If the balance of your credit cards is drowning you, then you will want to know which are the best debt consolidation companies. A debt consolidation loan is a new loan used to pay off your old debts, whether they are credit card or personal loans, car loans, student loans, or just about any other type of loan.. If you are looking for financial help to consolidate debt, this article will be very useful for you.
The request for any new debt consolidation loan affect credit. So, for starters, you need to choose the best lenders. In this way you will minimize the impact on your credit history.
By choosing the right approach and following an orderly plan for debt consolidation, you can save hundreds or even thousands of dollars in interest, while alleviating the stress of multiple monthly payments. By choosing the right loan, you need to consider interest rates, origination fees, early termination fees, and minimum credit scores. Here is a list of the best companies to consolidate debts.
Keep reading: Credit Repair: How to Fix My Credit Fast on My Own
What are companies to consolidate debts?
Basically, They are financial entities that will give you a loan with which you can pay all your previously contracted debts. That way you can merge all your debts into one. Instead of making separate monthly payments to multiple creditors (lenders, banks, etc.), you bundle them into one payment from a single lender, ideally at a lower interest rate.
Although debt consolidation will not cancel your debts or reduce the amounts you owe, it is a strategy that many use to make paying them easier and cheaper.
Best Overall: Marcus, Goldman Sachs
Marcus is a new bank for Wall Street giant Goldman Sachs. Marcus personal loan from Goldman Sachs company is a great option due to the combination of competitive interest rates and non-payment of fees. There are no setup or prepayment fees, which is not very common among major lenders. And, unlike others, Marcus does not charge late fees, but you should still pay on time. Annual interest rates range from 6.99% to 28.99% (6.99% to 24.99% for New York residents).
The minimum credit score for a new loan is 660 on the FICO 9, and 580 on the VantageScore 3.0 scale, which undoubtedly limits some borrowers with fair or poor credit. If you can get a better interest rate elsewhere, you should consider it. To get the loan, Marcus will want to verify your credit score, your social security or taxpayer number, and several other pieces of personal information. You can borrow between $3,500 and $40,000 in a single loan to consolidate debts but you must state what you will use the money for. They will usually give you the money in a period of one to four days.
This option is good when you need to take out a loan to consolidate debts because it does not have a minimum credit score and accepts some borrowers with bad credit. Origination fees vary by state, with interest rates ranging from 16.05% to 35.99%. While the interest rate will be higher at OneMain Financial, if you can’t get approved at another company due to past credit errors, this may be your only option.
Unlike most debt consolidation companies from this list, OneMain Financial has physical branches in 44 states. Loans are available from $1,500 to $30,000 with terms of two to five years. In some cases, you can get financing the same day.
OneMain Financial also offers secured loans, where you put something up as collateral, like a car title, to get a lower interest rate. With this type of loan, if you stop paying, you could lose your guarantee.
Better with good credit: Discover
If you have good credit, Discover offers loans from $2,500 to $35,000 with no origination fees and competitive rates.. They range from 6.99% to 24.99% per year depending on your credit score. Loan terms vary from three to seven years.
Discover personal loans are available to borrowers with a credit score of 660 or higher. Although you can wait up to a week to obtain the funds, it is still a very good option if your credit score allows it.
Lower interest: Best Egg
Best Egg offers one of the best interest rates for borrowers with good credit, and even for some borrowers with poor credit. The company offers fixed APRs (annual interest rates) ranging from 5.99% to 29.99% based on your credit history.
Best Egg lends for three or five years and works with borrowers whose credit score is 640 or higher. That said, you have to pay a 0.99% to 5.99% origination commission depending on your credit. Loans are available from $2,000 to $35,000. This means that the origination fee will cost you between $19.80 and $2,096.50 depending on the size of the loan and your credit history. You can get funds very quickly, in as little as one day, which is a great benefit for someone who wants to finish their debt consolidation.
The best loan market: Lending Club
Lending Club is one of the debt consolidation companies which is based on loans between peers. If you choose this option, you would not be borrowing from a big bank or self-financing lender. Instead, loans go to a market where they are funded in increments of $25 or more until the loan is fully funded. Lending Club is the largest lending marketplace of its kind with $38 billion in financed loans.
Lending Club offers loans from $1,000 to $40,000 with terms of three or five years. You are required to have a credit score of 600 or higher to qualify. Interest rates range from 6.95% to 35.89% per year and origination fees range from 1% to 6% depending on your credit.
This lender generally has good ratings from customers. Although it got some bad publicity due to the actions of its former CEO, the company appears to have turned a corner and is now among the top debt consolidation loan options.
Best with co-signer: Freedom Plus
If you can’t qualify for a good debt consolidation loan on your own, FreedomPlus gives you the option to bring a co-signer to get a better interest rate. This means that the co-signer is equally responsible for your payments. That person must have a close relationship with you because the risk may be high.
Borrowers need a credit score of 640 or higher to qualify for a $7,500 to $40,000 loan. Rates range from 5.99% to 29.99% per annum based on your credit with a 0% to 5% origination fee. Loans are available for periods of two to five years.
Best for paying credit cards: Payoff
Among the companies to consolidate debts, Payoff is announced as the ideal option for consolidate credit card debt, and even offers borrowers support in developing a personal debt repayment plan. That could help you consolidate and pay off your debt for good.
Interest rates vary between 5.99% and 24.99% per year and credit origination charges vary between 2% and 5% depending on your credit. These fees are based on the term of the loan (longer loans translate to higher fees). You’ll need a credit score of at least 640 to qualify. Loans are available from $5,000 to $35,000 total with repayment periods of two to five years.
Best for Professionals: Sofi
Sophie is a non-traditional lender that started with student loans and expanded into other financial services, including personal loans to consolidate debts. The SoFi also takes into account some non-traditional criteria when lending, including your education and professional background.
This company requires you to have a minimum credit score of 680 for loans from $5,000 to $100,000. California residents must borrow at least $10,000. Fixed interest rates vary between 5.99% and 20.91%, depending on the term of the loan and your credit. Loans are available in terms of two to seven years.
Something very good about Sofi is that it does not charge initiation fees, pre-payment or late fees. That makes it the lowest cost lender if your credit and income qualify.