Debt Consolidation Without Debt Review
Debt Consolidation Without Debt Review
Consolidating debts with a loan can help you consolidate multiple high-interest loans into one payment.
Check out our selections to find the best loans for every credit score.
You may be like many Americans who have high credit card debts and are looking for ways to reduce them. Consolidating your debt with loans is one way to reduce your debt and pay it off faster.
Debt consolidation is the process of combining multiple debts — such as credit cards, medical bills, and payday loans — into one debt with a fixed monthly payment. A personal loan can be used to consolidate debt. The interest rate for the loan should be lower than your existing debt.
Compare debt consolidation loans to find low rates, flexible terms, and consumer-friendly features like direct payment to creditors.
Consolidationnow’s August 2021 Best Debt Consolidation loans
- Upstart: Best for Bad credit and fast funding
- Payoff: Best for Fair credit and paying off credit card debt
- LightStream: Best for Good credit and low rates
- Marcus by Goldman Sachs: Best for Good credit and no fees
- Upgrade: Best for Fair credit and direct payment to creditors
- Prosper: Best for Good credit and joint loan option
- Discover(r) Personal Loans: Best for Excellent credit and flexible payment options
Compare the best debt consolidation loans
- Annual percentage rates: This is the loan’s true annual cost. It includes all fees and interest. Rates will vary depending on your credit score, income, and debt-to-income ratio. Compare multiple loans by using APRs. You can choose a low rate and make monthly payments that are within your means.
- Origination fees: Lenders may charge origination fees to pay for processing your loan. This one-time fee is typically 1% to 10% of your loan amount. It can be deducted from your loan proceeds or added to the loan total. Avoid loans with this fee unless the APR for other loans without fees is lower to keep costs low.
- Lender features: Some lenders offer consumer-friendly options like direct payment to creditors. This means that the lender will pay off any old debts you have once your loan is closed.
You can also shop for features such as free credit monitoring or hardship programs, which temporarily reduce or suspend your monthly payments in the event of a financial setback like a job loss.
Consolidate your debts to get the best deal
- Credit score and ability to repay are the main factors that will determine your loan approval. Although it is possible to obtain a consolidation loan for bad credit, borrowers with good credit (720-850 FICO) may have more options and be eligible for lower rates. It is worth building your credit score before applying for a consolidation loan.
- Co-sign with a friend: Although co-signing comes with some risks, it can help qualify for a consolidation loan.
- Calculate your savings. Use the debt consolidation calculator to calculate your interest savings, new monthly payments and compare different loan options.
- Compare rates and terms from multiple lenders before you apply for a consolidation loan. Many online lenders allow you to pre-qualify using a soft credit inquiry. This does not affect your credit scores.
- Plan: Before your loan is approved, make a budget to pay a portion of your income towards debt repayment. You can also track your progress using a budgeting or saving app.
- Limit your spending: Pay off all debts and avoid big purchases on credit cards. However, don’t close any. Credit card cancellations can damage your credit score.
Will debt consolidation hurt my credit score?
A personal loan, which consolidates your debt, can improve your credit score. You can lower your credit utilization (which measures how much credit is being used up) by using the loan to pay off credit cards. Lowering your credit utilization can bump your credit.
However, applying for a loan will require a hard credit check. This can temporarily affect your credit score. Your credit score could be affected if you start to accumulate credit card debt.
How to get pre-qualified for a consolidation loan
You can pre-qualify for an online loan to get access to possible loan terms and the interest rate. Consolidationnow allows you to pre-qualify for multiple lenders. This will allow you to compare rates and find the best rate.
high interest debts