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Best Debt Consolidation Lenders for March 2022 – CNET [CNET]
Overwhelmed by multiple loans and monthly payments? As interest rates continue to climb, now may be the time to consider debt consolidation.
A debt consolidation loan combines all your high-interest debt into one personal loan, giving you a lump sum to pay off credit cards, medical bills and other debt. By consolidating multiple payments into one fixed monthly payment, your debts will be easier to manage and you can simplify your repayment plan. You may even be able to access a lower interest rate.
We’ve evaluated major debt consolidation loan providers and highlighted the best options below. We’ll update this list regularly as terms change and new loan products are released. Note that all of the starting annual percentage rates, or APRs, that are listed are based on a high credit score of 800 or above.
Best debt consolidation lenders, compared
| LightStream | Rocket Loans | SoFi | Happy Money | Upstart | |
| Best for | Excellent credit | Fast funding | No fees | Consolidating credit card debt | Limited credit |
| APR | 4.98% to 20.49% | 5.97% to 29.99% | 5.74% to 21.28% | 5.99% to 24.99% | 5.22% to 35.99% |
| Loan amount | $5,000 to $100,000 | $2,000 to $45,000 | $5,000 to $100,000 | $5,000 to $40,000 | $1,000 to $5,000 |
| Term lengths | 24 to 84 months | 36 and 60 month term | 36 to 84 months | 24 to 60 months | 36 and 60 month terms |
| Time to receive funds | As early as same day | As early as same day | 1 business day after accepting loan | 2 to 5 business days | 1 business day after accepting loan |
| Prequalification | No | Yes | Yes | Yes | Yes |
| Origination Fee | No | 1% to 6% | No | 0% to 5% | 0% to 8% |
| Co-signer option | No, only joint applicants | No | Yes | No | No |
| Debt consolidation for student loans | No | No | Yes | No | No |
FAQs
Will a debt consolidation loan save me money?
A debt consolidation loan may save you money. You may pay less interest if you are approved for a lower rate than your existing debt. For example, if you have $2,500 in total debt with a combined APR of 20% and a combined monthly payment of $125, you’ll pay $566 in interest over about two years. But if you were to take out a debt consolidation loan with an 11% APR and a two-year repayment term, the new monthly payment would be $116.50, and you would save $329 in interest.
Keep in mind that access to lower rates is heavily dependent upon a high credit score.
How does student loan debt consolidation work?
Student loan debt consolidation is similar to other types of debt consolidation — borrowers can combine multiple student loans into one for new terms and a potentially lower interest rate.
However, student loan debt consolidation differs depending on whether you have federal loans or private loans. If you have federal loans, consolidation can only occur through the Direct Loan program, for a new rate of the weighted average of all your loans, rounded to the nearest eighth.
You cannot consolidate private student loans. However, you can refinance your loans (both private and federal) into one brand-new loan. Keep in mind that debt consolidation is a loan combination, while refinancing is simply changing the terms on a debt obligation.
What is prequalification?
Many lenders offer the option to prequalify, which allows you to view your payment plan and see what your potential interest rates and monthly payments would look like. Prequalification requires a soft credit pull, allowing lenders to view a limited portion of your credit history. Keep in mind that a soft credit pull will not impact your credit score.
What’s an origination fee?
An origination fee is an upfront, one-time fee for processing your loan. It may also be called the administrative or processing fee.
What is a co-signer, and how does it differ from a joint applicant?
If you don’t have a longstanding credit history, you may need someone with good or excellent credit to co-sign your loan. A co-signer takes on loan responsibility, serving as a guarantor, and are required to make loan payments if you’re unable to. Keep in mind that your loan repayment history will affect their credit score. With a joint applicant, both applicants are held equally responsible for paying the loan back. The co-applicant has more rights and responsibilities than a co-signer.
Lenders reviewed:
- Avant
- BestEgg
- Discover
- Freedom Plus
- LightStream
- Marcus by Goldman Sachs
- Payoff
- PenFed
- Peerform
- Prosper
- One Main Financial
- Rocket Loans
- SoFi
- Upstart
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