Best Debt Consolidation Loan : Explore Best Companies
Bringing together all of your student loans into one big loan could be an excellent way to reduce your stress and manage your finances better. It’s easier to see one payment every month rather than several different payments which may or may not fall on the same day.
We will get into a bit of an overview about debt consolidation then provide some excellent options if you think debt consolidation will help you.
What Is a Debt Consolidation Loan?
Debt consolidation loans allow you to pull together all of your loans into one big loan. The best-case scenario is that your new loan’s interest rate is lower than the interest rates on your other loans, which leads to potentially thousands saved over the life of the loan.
How to Qualify
First and foremost, you’ll want to have a high credit score before shopping for a debt consolidation loan. This has the biggest impact on your interest rate, and the banks we’re including have at least a 580 credit score requirement.
When you go to your preferred lender, the requirements may differ. Most of them will first require that you provide several personal details and allow them to pull your credit report. Bear in mind this may cause a slight drop to your credit score, but it shouldn’t affect the rate they eventually give you.
Ideally, you’ll want a credit score in the mid-600 range at least as well as a debt-to-income ration of less than 45%.
Best Companies That Offer Debt Consolidation Loans
When shopping for loans, you’ll want to look at the interest rates, origination fees, and the user interface you’ll be using on their website. While the companies themselves are high quality, it can help just that much more if the website is easy to navigate and they have a clear link to customer service.
- SoFi offers borrowers loans starting at $5,000 all the way up to $100,000. You can opt in for autopay to avoid penalties, and they do not have any origination fees. The rates start at 5.99% and the loan terms range from 2 to 7 years, but the minimum credit score is 680, which is high for this list. SoFi typically scores high on customer experience reviews, so if you have a higher credit score they might be a good pick.
- Marcus by Goldman Sachs is the online banking arm of the financial institution giant. They provide several accessible services like a normal bank and have made a name for being a solid choice. They are more restrictive than others as they have a maximum loan amount of only $40,000, require a minimum 660 credit score, and have interest rates starting at 6.00%. They have no fees, however, so if your borrowing needs are on the lower end, Marcus could be a good choice.
- Best Egg has location limits as they are available in most states but not all, Iowa, Vermont, West Virginia, and D.C. are excluded. They have a smaller minimum loan amount at $2,000 and range up to $50,000 at terms between 3 and 5 years. They do charge origination fees between 0.99% and 5.99% of the loan amount depending on your application and they don’t pay off your previous loans directly as some banks will.
- Upgrade offers the lowest minimum credit score of 580, but the top of the interest rate range reflects this at a huge 35.97%. While they do provide direct payoff of previous loans, the loans they offer include origination fees, late payment fees, and insufficient funds fees.
- Lightstream requires a minimum of 660, which is high on the list, but they do offer the lowest starting interest rate of 4.49%. If you have very high credit and have a borrowing need of less than $10,000 to $15,000, Lightstream might be your best bet.
Choosing the right debt consolidation loan can help relieve some of your financial stress and allow you to go about your day knowing you have things a bit more under control. The interest rates can be higher, but a high credit score could help you scoring an interest rate lower than what most credit cards are charging. Also, remember that, while applying for a loan and receiving an interest rate quote might ding your credit score, you have a window of time during which you can apply for several quotes without all of them affecting your credit score.