qualify for, and what interest rates and loan terms you’re offered. You should know your score going into the process. Checking your credit report also gives you the chance to correct any errors on your report that might be holding your score down. Each credit bureau is required by law to give you a free copy of your report once per year. Use a site like AnnualCreditReport.com to get your copies, and scour them for mistaken account balances or any other errors.
  • Shop around. Lenders often post information on their websites about the interest rates and loan terms they offer. You can look at the interest rate ranges and terms and see if the lender might be a good fit.
  • Prequalify. When you’ve found a few lenders that might fit the bill, you can use each company’s online form to request a rate quote or prequalify for a loan. Most of the time, this will only use a “soft credit inquiry” on your credit, so your score won’t be affected. To get a rate quote, you’ll typically need to give the lender your Social Security number and a little information about your finances and the type of loan you’re looking for. These rate quotes will give you a good indication of what rates and terms you’d be able to receive, so you can use this information to compare loans and find the best one for you.
  • Apply. Once you’ve found the quote that works best for you, it’s time to formally apply for the loan. You’ll need to submit more information to the lender, which they’ll use to make a final decision on your loan. The lender may also run a hard credit check, which can temporarily lower your score by a few points.
  • Accept your loan. If you’re approved for the loan, your lender will tell you what you need to do to receive your loan funds. This could take a day or two, and the money can usually be deposited directly into your bank account.

Comparing fair credit debt consolidation loans and lenders

Every personal loan you evaluate will look a little different, but there are a few variables it always pays to look at. Here are the most important elements to compare when shopping for a debt consolidation loan for fair credit.

  • APR: This is the annual percentage rate, or the total cost of the loan each year as a percentage of the loan amount. The APR on a loan includes the interest rate and all fees charged. Using the APR to compare loans instead of just the interest rate gives you a better apples-to-apples comparison, as it includes all the costs of borrowing money.
  • Fees: Fees can vary widely from lender to lender. Some debt consolidation lenders don’t charge any, while others may charge application fees, origination fees or late fees. Few lenders charge an application fee, and you’re bound to find one that doesn’t. But be sure to check the origination fee, if one applies. Some lenders don’t charge them, while others charge a percentage of the loan that’s typically deducted from the amount you receive.
  • Repayment terms: This generally refers to the length of time you have to pay back the loan. The longer the term, the lower your monthly payment — but the more you’ll pay in interest. Lenders typically offer terms that can be as short as one year or as long as 12.

If you’re ready to start comparing personal loan rates, Credible makes the process easy.

Pros and cons of debt consolidation loans for fair credit

All financial products have advantages and disadvantages. It’s important to weigh the benefits against the costs when deciding if a debt consolidation loan is right for your situation.

Pros of debt consolidation loans for fair credit

  • Single, fixed monthly payment — When you take out a debt consolidation loan, you pay off all of your credit card and other personal debt and replace it with a single new loan. Some lenders will even pay creditors directly with a debt consolidation loan. Debt consolidation loans typically have fixed interest rates, so the amount you pay each month won’t change for the life of your loan.
  • Lower interest rates — A personal loan used for debt consolidation generally has a lower interest rate than credit cards, so you may save money by consolidating your debt.
  • Lower risk — Debt consolidation loans are typically unsecured, meaning you don’t have to stake your home or other property as collateral for the loan. Other options, like home equity loans, do require collateral, meaning you may risk foreclosure if you’re not able to keep up with your payments.

Cons of debt consolidation loans for fair credit

  • Harder to qualify for good terms — With fair credit, you may have fewer choices for a debt consolidation loan, depending on your specific credit score. You may not be offered the interest rate and loan terms you’re hoping for.
  • Higher interest costs — Debt consolidation loans are cheaper than credit cards, but they do often have higher rates than secured loans, like a home equity loan or HELOC. You may have debts at lower interest rates that wouldn’t make sense to consolidate.
  • High fees — Debt consolidation loans for fair credit may come with fees that reduce the amount of money you receive after taking out the loan. You might be able to avoid these fees if you can improve your credit.

Alternatives to debt consolidation loans with fair credit

If you want to consolidate debt, a debt consolidation loan isn’t your only option. Here are a few others to consider.

  • Balance transfer credit card: With a balance transfer credit card, you can transfer the amounts you owe on several different cards, leaving you with a single payment. Many of these cards have a low introductory interest rate — sometimes even 0% — for a short period of time. But watch out for fees — balance transfer cards typically come with a fee of 3% to 5% of the amount you transfer. And if you aren’t able to pay off your full balance by the time the introductory period expires, you’ll start accruing interest at the card’s regular rate.
  • Home equity loan or home equity line of credit (HELOC): If you own a home, you might be able to borrow against the equity in your property in order to pay off debt. Your equity is the difference between what you owe on your mortgage and what your home is worth. Interest rates on these loans tend to be lower, but they’re secured loans — and your home is the collateral. So if you fall behind on your payments, you could risk losing your home.
  • 401(k) loan: Your employer-sponsored retirement plan may allow you to borrow from the amount you’ve socked away. These loans tend to have low interest rates, and you won’t need a certain credit score to qualify. But you lose out on investment gains, and you might have to pay all the money back quickly if you lose your job.

Ways to boost your credit

You can likely save a lot of money in interest if you’re able to boost your credit from the “fair” range up to “good” — or even “excellent.” Start by requesting your credit report. Make sure there are no errors on it and identify any areas you see that can be improved.

Commit to paying all of your bills on time, every time. Your payment history is the No. 1 factor in determining your credit score, and if you’ve missed payments in the past, it’ll take time to rebuild that history. 

You can also boost your credit score by paying down credit card balances and avoiding applying for new credit.


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Best Debt Consolidation Loans in September 2021 https://canalvoyagers.com/best-debt-consolidation-loans-in-september-2021/ https://canalvoyagers.com/best-debt-consolidation-loans-in-september-2021/#respond Thu, 30 Sep 2021 03:21:32 +0000 https://canalvoyagers.com/?p=70 Editorial Independence We want to help you make more informed decisions. Some links on this page — clearly marked — may take you to a partner website and may result in us earning a referral commission. For more information, see How We Make Money. American consumers had a total of $820 billion in credit card […]]]>

We want to help you make more informed decisions. Some links on this page — clearly marked — may take you to a partner website and may result in us earning a referral commission. For more information, see How We Make Money.

American consumers had a total of $820 billion in credit card debt at the end of 2020, according to the Federal Reserve Bank of New York. Although total debt obliglations were lower in 2020 than in the years before, consumer debt (credit cards, auto, and personal loans) still accounted for 5.4% of American households’ disposable income. 

If you have a lot of high-interest debt, such as credit card debt, personal loans, medical loans, or payday loans, a debt consolidation loan could be a good option. If you consolidate this debt into a single loan with a lower interest rate than your existing debt, you can save on interest, pay off your debts faster, and streamline your finances with one monthly payment. 

Keep in mind that a debt consolidation loan only makes sense if you can get an interest rate that’s lower than the current interest rate of your existing debts. You should also take into account any fees. Always comparison shop between multiple lenders to get the best rate possible, then run the numbers yourself to see if a debt consolidation loan makes sense for your personal situation. 

If you’re looking for a place to start, here are our picks for the best debt consolidation loans. 

Best Debt Consolidation Loan Rates in September 2021

INSTITUTION CURRENT APR LOAN TERM RANGE MIN. LOAN AMT. MAX LOAN AMT. MINIMUM CREDIT SCORE REQUIRED
LightStream 2.49% to 19.99% (0.50% autopay discount included) 2 to 7 years $5,000 $100,000 Not specified
SoFi 4.99% to 19.63% (0.25% AutoPay discount included) 3 to 7 years $5,000 $100,000 680
Payoff 5.99% to 24.99% 2 to 5 years $5,000 $40,000 640
Best Egg 5.99% to 35.99% 3 to 5 years $2,000 $50,000 640
Marcus by Goldman Sachs 6.99% to 19.99% (0.25% AutoPay discount included) 3 to 6 years $3,500 $40,000 Not specified
Discover 6.99% to 24.99% 3 to 7 years $2,500 $35,000 Not specified
Rocket Loans 5.970% to 29.99% (0.30% AutoPay discount included) 3 to 5 years $2,000 $45,000 540

How We Chose These Lenders

This list does not represent the entire market. We began by analyzing the most commonly reviewed and searched-for debt consolidation loan rates. We only included lenders that offered loans marketed specifically as debt consolidation loans. However, it’s worth noting that other lenders offer personal loans that can be used for debt consolidation purposes too. Then, we cut out any lenders based on the following criteria:

  1. We eliminated lenders that don’t make it easy to find essential loan information like APRs, fees, minimum and maximum loan amounts, and available loan terms on their websites without entering an email or other personal information. Many lenders prominently display this information on their sites, making it easy to compare to other lenders. If you are in the market for a debt consolidation loan, we’d recommend a transparent lender that doesn’t require personal information for a rate comparison.
  2. We ruled out any lenders whose max APR exceeds 30%. Since the goal of a debt consolidation loan is to consolidate your existing high-interest debt into a single loan with a lower interest rate, we believe that it makes sense to feature lenders whose average interest rates are lower than the average credit card interest rate. Keep in mind that the rates listed on lender websites are only general ranges with the minimum and maximum rates. The rate you qualify for will likely fall somewhere between and will depend on factors like your credit score and loan term. The only way to know the exact rate you’ll get is to prequalify or apply for a loan. 
  3. Our list only features direct lenders rather than intermediaries or loan marketplaces. We also ruled out credit unions, which have unique membership requirements and limit the number of people who could easily consider them for a loan. Credit unions can offer competitive rates to those who qualify; check your local area or use a credit union locator to compare rates.
  4. Also, none of these lenders charge any fees or penalties for early payments or otherwise paying off your loan early. We don’t think you should ever have to pay a fee to get out of debt faster. We will never recommend a personal loan that includes such a fee or penalty.
  5. Finally, we eliminated any lenders that did not have an A rating or higher with the Better Business Bureau

The above rates and loan information is accurate as of September 27, 2021. The NextAdvisor editorial team updates this information regularly, though it is possible APRs and other information changed since it was last updated. Some lenders may offer a rate discount if you pay with AutoPay. If the advertised rates include an AutoPay discount, it will be clearly marked. Also, some loan offerings may be specific to where you live. Keep in mind that the longest loan terms and largest loan amounts may only be available to borrowers with the best credit.

Lender Overview

LightStream

Overview: A division of Truist Bank, LightStream offers fee-free debt consolidation loans with no fees for borrowers with good to excellent credit.

Pros: LightStream charges no fees on its loans and offers the Rate Beat program, which will offer a rate 0.1% lower than rates from competing lenders for the same loan term, with certain conditions. LightStream also offers a $100 Loan Experience Guarantee, where if you’re not satisfied with the service you received and explain why in a questionnaire, the company will send you $100.

Cons: LightStream requires you to go through the entire application process (including a hard credit inquiry, which can affect your credit score) to know the exact rate you’ll get, making it hard to shop around and compare with other lenders.

LIGHTSTREAM
Current APR 2.49% to 19.99% (0.50% autopay discount included)
Loan Term Range 2 to 7 years
Loan Amount $5,000 to $100,000
Prepayment Penalty None
Origination Fee None
Minimum Credit Score None specified
Minimum Annual Income None specified
Co-Borrower Allowed? Yes
Cosigner Allowed? No
Unsecured Debt Consolidation Loans Yes
Secured Debt Consolidation Loans No

SoFi

Overview: SoFi offers no fees, a way to prequalify online, and other perks. But loan eligibility is limited to those with good credit scores and who are currently or soon-to-be employed or have another source of income. 

Pros: SoFi charges no origination fees or late fees (although you’ll still be on the hook for interest on late payments). SoFi offers an unemployment protection program that will pause your payments and provide job placement assistance if you lose your job.

Cons: SoFi has stricter eligibility requirements than other lenders on this list. In addition to credit score requirements, you also have to be currently employed, have sufficient income from other sources, or have an offer of employment that starts within 90 days to qualify for a loan. Finally, SoFi loans are not available to residents of Mississippi. 

SOFI
Current APR 4.99% to 19.63% (0.25% AutoPay discount included)
Loan Term Range 3 to 7 years
Loan Amount $5,000 to $100,000
Prepayment Penalty None
Origination Fee None
Minimum Credit Score 680
Minimum Annual Income None specified, but employment or alternative income is required
Co-Borrower Allowed? Yes
Cosigner Allowed? No
Unsecured Debt Consolidation Loans Yes
Secured Debt Consolidation Loans No

Payoff

Overview: Payoff by Happy Money specializes in debt consolidation loans and has lower credit score requirements than some other lenders on this list. You can also prequalify online without a hard credit check. 

Pros: Payoff has a minimum FICO credit score requirement of 640, which is considered in the “fair” range by Experian. This makes Payoff more accessible to those who may not have good or excellent credit. Keep in mind, though, that credit score isn’t the only determining factor lenders use when deciding whether to grant you a loan. Payoff members also get free monthly FICO score updates.

Cons: You need to have at least three years of established credit to qualify for a Payoff loan. In addition, Payoff loans aren’t available in Massachusetts, Mississippi, Nebraska, and Nevada.

PAYOFF
Current APR 5.99% to 24.99%
Loan Term Range 2 to 5 years
Loan Amount $5,000 to $40,000
Prepayment Penalty None
Origination Fee 0% to 5%
Minimum Credit Score 640, and three years of established credit
Minimum Annual Income None specified
Co-Borrower Allowed? No
Cosigner Allowed? No
Unsecured Debt Consolidation Loans Yes
Secured Debt Consolidation Loans No

Best Egg

Overview: Best Egg offers debt consolidation loans with a quick application process and the option to prequalify online. Like Payoff, Best Egg offers loans to borrowers with “fair” credit (640 and above). 

Pros: Best Egg has a quick online application process, allowing you to receive funds in as little as one business day. 

Cons: Although Best Egg offers loans to those with fair credit, getting the lowest APR advertised requires you to have an annual income of at least $100,000 and a minimum FICO credit score of 700.

BEST EGG
Current APR 5.99% to 35.99%
Loan Term Range 3 to 5 years
Loan Amount $2,000 to $50,000
Prepayment Penalty None
Origination Fee 0.99% to 5.99%; at least 4.99% for loan terms longer than four years
Minimum Credit Score 640; 700+ for the lowest APR
Minimum Annual Income $100,000 minimum individual annual income for the lowest APR
Co-Borrower Allowed? No
Cosigner Allowed? No
Unsecured Debt Consolidation Loans Yes
Secured Debt Consolidation Loans No

Marcus by Goldman Sachs

Overview: Marcus, a subsidiary of Goldman Sachs, offers fee-free debt consolidation loans for borrowers with good-to-excellent credit. 

Pros: Marcus offers an on-time payment reward where if you pay your loan on time and in full every month for 12 months, you can get an interest-free payment deferral for one month. Marcus also charges no origination fees, sign-up fees, or late fees. 

Cons: Although Marcus doesn’t specify a minimum credit score needed to qualify for a loan, it does say you’ll need good or excellent credit (700-850) to get the lowest rates.

MARCUS BY GOLDMAN SACHS
Current APR 6.99% to 19.99% (0.25% AutoPay discount included)
Loan Term Range 3 to 6 years
Loan Amount $3,500 to $40,000
Prepayment Penalty None
Origination Fee None
Minimum Credit Score None specified; borrowers with scores of 700-850 can get lower rates and larger loan amounts)
Minimum Annual Income None specified
Co-Borrower Allowed? No
Cosigner Allowed? No
Unsecured Debt Consolidation Loans Yes
Secured Debt Consolidation Loans No

Discover

Overview: This popular banking and credit card company also offers debt consolidation loans with no origination fees, flexible repayment terms, and same-day decisions in most cases. 

Pros: Discover charges no origination fees, and no other fees, as long as you pay on time. Discover offers a same-day decision in most cases, as well as an option to pay off creditors directly. If you change your mind about needing the loan, you’ll pay no interest if you return the loan funds within 30 days. 

Cons: You need a minimum household income of $25,000 to qualify for a Discover loan. In addition, you can’t use the loan to pay off a secured loan or directly pay off a Discover credit card. 

DISCOVER
Current APR 6.99% to 24.99%
Loan Term Range 3 to 7 years
Loan Amount $2,500 to $35,000
Prepayment Penalty None
Origination Fee None
Minimum Credit Score None specified
Minimum Annual Income $25,000 household income
Co-Borrower Allowed? No
Cosigner Allowed? No
Unsecured Debt Consolidation Loans Yes
Secured Debt Consolidation Loans No

Rocket Loans

Overview: Rocket Loans, a subsidiary of mortgage company Quicken Loans, offers debt consolidation loans for people with “poor” credit, although you may pay higher interest rates. 

Pros: Rocket Loans requires a minimum credit score of 540, making it a viable option for people with “poor” credit. Rocket Loans offers online preapproval as well as same-day funding.

Cons: The maximum interest rate for Rocket Loans is on the high side of the spectrum for this list, although the minimum interest rate is on the low side. Keep in mind that the exact interest rate you’ll get depends on your credit score, and those with poor credit will typically get higher rates. Rocket Loans only offers two loan terms: 3 years and 5 years. 

ROCKET LOANS
Current APR 5.970% to 29.99% (0.30% AutoPay discount included)
Loan Term Range 3 to 5 years
Loan Amount $2,000 to $45,000
Prepayment Penalty None
Origination Fee 1% to 6%
Minimum Credit Score 540
Minimum Annual Income $24,000
Co-Borrower Allowed? No
Cosigner Allowed? No
Unsecured Debt Consolidation Loans Yes
Secured Debt Consolidation Loans No

What is Debt Consolidation?

Debt consolidation is when you consolidate multiple sources of debt — for example, credit cards, personal loans, payday loans, or medical bills — into a single loan. Some common reasons for consolidating debt include:

  • Simplifying your finances by combining your debt into a single monthly payment
  • Consolidating high-interest debt, like credit card debt, into a lower-interest loan
  • Consolidating debt with a variable interest rate into a fixed-rate loan
  • Reducing your monthly payment by getting a longer loan term
  • Being able to budget better with fixed, monthly payments

The two most common ways of consolidating debt are balance transfer credit cards and debt consolidation loans. With a debt consolidation loan, you take out a loan to pay off your existing debt and pay off the new loan over a fixed time period. A balance transfer credit card comes with an introductory 0% APR, making it a good move if you qualify for one of these cards. Whether you use a balance transfer credit card or a debt consolidation loan, it is essential to make a plan to pay off the consolidated debt before the loan term ends or an introductory APR expires.

What is a Debt Consolidation Loan? 

A debt consolidation loan is a type of personal loan taken out for the purpose of consolidating debt. Although many lenders offer products specifically called debt consolidation loans, they’re typically the same as personal loans and have the same loan terms and APRs, just under a different name. Some debt consolidation loans might offer benefits geared toward those looking to consolidate debt, such as the option to pay your lenders directly through the loan provider, saving you a step. 

Debt consolidation loans typically fall into two categories: secured and unsecured. Secured loans require you to put up an asset — such as a home or car — as collateral, which the lender can seize if you default on your loan. Unsecured loans don’t require collateral. Because secured loans are less risky for the lender, they typically have lower APRs and credit score requirements. However, be careful when taking out a secured loan; if you fall behind on your payments, you could lose your collateral. In general, you want to avoid trading any unsecured debt for secured debt since that increases your risk. 

Benefits of a Debt Consolidation Loan 

A debt consolidation loan can help you pay off debt and improve your financial health when used correctly. Some benefits of a debt consolidation loan include:

  • Lower APR. If you have high-interest debt like credit card debt, you may be able to consolidate your debt into a loan with a lower APR. A lower APR means you’ll pay less interest over the life of the loan, and you may even be able to pay off your debt faster as a result. Keep in mind the exact rate depends on factors like your credit score and debt-to-income ratio, so you’ll need to prequalify for a loan or get a quote to see your rate. A debt consolidation loan is likely not a good idea if you can’t get a lower APR than your current one. Also, be aware that fees may cut into your savings; before taking out a debt consolidation loan, always crunch the numbers to see how much you can save.
  • Regular, fixed-rate payments. If you have lots of credit card debt with no plan to pay it off, a debt consolidation loan can help. With a debt consolidation loan, you’ll make regular monthly payments with a fixed payoff date to help you budget better. You’ll also get a fixed interest rate, as opposed to a variable APR with credit cards, eliminating any surprise changes in interest charges. 
  • Streamline your finances. If you have multiple sources of debt, such as several credit cards or personal loans, combining them all into a single monthly payment can simplify your finances and help you better keep track of your payment deadlines. A single missed payment on a credit card or loan can result in hefty fees or a significant drop in your credit score. A debt consolidation loan can help you avoid missing payments by reducing the number of separate bills you need to pay.

Keep in mind, a debt consolidation loan will only help you if you go in with a plan to pay off the debt. Before taking out a debt consolidation loan:

  • Calculate the interest and fees to make sure you’re saving money
  • Build the loan payments into your budget
  • Keep track of payment deadlines to make sure you don’t miss a payment. 

Debt Consolidation Loan vs. Balance Transfer Credit Card 

One popular alternative to a debt consolidation loan is a balance transfer credit card. A balance transfer credit card is a credit card that offers a 0% APR introductory period, which typically ranges from 6 to 20 months. You can use a balance transfer credit card to consolidate debt by putting your existing debts onto the credit card and paying it off before the introductory period expires, thus paying no interest on the balance. (Though you may have to pay a balance transfer fee, usually around 3%.)

The biggest draw of a balance transfer credit card is paying off the balance before the introductory period expires and, consequently, paying no interest at all. Having a plan to pay off debt is even more important when using a balance transfer card, or you’ll be stuck with high APRs once the introductory period ends. The best balance transfer cards are typically available only to those with good or excellent credit, making them less accessible than personal loans for those with poor or fair credit.

Personal Loan Balance Transfer Credit Card
• Installment loan
• Fixed interest rate for the loan term
• More options for those with poor or fair credit
• May charge an application fee, origination fee, prepayment penalty, and other fees
• Credit card
• 0% APR introductory period, then high variable APR
• Fewer options for those with poor or fair credit
• May charge a balance transfer fee, a monthly credit card fee, and other fees

Alternatives to a Debt Consolidation Loan

In addition to balance transfer credit cards, there are several other alternatives to debt consolidation loans or personal loans for consolidating debt. These include:

Home Equity Loan or HELOC

You can tap into your home equity for immediate cash with either a home equity loan or home equity line of credit (HELOC). A home equity loan is a secured installment loan where you borrow a lump sum and pay it back, with interest, over a fixed period. A HELOC is a revolving line of credit that works like a credit card, where you can withdraw as much cash as you need (up to the credit limit) during the draw period and pay it back during the repayment period.  Home equity loans and HELOCs use your home equity as collateral and may have lower rates than unsecured personal loans or credit cards. Be aware, though, that if you default on the loan, the lender could foreclose on your house. 

Cash-Out Refinance

Similar to a home equity loan or HELOC, a cash-out refinance also lets you use your house as a means of accessing cash. The process just works differently. With a cash-out refinance, you take out a new mortgage with a larger value than your current mortgage, pay off your old mortgage with the money, and keep the difference as cash. Since mortgage rates are relatively low right now, a cash-out refinance may be a better deal than a home equity loan, HELOC, or personal loan. 

Credit Counseling

If you’re struggling with debt, many credit counseling agencies offer services to help you make a debt repayment plan and get your finances back on track. Credit counseling is different from debt settlement, where for-profit companies negotiate with your creditors in an attempt to get them to settle your debt for less than the total amount owed. Debt settlement companies typically charge hefty fees for their services, and settling your debt for less than the original amount can severely hurt your credit score. Credit counseling is typically offered for free or for a small fee by nonprofit organizations. 


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Debt Consolidation vs. Debt Settlement – What Are The Main Differences? https://canalvoyagers.com/debt-consolidation-vs-debt-settlement-what-are-the-main-differences/ https://canalvoyagers.com/debt-consolidation-vs-debt-settlement-what-are-the-main-differences/#respond Thu, 23 Sep 2021 09:41:43 +0000 https://canalvoyagers.com/debt-consolidation-vs-debt-settlement-what-are-the-main-differences/ There are many reasons why people go into debt. These could be necessary expenses such as hospital visits, repairing a car in the event of an unexpected breakdown, or home repairs that need to be done. Whatever the reason, it’s easy to fall behind if you don’t have the money. Debt consolidation and debt settlement […]]]>

There are many reasons why people go into debt. These could be necessary expenses such as hospital visits, repairing a car in the event of an unexpected breakdown, or home repairs that need to be done. Whatever the reason, it’s easy to fall behind if you don’t have the money. Debt consolidation and debt settlement are among the most popular ways for people in debt to cope. Before deciding what to do next, you should know the difference between the two options.

1. Interest rates on credit cards

The main difference between debt consolidation and debt settlement is their impact on your credit cards. Debt consolidation means you take out a new loan with which you pay off your existing credit card balances, usually at zero percent or low interest rates.

This leaves you with one payment per month and allows you to pay off the debt faster. People generally find deadlines important when they think about ways to reduce credit card debt because they want to pay off all their debts within a certain period. Most financial institutions will allow you to consolidate your credit card debt without negatively affecting your credit rating.

When you go for debt settlement, you contact your creditors and negotiate a balance or a lower interest rate. This often results in many different payments, which takes longer to pay off the full amount of debt. While it doesn’t affect your credit score, it could prove to be more costly in the long run as you may have to pay more money in fees.

2. Availability of funds

Another difference between debt consolidation and debt settlement is whether your credit cards are available after you have paid off your debts, which depends on how they are settled.

With debt settlement, you are not allowed to use your cards while negotiating new terms with the creditor. This means that you will have to save for the most part like groceries, rent, bills and transportation until your debt situation is resolved. There are ways to avoid this, like setting up a separate bank account for your bills and essentials.

With debt consolidation, after you have paid off all of your credit card debt using a new loan, you are free to use your cards again. Keep in mind that rebuilding your credit can take some time, so be sure to use the accounts responsibly.

3. Legal implications

Debt settlement is not legal in all states in the United States, which means that when you use this process to pay off your debt, there could be negative consequences if the creditor decides to sue you for an unpaid debt. .

You should always consult with a lawyer or financial professional before deciding to settle debts with a creditor. Debt settlement is legal in most states, although some have rules against the process, so it is important for research carefully this option before using it. There are also no written rules on how debtors should deal with a debt settlement provider.

With debt consolidation, there are legal limits and written rules on how the process should take place. This reduces the risk of problems between you and your credit card company, such as lawsuits or demands for repayment after you’ve paid off your debts in full.

4. Tax implications

Consolidation and debt settlement affect taxes in different ways. Debt settlement does not have a tax impact while debt consolidation can have a negative impact on your taxes.

If you use a loan to pay off your existing debt, any interest you pay on the new loan will be considered taxable income by the IRS. You can deduct these interest payments if you itemize your deductions. If you decide to use tax relief services to help you with your debt consolidation loan, the IRS may treat that as income and charge you taxes on it. You should always consult a professional before deciding how to handle debt that negatively affects your ability to pay taxes.

5. Credit score

When you use debt settlement to pay off your debts, negative information may stay on your credit report for up to 7 years. This can make it more difficult for you to get loans and other lines of credit in the future.

With debt consolidation, you take out a new loan to pay off your old ones. This loan may appear on your credit report as another account you have with the lender. It can help improve your credit score because it shows lenders that you are paying your bills responsibly.

6. Foreclosure

One of the benefits of debt consolidation is that you can keep your home if it gets foreclosed. This can be beneficial if you want to stay in the house or sell it quickly, but it means there may be additional interest on top of what you already owe.

If you choose to use debt settlement, your creditor will expect the amount of money you owe to be paid in full, which means you’ll likely lose your home if you can’t afford it. . However, this process is not always permanent and many people are able to negotiate with the creditor to keep their home through debt settlement afterwards.

7. Credit counseling

Some creditors require credit counseling before letting you get into debt repayment plans using debt settlement. Counseling will help you understand your current financial situation and what you can do to improve it, which can make it easier to pay off your debts in the future.

Debt consolidation does not always include advice, but some creditors require it before approving debt consolidation loans. This helps you work with a proactive lender who knows your financial situation, which can make it easier for them to help you pay off your debts.

Although debt consolidation and debt settlement both offer a way out of debt, there are significant differences between them. Before deciding on the right approach for you, it is best to consider your financial situation and discuss these matters with an expert such as a lawyer or an accountant to find the best way to manage your debts. Things can get a little overwhelming right now, so write down a list of questions you want to ask before choosing between debt settlement or consolidation so that you know what you are getting into if you are considering going through it. one of these options.


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Affordable Debt Consolidation in Texas Offers Debt Relief for Texans https://canalvoyagers.com/affordable-debt-consolidation-in-texas-offers-debt-relief-for-texans/ https://canalvoyagers.com/affordable-debt-consolidation-in-texas-offers-debt-relief-for-texans/#respond Wed, 22 Sep 2021 17:27:25 +0000 https://canalvoyagers.com/affordable-debt-consolidation-in-texas-offers-debt-relief-for-texans/ Posted: Sep 22, 2021 / 12:27 CDT / Update: Sep 22, 2021 / 12:27 CDT Tim Wilkins of Affordable Debt Consolidation joined Studio 512 co-host Stephanie Gilbert to talk about debt and how some programs can help. “Many Texans have suffered financially from the pandemic and are now grappling with crushing credit card debt and […]]]>

Posted:
Update:

Tim Wilkins of Affordable Debt Consolidation joined Studio 512 co-host Stephanie Gilbert to talk about debt and how some programs can help.

“Many Texans have suffered financially from the pandemic and are now grappling with crushing credit card debt and personal loans. Sometimes it can seem impossible to pay off the debt because of the high interest. Others are struggling to make minimum payments or have fallen behind in payments. For those who have missed payments for several months, many lenders are suing the Texans in an attempt to collect the debt. “

Non-Texas Debt Relief Companies

“There are many out-of-state debt relief companies that advertise on the Internet and on cable TV. Unfortunately, many Texans find themselves with high fees and broken promises. Affordable Debt Consolidation is a registered DBA of Debt Redemption Inc., a Texas-based company dedicated solely to providing solutions to Texans who struggle with tens of thousands of credit card or personal loan debt.

Below are options that might help you solve your debt problems:

Texas Debt Consolidation Loans

“Using a low interest debt consolidation loan to pay off high interest credit card debt can be a great way to manage your finances better. You may be able to save a lot of money each month and pay off the debt in a few years instead of decades. Unfortunately for many people, these loans can be difficult to meet the qualification requirements. Lenders expect a very high credit score and low debt-to-income ratio to reduce their risk when offering an unsecured loan to pay off a large chunk of credit card debt. Applying to multiple lenders can be frustrating. Affordable Debt Consolidation is not a lender, but rather offers an affiliate platform to buy from dozens of lenders who provide debt consolidation loans to Texans. There is no charge to review offers, and it will not affect your credit score.

Texas Credit Counseling

“A credit counseling debt management plan can be a good option for people who are not eligible for a debt consolidation loan because there is no need to be eligible or take out new loans.” . A credit counseling program is considered a hardship plan and will generally reduce credit card interest rates to 10% or less. Any credit counseling or debt relief plan is not designed to allow you to keep making changes while you are registered. Usually our monthly payments will be lower than the minimum payments in a credit counseling plan, and they are designed to pay off debt in about five years. Affordable Debt Consolidation uses a nonprofit debt management partner for clients who feel this is the best option for their situation.

Texas Debt Relief

“This is often the best option for those who are really in trouble and want to pay off their debts as quickly as possible for as little money as possible without bankruptcy. These programs are not new loans or credit counseling programs, and you do not pay your creditors on a monthly basis. Instead, you deposit your program payment into an FDIC Special Purpose Savings Account while each account is negotiated and settled one by one, to the minimum possible. The monthly program can cost less than half of the minimum payments, and the programs are typically structured for an estimated duration of 2 to 4 years, depending on your budget. Affordable Debt Consolidation can also help Texans who are now facing lawsuits against creditors. One of their debt specialists in Texas can discuss your situation and help you decide which option is best for you. Upon request, Affordable Debt Consolidation can also refer you to Texas Bankruptcy attorneys if you decide not to pursue a non-bankruptcy debt solution.

“If you’re struggling with credit card debt or personal loans, call 800-816-1003 or visit AffordableDebtConsolidation.org to speak to a Texas debt specialist. You will learn about credit counseling, debt relief, and debt consolidation options in Texas. Affordable Debt Consolidation Telephone or office consultations in Texas are free and without obligation. Due to COVID-19, in-person consultations may not be available in all locations. “

This segment is paid for by Affordable Debt Consolidation and is intended as an advertisement. The opinions expressed by guests on this program are solely those of the guests and are not endorsed by this television station.


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Best Debt Consolidation Loans for October 2021 https://canalvoyagers.com/best-debt-consolidation-loans-for-october-2021/ https://canalvoyagers.com/best-debt-consolidation-loans-for-october-2021/#respond Wed, 22 Sep 2021 07:00:00 +0000 https://canalvoyagers.com/best-debt-consolidation-loans-for-october-2021/ Debt Consolidation Loans Credit card balance transfers The process You borrow money with a new installment account to pay off existing debts. Then make a single monthly payment to the new account. You borrow money with a revolving credit card to pay off existing debt. Then make a single monthly payment to the new account. […]]]>
Debt Consolidation Loans Credit card balance transfers
The process You borrow money with a new installment account to pay off existing debts. Then make a single monthly payment to the new account. You borrow money with a revolving credit card to pay off existing debt. Then make a single monthly payment to the new account.
Costs Your new lender may charge a set-up fee, application fee, or other fee that may increase the cost of financing. Many credit card balance transfers include a balance transfer fee that can increase the cost of funding.
APR Debt consolidation loans generally have fixed rates over a specified period of time. Low introductory rates often expire after 6 to 18 months. Once the introductory rate expires, you will be charged the standard APR on the account. (Average credit card rates are currently around 17%.)
Qualification Lenders look at your credit, income, and other factors to determine your eligibility and set your interest rate. Lenders look at your credit, income, and other factors to determine your eligibility and set your interest rate.

Debt Consolidation and Your Credit

There are two main questions people usually have when considering debt consolidation options:

  • How much will it cost?
  • What impact will this have on my credit?

The first question can only be answered with research and rate buying. Still, it’s a little easier to explain how debt consolidation can affect your credit.

Are Debt Consolidation Loans Harming Your Credit?

Debt consolidation loans can be good for your credit scores, depending on the information in your credit reports. Credit scoring models, like FICO and VantageScore, pay close attention to the debt-to-limit ratio (that is, the credit utilization ratio) on your credit card accounts. When your credit reports show that you are using a higher percentage of your credit limits, your scores can suffer.

Installment accounts, like consolidation loans, do not receive the same treatment when it comes to credit scores. Imagine you owe $ 30,000 on an installment loan and $ 3,000 on a credit card with a limit of $ 3,000. Since the credit card is 100% used, it would likely have a much bigger impact on your credit scores (and not in a good way) than the $ 30,000 installment account.

When you pay off revolving credit card debt with a debt consolidation loan, you can trigger a decrease in your credit utilization rate. This reduction in the use of credit could lead to an increase in the credit rating. Additionally, your credit scores can be affected by the number of accounts with balances on your credit report – the less the better. When you use a new loan to pay off multiple accounts at once, it could potentially give your credit scores a little boost.

Are balance transfers bad for your credit?

Opening a new credit card and using a balance transfer to pay off existing credit card debt can also lower your credit utilization rate. However, a balance transfer card is still a revolving account. A debt consolidation loan can reduce your utilization rate to 0% (if you have paid off all of your credit card balances). A balance transfer to a new credit card will not have the same effect.

So a credit card balance transfer could potentially improve your credit scores. But in general, paying off revolving credit cards with an installment account (i.e. a debt consolidation loan) has a chance to further improve your scores.

Is debt consolidation a good idea?

Here are some signs that consolidating your debt might be a smart financial move.

  1. Your monthly payments are manageable, but you can’t afford to pay off your high-interest debt in full in the next few months.
  2. You may be eligible for a lower interest rate than what you pay on your current credit obligations.
  3. You pay off your debts and believe that consolidation will help you clear outstanding balances faster.
  4. You have a stable income, are on a budget, and believe that you can avoid overspending in the future.

Only you can decide if debt consolidation is the right choice for your current financial situation. But considering some of the pros and cons of debt consolidation can make your decision a little easier.

Advantages

  • Debt consolidation could reduce the amount of money you pay in interest. The average rate for a credit card with interest rate is 14.75%. Meanwhile, the average interest rate on a 24-month personal loan is 9.46%, according to the Federal Reserve.

  • Consolidating your debt could improve your credit. When you reduce your credit utilization rate and the number of accounts with balances on your credit reports, your credit scores can benefit.

  • All you have to do is make a monthly payment to your new lender. It’s easier to manage than multiple payments to different accounts.

The inconvenients

  • Debt consolidation does not erase your debt. You’ll need to follow a budget and avoid overspending if you want your new consolidation loan (or balance transfer card) to permanently eliminate your debt.

  • If you have credit or income issues, you might have a hard time qualifying for a lower interest rate. There is usually no point in consolidating your debt if a new loan or balance transfer doesn’t save you money.


Final result

A debt consolidation loan has the potential to help you improve your financial life. But whether a debt consolidation loan helps or hurts you depends on how you handle the account and your finances as a whole.

Most importantly, avoid the temptation to charge new balances on your recently paid off credit cards. If you load new balances on the original accounts, you could be setting yourself up for financial disaster in the future.


How we choose the best debt consolidation loans

Investopedia is committed to providing consumers with unbiased and comprehensive personal lender analysis for all borrowing needs. We have collected over twenty-five data points from over fifty lenders, including interest rates, fees, loan amounts, and repayment terms, to ensure our content helps users take the right borrowing decision for their needs.


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Struggling under the bills? How Debt Consolidation Can Help You https://canalvoyagers.com/struggling-under-the-bills-how-debt-consolidation-can-help-you/ https://canalvoyagers.com/struggling-under-the-bills-how-debt-consolidation-can-help-you/#respond Wed, 22 Sep 2021 02:56:00 +0000 https://canalvoyagers.com/struggling-under-the-bills-how-debt-consolidation-can-help-you/ Debt consolidation can ease stress and save you money – if you do it right. Sponsored by NOW Finances. Personal loans, personal services and repayment plans that are right for you. Set up a NOW Finance debt consolidation loan by September 30, 2021 and you could earn $ 2,000 on your debt. The T & […]]]>

Debt consolidation can ease stress and save you money – if you do it right.

Sponsored by NOW Finances. Personal loans, personal services and repayment plans that are right for you. Set up a NOW Finance debt consolidation loan by September 30, 2021 and you could earn $ 2,000 on your debt. The T & Cs apply. Learn more.

Paying off multiple debts can be stressful. You may find yourself thinking about it all the time, counting the days until the next bill, and wondering how long it will be before you’re back in the dark.

But there is an effective way to alleviate that stress and simplify your payment schedule: bring all of your debts under one roof. Otherwise known as debt consolidation.

While not a panacea, debt consolidation has some major benefits. We will take a look.

It can save you money

Let’s say you have $ 20,000 in credit card debt, spread across multiple cards. According to the Australian Bureau of Statistics, the average credit card interest rate is 19.94% per year. This means that if you paid off your credit card over 5 years, you would have spent $ 11,759 more on interest alone. That’s before you even look at the annual fees.

But there are a few options that could save you money. You can either take out a personal loan to pay off your debt or transfer the debt to a balance transfer credit card.

Let’s look at personal loans first. Personal loans generally have lower interest rates than credit cards and are more suitable for larger debts that will be repaid over a longer period.

For example, digital lender NOW Finance offers unsecured loans with an interest rate starting at 5.95% pa *. for borrowers with excellent credit.

If you qualified for this interest rate and paid the $ 20,000 over 5 years, you would only pay $ 3,171 in interest. In addition, NOW Finance does not charge any fees either. That’s a potential savings of over $ 9,000.

On the other hand, you could transfer your debts to a credit card with 0% interest on balance transfers for a set period of time. If you were able to pay off your debts during the introductory period, you would not pay any interest.

The longest introductory periods on the market right now are 36 months, so if you paid off three-fifths of your $ 20,000 debt during that time, you would still have $ 8,000 to pay. Over two years at an interest rate of 19.94% per annum, this will still cost $ 4,415 in interest only.

However, some credit cards with balance transfer charge an annual fee that you should be careful about and some only allow you to transfer credit card debt. Other cards also allow you to transfer personal loan balances, but if you have other forms of debt, such as unpaid medical bills, unpaid utility bills, or a buy-now balance, you won’t be able to not cover it.

Piggy bank on a pink background, with coins falling around.

You can erase your debts faster

If you consolidate all of your debt into one account with a lower interest rate, but keep paying the same monthly payments, you can pay off your debt sooner.

Let’s say you have a $ 10,000 car loan with an interest rate of 7% per annum and you pay $ 400 per month to pay off the debt. You also have $ 5,000 in credit card debt with an interest rate of 19.94% per annum. And you pay $ 200 a month to pay off that debt.

All in all, that means you are servicing $ 15,000 debt with an average interest rate of 13.47% per annum and paying a total of $ 600 per month. (Again, this doesn’t factor in fees, but we’ll use this as an assumption.) To clear both debts, it would take 29.51 months.

However, if you took out a personal loan with a lower interest rate, you may be able to pay it off sooner. Let’s take the NOW Finance personal loan again as an example, assuming you are eligible for the 5.95% pa (compare 5.95% pa *) interest rate for borrowers with excellent credit. Again, there is no cost involved.

If you carried over your $ 15,000 debt, but continued to pay $ 600 per month, you could pay off your debts almost 3 months earlier than in the situation described above. This means that you also saved almost $ 1,800.


Need a personal loan ?  10 Ways To Increase Your Chances Of Approval


It could reduce your monthly repayments

On the flip side, if you’re struggling to pay off your monthly payments, consolidating your debt can give you an opportunity to cut spending while paying off your debt.

Let’s stay with the example above. $ 600 is a lot of money every month. If you transferred your $ 15,000 debt to a personal loan, you could apply for a loan with a longer repayment period.

Suppose you took out the same personal loan with an interest rate of 5.95% per annum, but extended the loan term to 5 years. As a result, your monthly repayments are only $ 289.

Be aware, however, that if you extend the term of your loan, you will pay more interest. Over 5 years, you would pay $ 2,378 in interest while you would pay $ 947 in interest over 2 years.

A woman holding Australian money.

it can be less stressful

I don’t know about you, but having just one bill to think about each month is a lot less stressful than having 3, 4 or 5.

Instead of feeling this moment of dread several times a month, you will master it. You got this.

[Sponsored]
Finder Exclusive: Set a NOW Fund Debt Consolidation Loan Via Finder by Sep 30, 2021 and you could earn $ 2,000 on your debt. The T & Cs apply.

It can improve your credit

Although unsecured, debt consolidation can make it easier to manage your finances and reduce the risk of missing a payment.

Let’s say you are having a rough month, your car needs urgent repairs, you’ve paid for medical bills, and maybe you just overspended. If you can’t meet your repayments, you should contact all of the different lenders, request an extension, possibly incur late fees, and possibly have them recorded on your credit score.

However, if you only have one lender to work with, suddenly things are much easier. You only ask for one extension, and you don’t suddenly have multiple debts piling up over the next month.

In turn, this can improve your credit score. You are less likely to miss a payment, which means there is less chance that your credit score will be affected. With a healthier credit score, you might even qualify for a lower interest rate if you ever need to refinance or take out a loan again in the future.

Learn more about debt consolidation loans from NOW Finance

Compare other personal loan providers here


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Debt Consolidation Loans Are A Popular Way To Eliminate Debt, According To SocietyOne https://canalvoyagers.com/debt-consolidation-loans-are-a-popular-way-to-eliminate-debt-according-to-societyone/ https://canalvoyagers.com/debt-consolidation-loans-are-a-popular-way-to-eliminate-debt-according-to-societyone/#respond Thu, 16 Sep 2021 07:00:00 +0000 https://canalvoyagers.com/debt-consolidation-loans-are-a-popular-way-to-eliminate-debt-according-to-societyone/ Feel like your multiple debts have gotten a little messy lately? Well, it might be time for a spring cleaning! Managing multiple debts can be tricky, from paying off a car or personal loan to paying off your credit card. But this is where a debt consolidation loan can make life a little easier (and […]]]>

Feel like your multiple debts have gotten a little messy lately? Well, it might be time for a spring cleaning!

Managing multiple debts can be tricky, from paying off a car or personal loan to paying off your credit card. But this is where a debt consolidation loan can make life a little easier (and probably cheaper!).

But are debt consolidation loans really that popular? To put it simply, yes they are.

According to online personal lender SocietyOne, about half (50%) of their loans taken out each month are for debt consolidation, with the average loan being around $ 20,000.

SocietyOne Marketing Director Nicole Avery explains how it all works.

“Let’s say you have a credit card (or a few of them), bank cards, and maybe an existing car or personal loan. Not only does it take a lot of time and effort to make sure you pay it all off on time, but you could also be paying a lot of interest on each debt, ”she says.

“Debt Consolidation Loans are used to transfer all of that debt into one easy to manage payment. Not only could this save you a lot of administration time, it could save you thousands in interest and help you pay off your debts sooner.

Want to Compare Debt Consolidation Loans Now? Check out these best options …

How Much Could I Save With A Debt Consolidation Loan?

It depends on a number of factors like your current debt, interest rates, repayments, etc.

Mozo banking expert Peter Marshall says that by consolidating debt, consumers could end up drastically reducing the amount of interest they pay.

“The truth is that credit card rates have remained high over the years, and although personal and auto loan rates have declined slightly, if you pay off a longer loan, you may not benefit from it. ‘a competitive rate,’ he said.

“More and more Australian personal lenders are now offering debt consolidation loans. By opting for a low rate debt consolidation loan, borrowers might end up paying less interest over the life of the loan than paying off their debts separately. ”

Currently on the Mozo database, the average interest rates on personal debt products are as follows:

  • Credit card: 16.88%
  • Personal loan without guarantee: 9.74%
  • Secure personal loan: 7.25%
  • New car loan: 6.14%
  • Used car loan: 6.64%

So with that in mind, let’s take a look at this scenario …

Say you have $ 20,000 in debt. You owe $ 12,000 on an unsecured personal loan with an interest rate of 10% and $ 8,000 on two credit cards ($ 5,000 at 20.00% and $ 3,000 at 12%).

Right now, you would pay $ 674 in interest each month on the separate and three-year repayments, which would add up to $ 4,191 in interest.

However, if you opted for a three-year unsecured debt consolidation loan with an 8% interest rate, your one-time repayment would end up costing you $ 632 in interest each month. Over the life of the loan, you will end up paying $ 2,762 in interest, which is $ 1,429 less than if you kept your repayments separate.

And if you land a consolidation loan with a lower and lower rate, you could end up saving even more.

“Saving on interest can be the difference between keeping hundreds or even thousands of dollars in your pocket rather than in the hands of a lender,” says Marshall.

“In addition to a low interest rate, it’s important that consumers remember to weigh things like annual or monthly fees, as well as repayment features that can allow them to pay off their debt sooner. , which could save them even more in interest payments.

Will a debt consolidation loan have an impact on my credit rating?

Just like any other type of loan, such as a personal loan or a credit card, a debt consolidation loan can have an impact on your credit score. But whether it is positive or negative is up to you and how you pay back what you owe.

“When you apply for any type of credit, the lender will most likely check your credit score as part of the credit assessment process,” says Avery.

“This may initially lower your credit score, but as long as you keep control of your regular repayments, you’ll find that your score can actually improve over time, especially if you don’t apply for additional credit before. the debt is not repaid. “

It is therefore crucial that you always make paying off your debts a priority when it comes to your finances. By doing this, not only will you improve your credit rating, but you will increase your chances of getting approved or getting a lower rate later.

Want to learn more about debt consolidation? Visit our Debt Consolidation Center for more information and more from top lenders!

* DISCLAIMER: The Comparison Rate combines the interest rate, fees, and charges of the lender into one rate to show the true cost of a personal loan. The comparison rates displayed are calculated on the basis of a loan of $ 30,000 for a term of 5 years or a loan of $ 10,000 for a term of 3 years as indicated, on the basis of monthly repayments. principal and interest, on a secured basis for secured loans and on an unsecured basis for unsecured loans. This comparison rate applies only to the example (s) given. Different amounts and terms will result in different compare rates. Costs such as redemption or prepayment charges, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

^ See information on the Mozo Experts Choice Personal Loan Awards

Mozo provides general product information. We do not consider your personal goals, your financial situation or your needs and we do not recommend any particular product to you. You should make your own decision after reading the PDS or offering literature, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we do not cover every product on the market. If you decide to request a product through our website, you will be dealing directly with the supplier of that product and not with Mozo.


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Debt Consolidation Loan Rates for September 2021 https://canalvoyagers.com/debt-consolidation-loan-rates-for-september-2021/ https://canalvoyagers.com/debt-consolidation-loan-rates-for-september-2021/#respond Thu, 02 Sep 2021 07:00:00 +0000 https://canalvoyagers.com/debt-consolidation-loan-rates-for-september-2021/ Consolidating your debt with a personal loan can simplify your debt repayment process, and it can also save you money if you get an interest rate that is lower than the rates on your existing debts. Typical interest rates on debt consolidation loans range from around 6% to 36%. To get a rate at the […]]]>

Consolidating your debt with a personal loan can simplify your debt repayment process, and it can also save you money if you get an interest rate that is lower than the rates on your existing debts.

Typical interest rates on debt consolidation loans range from around 6% to 36%. To get a rate at the bottom of this range, you will need an excellent credit score (720 to 850 FICO). But even a good credit score (690 to 719 FICO) could help you get a better rate than you currently have.

Borrowers with fair credit (630 to 689 FICO) and bad credit (300 to 629 FICO) may not be able to qualify for a lower rate than their current debts. may improve your chances of qualifying in the future.

Interest rates and terms may vary depending on your credit score, and other factors.

Source: Average rates are based on aggregated and anonymized supply data of users who prequalified in the NerdWallet lender market from July 1, 2020 through July 31, 2021. Rates are estimates only and are not intended for use. specific to any lender.

If you have more than one debt – for example, if you have balances on several different credit cards – you can to pay them all at once. Then you make a payment for the new loan.

But how does it save you money? The main thing is to choose a personal loan with a it is less than your existing debts.

Let’s say you have $ 9,000 in total credit card debt with a combined 22% APR and a combined monthly payment of $ 450. It will take a little over two years to be debt free and will cost $ 2,250 in interest.

But if you consolidate the cards into a loan with 14% APR and a two-year repayment term, you’ll save $ 879 in interest. Your new monthly payment would be $ 432, and you could apply the additional monthly savings to the loan to pay off the debt even faster.

Use our to plug in your current balances, interest rates and monthly payments. Then see how much you could save with a debt consolidation loan and compare the options based on your credit score.

A good first step is to compare what each lender can offer you. Online lenders allow you to see what rates, repayment terms and loan amounts you may be entitled to. Pre-qualifying with multiple lenders can help you compare rates and terms, and it won’t hurt your credit score.

It is a good rule of thumb to choose the lender that offers the lowest rate, but you should also pay attention to the repayment term. Longer terms mean more interest, even if your monthly payment is more affordable.

You can also look for lenders who specialize in debt consolidation. These lenders will offer benefits such as sending loan funds directly to your creditors and free financial education to help you manage your debts.

NerdWallet has reviewed over 30 lenders to help you choose the right one for you. While borrowers with higher credit scores will likely receive the lowest rates, there are still some .


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Best Debt Consolidation Loans for October 2021 – Forbes Advisor https://canalvoyagers.com/best-debt-consolidation-loans-for-october-2021-forbes-advisor/ https://canalvoyagers.com/best-debt-consolidation-loans-for-october-2021-forbes-advisor/#respond Wed, 01 Sep 2021 07:00:00 +0000 https://canalvoyagers.com/best-debt-consolidation-loans-for-october-2021-forbes-advisor/ Upstart has established itself in the field of personal loans because of its approach based on artificial intelligence and machine learning for qualifying borrowers. In fact, Upstart estimates that it was able to approve 27% more borrowers than possible under a traditional lending model. With competitive APRs, Upstart is not a leading lender for borrowers […]]]>

Upstart has established itself in the field of personal loans because of its approach based on artificial intelligence and machine learning for qualifying borrowers. In fact, Upstart estimates that it was able to approve 27% more borrowers than possible under a traditional lending model. With competitive APRs, Upstart is not a leading lender for borrowers who can benefit from more competitive rates. Even so, the platform’s minimum credit score of 600 makes it an accessible option for those with fair credit.

Upstart also offers a fairly flexible range of loan options, with amounts ranging from as low as $ 1,000, so you don’t have to borrow (or pay interest) more than you really need. And, although Upstart’s loans cap at $ 50,000, which is less than some lenders, that will likely be enough for many potential borrowers.

Even though Upstarts’ three- and five-year loan terms are more restrictive than those of other lenders, this is likely an acceptable compromise for applicants who might not be approved in a more traditional lending environment. Plus, it’s available in all states except West Virginia and Iowa, so it’s as widely available as many other top lenders.

Eligibility: Upstart stands out because it uses an AI-powered platform to take into account a range of unconventional variables when assessing borrower applications. And, although the platform advertises a minimum credit score of 600, Upstart can even accept applicants who don’t have enough credit history to get a score. When assessing potential borrowers, Upstart takes into account college education, employment history, residency, debt-to-income ratio, bankruptcies and defaults, and number of credit applications.

Borrowers must also have a full-time job or an offer starting in six months, a regular part-time job or other source of regular income, with a minimum annual income of $ 12,000. Co-signers and co-applicants are not allowed.

Uses of the loan: Upstart personal loans can be used for credit card and other debt consolidation, special events, moving and relocation, medical and dental expenses, and home renovations. Unlike many other traditional and online lenders, Upstart also allows borrowers to use personal loan funds to cover education expenses (except in California, Connecticut, Illinois, Washington and District of Columbia).

Successful borrowers cannot use personal loans to finance illegal activities or purchase illegal weapons, firearms, or drugs.

Completion time : Upstart provides next business day financing to borrowers whose loans are accepted before 5:00 p.m. EST, Monday through Friday. Loans approved after 5:00 p.m. are usually funded the next business day or day. That said, Upstart reports that 99% of loan seekers receive their money within a business day after agreeing to their loan terms. Loans for education expenses can take up to three additional business days after loan acceptance.


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4 Common Debt Consolidation Mistakes And How To Avoid Them https://canalvoyagers.com/4-common-debt-consolidation-mistakes-and-how-to-avoid-them/ https://canalvoyagers.com/4-common-debt-consolidation-mistakes-and-how-to-avoid-them/#respond Sat, 28 Aug 2021 07:00:00 +0000 https://canalvoyagers.com/4-common-debt-consolidation-mistakes-and-how-to-avoid-them/ If you have accumulated multiple forms of debt, such as credit cards, medical bills, or personal loans, you may be considering consolidation. Debt consolidation involves consolidating your debts into one payment, usually with a consolidation loan. Not only does this simplify your debt, but if you qualify for a rate low enough, you can pay […]]]>

If you have accumulated multiple forms of debt, such as credit cards, medical bills, or personal loans, you may be considering consolidation.

Debt consolidation involves consolidating your debts into one payment, usually with a consolidation loan. Not only does this simplify your debt, but if you qualify for a rate low enough, you can pay less interest and even get out of debt faster.

Sounds like a no-brainer, right?

While financial experts agree that debt consolidation can be a smart move, it is not without risk. Avoid these four common mistakes when consolidating.

Mistake 1: rushing into debt consolidation

Being in debt is stressful, and it makes sense to want to get out of it as quickly as possible. But rushing into consolidation can cost you money.

Borrowers with higher credit scores tend to benefit from lower interest rates, including when refinancing. That’s why Charles Ho, a California-based certified financial planner and founder of Legacy Builders Financial, says borrowers should look for ways to build credit before consolidating.

When working with clients who want to consolidate, Ho pulls their credit report and identifies what he calls “fruits at hand”: quick fixes with big payoffs. This could be disputing an error or scheduling a few payments on time to reduce credit usage i.e. the amount you owe on revolving credit accounts versus the total credit available from those. accounts.

According to Ho, small changes could impact your score in the short term, 50 to 100 points. “It’s literally dollars saved by having a lower interest rate on consolidation, just by waiting a few months,” he says.

Avoid it: Before applying for a debt consolidation product, take a look at your credit history and look for ways to build credit fast. Until April 2022, you can check your credit report with every major credit bureau for free every week using AnnualCreditReport.com.

Mistake 2: ignoring the root cause of your debt

While debt consolidation may seem like a big step in the right direction, it may not be enough to keep you from financial hardship.

It’s common for people to find themselves trapped in recurring debt if they haven’t tackled the source, says Pete Klipa, senior vice president of creditor relations at the National Foundation for Credit Counseling.

“If someone goes into debt consolidation and they don’t fundamentally tackle the budget habits that maybe got them there in the first place, then they’re just going to fall back into this trap,” says -he.

Consolidation can even exacerbate a common root cause of debt: overcharging credit cards. Removing your current debt from these cards through consolidation frees them up again. If you can’t resist using them, you’ll have more problems than if you hadn’t consolidated in the first place.

Avoid it: Set up a monthly budget that balances your income and expenses and leaves room for an emergency fund. As you strive to pay off debt, avoid financing non-essential purchases.

Mistake 3: Choosing the Wrong Debt Consolidation Loan

Personal loans for debt consolidation are available for borrowers across the credit spectrum, including those with bad credit (629 FICO or less).

But just because a lender will give you a debt consolidation loan doesn’t mean you should take it.

A smart debt consolidation loan is a loan that has an annual percentage rate that is lower than the average interest rate of your current debts. You will also need to pay special attention to the repayment term. A longer term will result in lower monthly payments, but it will also extend the debt. Find out if you can stay motivated to make payments over a three- or four-year period and what other financial goals may be delayed until your loan is paid off.

Avoid it: If you are considering a debt consolidation loan, first plug your debts into a debt consolidation calculator to see your average APR. You will want your new APR to be lower. Also, look for the shortest repayment term with monthly payments that you can still afford.

Mistake 4: Not Considering Other Debt Repayment Options

Debt consolidation isn’t the only option available, and depending on factors such as your financial situation and credit rating, you might be better off choosing another strategy.

Klipa says credit counseling can offer benefits that a simple debt consolidation product cannot, as clients receive individualized advice on their finances, in addition to a plan to restructure and pay off their debt. . This is especially useful for clients who need advice on budgeting.

Another option may be to borrow against an asset, such as a home equity loan or 401 (k) loan, Ho says. These loans often have lower APRs than an unsecured consolidation loan, especially for borrowers with bad credit.

However, Ho calls for caution. If you don’t repay the loan, you could lose the asset or face a large tax bill, in addition to the impact on your credit score.

Whichever option you choose, the key is to make a plan and commit to it by staying on track with your payments.

“There is seldom a magic pill that makes debt go away,” Ho says. “We live in a society that promotes instant gratification, but with debt it’s a slow and orderly process.”

Avoid it: Research the different ways to pay off your debt, especially if you have bad credit. Consider working with a nonprofit credit counseling agency or certified paid-only financial planner for advice on your specific financial situation.

About the Author: Jackie Veling covers personal loans for NerdWallet. Read more


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