Best Debt Consolidation Loan Companies
Debt consolidation companies offer solutions to combine multiple debts — such as credit card bills, home loans or other loans — into one easy-to-manage monthly payment. This debt relief solution may be helpful for consumers with many outstanding debts, especially if they have debts with high interest rates. Consumers with bad credit who are looking for debt relief and hoping for a faster solution may use a debt settlement company as an alternative to a debt consolidation loan.
Compare Top Debt Consolidation Companies
Read 480 Reviews
Offers personal loans up to $50,000. Underwrites consumer loans under Freedom Financial Network LLC. Recommended minimum debt of $10,000 for debt consolidation.
|Visit Website Toll free number (800) 368-0061|
Read 929 Reviews
Offers personal loans up to $10,000. Can deliver funds same business day, Guarantees a 100% commitment to customer satisfaction. Provides eligibility verification by state.
|Liberty Lending Group|
Read 98 Reviews
Offers fixed-rate personal loans up to $100,000. Provides personalized rate and term offers with online application. Funds approved loans in as few as 24 hours. No hidden fees or prepayment fees. 24- to 60-month terms available.
|Visit Website Toll free number (855) 535-8306|
Read 519 Reviews
Offers personal loans up to $100,000. Processes approvals in as few as four hours. No prepayment penalties. Minimum loan amount of $600 required.
|Toll free number (855) 464-0433|
Read 80 Reviews
Offers personal loans up to $40,000. Online application available. Licensed in California, Texas, Florida, Pennsylvania, Michigan, North Carolina, Virginia and Arkansas.
|Ovation Credit Services|
Read 328 Reviews
Charges $89 setup fee. Monthly fees from $79 to $109. Averages 19 points improvement per customer. Does not guarantee specific results. Cancel contract within five days of signing. Not be available in all states.
|CountryWide Debt Consolidation Loans|
Read 16 Reviews
CountryWide Debt Relief has several options for debt relief, including debt settlement, debt consolidation and consumer credit counseling services. Helps people facing financial hardships, including those considering bankruptcy.
Analyzes credit to see if you qualify for a line of credit loan with a lower interest rate. Provides app that monitors credit card due dates, minimum payments and interest rates and calculates the best way to pay off debt.
Read 515 Reviews
|Out of Business|
Offers consumers personal loans, small business loans and mortgage loans online. Provides a quick and streamlined application process.
What is a debt consolidation loan?
Debt consolidation is a debt relief program that lets you take out a new loan to pay some or all of your outstanding debts. In some situations, it reduces the total amount you pay by lowering the interest rate, and it often gives borrowers more time to repay the owed amount.
Consolidating your debt streamlines the debt repayment process by combining multiple bills into one single payment. A debt consolidation loan covers the following types of debt:
- Credit cards
- Personal loans
- Medical bills
- Payday loans
- Student loans
How do debt consolidation loans work?
Debt consolidation can be done with a balance transfer credit card or by taking out a personal loan. You still pay the full amount you owe when using a personal loan for debt consolidation, but you’re simplifying your payments and protecting your credit. A personal loan typically has a lower interest rate than credit cards, and the repayment terms can be stretched to between 36 and 60 months so you can take advantage of lower monthly payments over an extended period.
Debt consolidation loans are available in various amounts through banks, credit unions, private lenders and other financial institutions. The amount you pay and the availability of loans depend on several factors, including the total amount of debt and your credit score.
Debt consolidation changes the terms of your debt. Debt settlement reduces your debt.
Debt consolidation vs. debt settlement
Debt settlement is another popular form of debt relief, but it’s notably different from debt consolidation. With debt consolidation, you still pay the total amount of debt you owe. With a debt settlement program, you attempt to reduce the total amount of debt you owe by negotiating with creditors.
How to qualify for a debt consolidation loan
Specific debt consolidation requirements vary by lender but are likely to include:
- Proof of income
- Credit history
- Unsecured debt exceeding $5,000
Debt consolidation lenders generally set a minimum credit score of 580 to 640 to qualify for a loan.
How to get a debt consolidation loan
Getting a loan for debt consolidation requires careful preparation. Follow these steps to get the best debt consolidation loan for your situation:
- Analyze your debt
Take an inventory of each loan and credit card balance you have and prepare a budget and payment plan. Your budget helps you calculate how large of a monthly payment you can afford, and your payment plan reminds you to set aside the needed funds.
- Know the type of loan you need
Your credit counselor or debt consolidation lender helps you identify the type of loan you qualify for and have the best chance of paying off. If you've weighed your debt relief options and decide to take out a loan, you need to choose between a secured loan or an unsecured loan.
- Unsecured debt consolidation loans aren’t backed by an asset or personal property as collateral. This is the most popular type of debt consolidation loan, though interest rates of unsecured loans are generally higher than those of secured loans. Lenders base approval and interest rates on your credit score, income and debt-to-income ratio. You typically need to have a good credit score to be approved for an unsecured personal loan for debt consolidation.
- Secured debt consolidation loans are secured by an asset or property, such as your house when taking out a home equity loan for debt consolidation. Secured personal loans can be easier to get than unsecured loans, but they’re riskier because your property may be seized if you default on the loan. Only apply for one if you’re confident you can make consistent monthly payments.
- Find a reputable debt consolidation company
Shop around and compare rates and terms. Know what qualifications each lender requires to approve a loan. Not all debt consolidation lenders are equal — use the following tips to identify a legitimate debt consolidation company you can trust.
- Check memberships: Visit organizations like the American Fair Credit Council, Financial Counseling Association of America or the National Foundation of Credit Counseling and see if the company is listed. To be accredited by the American Fair Credit Council, the company must be certified in following certain best practices for consumer protection.
- Check reviews: Ask family and friends for their experiences or look at online reviews of the top debt consolidation companies to see what real consumers experienced while working with them.
In the end, the best debt consolidation company to use is the one you feel most confident in.
Debt consolidation loan rates
Debt consolidation interest rates vary by lender and are based on factors like your credit score, the loan amount and the loan term. Debt consolidation loans have fixed or variable rates. If you’re worried about rising interest rates on a long-term loan, get one with a fixed rate. Variable-rate loans have lower APRs than fixed-rate loans, but the interest rates are based on a benchmark set by banks on a periodic basis. This means the interest rate of your loan is likely to rise or fall over time, which creates financial uncertainty.
Your credit score is usually the primary factor when a lender determines what interest rates to offer you. Debt consolidation loan rates range from 4% for borrowers with excellent credit to 36% for those with poor credit. Many debt consolidation lenders require borrowers to have a minimum credit score of 580.
Estimated debt consolidation loan rates
|Credit score||Score range||APR estimate||APR average|
|Excellent||730 - 850||4% - 20%||14%|
|Good||680 - 730||6% - 29%||18%|
|Fair||610 - 680||7% - 31%||22%|
|Poor||300 - 610||14% - 37%||28%|
Debt consolidation questions
- Is it a good idea to consolidate debt?
- As with any debt relief solution, there are pros and cons to debt consolidation. However, debt consolidation can be an attractive option for consumers looking to simplify their debt portfolio or buy more time to pay off their debts and take control of their finances. By paying off several debts with one new loan, you also alleviate the stress associated with having multiple creditors.
- Are debt consolidation companies legitimate?
- There are many legitimate debt consolidation companies, but there are also fraudulent businesses. Review our tips above for finding a reputable lender and read reviews to better understand the results you can expect from a company.
- Are there any government programs to help with debt?
- There are no government-approved debt consolidation companies. The federal government does not directly offer or endorse any debt management program. It does, however, set regulations for the lending industry to protect consumers.
- Can I get a debt consolidation loan with poor credit?
- You can still get a debt consolidation loan with bad credit, but it’s more difficult. Your interest rates will be higher, which means you won’t be saving as much money. This could defeat the purpose of consolidating your debt.
When choosing a lender, consider the full amount of interest you'll pay over the life of the loan. Opting for a short-term loan increases your monthly payments but reduces the amount of interest and fees you pay over time.
If you have already consulted your local credit union, tried options such as a loan finder service and are having trouble securing a debt consolidation loan, consider seeking help from a credit counseling agency. Credit counseling agencies offer programs that can help people with bad credit who are having trouble finding a loan.
- Do debt consolidation loans hurt your credit score?
- When taking out any new line of credit, you may see a short-term effect on your credit score. However, taking out a personal loan for debt consolidation shouldn't have a long-term negative impact on your credit if make your payments consistently and don’t default on the loan.
Credit scores are impacted by your credit utilization ratio, which is the amount of credit you owe compared to how much credit is available to you. Closing credit card accounts reduces your available credit and raises your credit utilization ratio. A higher credit utilization ratio can lower your credit score. You might want to leave your credit accounts open even after they are paid off — just don’t add any new or additional debt on the accounts.
- How much does debt consolidation cost?
- The only cost of debt consolidation is the same associated with any personal loan: the interest charged over the term of the loan and any origination fee the lender charges. There is no guarantee you’ll save money by consolidating your debt — you may end up paying more over the life of the loan if you opt for a long repayment term. A good lender or credit counselor helps you make sense of the loan conditions and ensures the loan you’re taking out makes sense for your financial situation.
- Can you consolidate student loans?
- The short answer is yes, but student loan consolidation is an animal of its own. Unlike other types of debt, there are federal consolidation programs for student loans. You can also use a personal loan to consolidate student loans — this is typically referred to as refinancing your student loans.
- Do debt consolidation programs work?
- Yes. Taking out a personal loan to consolidate your debt is a viable option. Whether the method is successful depends on the individual and their ability and commitment to repaying the new loan.
- What are some debt consolidation alternatives?
- When it comes to debt relief, debt consolidation is not your only option. Other popular debt management plans and programs include debt settlement and credit counseling. There are also DIY debt repayment solutions, including the snowball or avalanche methods. As a last resort, filing for bankruptcy may be a solution for some people.
READ MORE: Debt relief programs and solutions.
Who are the best debt consolidation companies near me?
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Debt consolidation reviews
Freedom Debt Relief is a credit advocacy and debt resolution company that has resolved over $4 billion in debt for its clients. Freedom Debt Relief has over 900 highly-trained professionals at their company. Their individualized approach first reviews every customer’s personal situation to determine whether they are the best fit for the company. If the company can’t help the consumer, they refer them to a more suitable agency.
- No fees upfront: Freedom Debt Relief doesn't charge any fees until after it has resolved your debt.
- Training: Employees receive in-depth training and frequent quality assurance monitoring.
- Customer support: Customer support specialists are available online 24/7, and the company has an online consumer portal to help clients stay informed and in control.
- Certifications: The company is a Platinum Member of the International Association of Professional Debt Arbitrators (IAPDA), a Charter Member of the American Fair Credit Council and accredited by BSI Management Systems.
- Services: Freedom Debt Relief offers multiple options for debt management, including debt settlement, credit counseling and debt consolidation.
- Bankruptcy: Freedom Debt Relief can help consumers work through their bankruptcy plans and options as well as manage their debts.
- Best for: Consumers worried about bankruptcy, over-spenders and individuals with excessive credit card debt.
Consolidated Credit has been in business for over 20 years and has helped over 5 million people eliminate debt. The company offers a wide range of debt assistance programs, including debt management, credit improvement, avoiding foreclosure and bankruptcy plans. Consolidated Credit also offers a strong counseling and financial education component.
- Accredited: Consolidated Credit is an ISO 9001:2000 Registered Organization, meaning that its credentials are recognized worldwide.
- Certified professionals: The majority of the company's counselors and staff are certified financial counselors (CFC). They are required to renew their certifications every three years and undertake additional training.
- Services: The company offers an extensive list of services, including debt management, debt consolidation, counseling, consumer credit rights information and helpful calculators. It offers financial advice through webinars and individual counseling to help with topics like budgeting, credit reports, credit scoring, student loans and more.
- Free assistance: Consolidated Credit offers a host of free calculators to help estimate credit card debt repayment, credit score loan cost, debt-to-income, debt restructuring, savings and more. The company's online educational resources are easily accessible from its website.
- Customized programs: The company offers customized programs to help tailor debt relief solutions to the client’s personal needs.
- Support: The company’s online chat support populates with the first visit to the site. Consolidated Credit offers easy access to company services through its phone support. There is a walk-in branch in Ft. Lauderdale, Florida.
- Best for: Individuals and small business owners with debt and credit issues, homeowners facing foreclosure and those seeking extensive financial education resources.
CountryWide Debt Relief is a 30-year-old debt settlement company that educates its clients about options to avoid bankruptcy. The firm is a proactive company that negotiates with debtors, coordinates repayment and teaches clients about improving their credit scores.
- Services: CountryWide provides debt settlement, debt consolidation, consumer credit counseling and bankruptcy guidance services.
- Debt settlement: The company negotiates with debtors to help lower the total repayment of clients' credit card and unsecured debts.
- Debt consolidation: CountryWide Debt Relief helps clients consolidate debt into a single, low-interest loan to lower their monthly debt payments.
- Bankruptcy advice: The company helps clients explore debt repayment strategies to avoid bankruptcy and its impact on their credit histories.
- Debtor communication: The company handles all communications to help you avoid stress.
- Fees: CountryWide Debt Relief charges a flat, 18% fee only after the debts are settled.
- Best for: Consumers who want to avoid bankruptcy by consolidating their debts.
Pacific Debt Inc. was founded in 2002 to address the rise of consumer debt in the United States. Since its founding, Pacific Debt has settled millions of dollars in consumer debt each month by offering counseling and solutions that put the customer first.
- Free educational resources: Pacific Debt has several free educational resources posted online with subjects like basic budgeting tips, money management advice for newlyweds, insurance purchasing guides and more.
- Client care: The company has a small team of dedicated client care professionals to help consumers gather the right documents, manage creditor calls and provide other types of assistance.
- Personal account manager: When clients start settling their debts, Pacific Debt assigns a personal account manager to them. These managers give each consumer personal attention and work closely with consumers to keep them up to date on their progress or any upcoming negotiations.
- Blog: The company hosts a blog to keep consumers up to date with articles about debt and financial management.
- Free consultation: Consumers can get a free consultation with a debt specialist to see if Pacific Debt’s services are right for them.
- Best for: Consumers who are looking for debt solutions from a company that focuses on tailored customer service.
National Debt Relief helps consumers find relief from burdensome debt with their debt settlement services. They offer alternatives to bankruptcy along with educational resources for people who are considering filing for bankruptcy.
- No upfront cost: There are no upfront fees to use National Debt Relief’s services, and you pay only when the company succeeds in reducing your debt. Fees range from 20% to 25% of the total paid debt.
- Free budget planner worksheets: Start managing your budget by downloading a free budget planner worksheet from National Debt Relief’s website. This tool helps you determine if you will have a surplus or deficit at the end of the month based on your monthly income and expenses.
- Location-specific resources: Find out about your state's debt laws on the company’s website. If National Debt Relief does not operate in your state, you can still learn about ways to manage your debt.
- Quick qualification: Fill out a short form on National Debt Relief’s website to see if you qualify for debt relief. A representative contacts you quickly to help you figure out your next move.
- Customer success record: More than 99.9% of the company's clients pay off their debts and do not need to return for future help.
- Best for: Overspenders and people dealing with consumer debt.
Debt Rx provides debt settlement and debt negotiation services. The company focuses on giving personal attention to each of its customers and helps you find the best solution to manage your debt, even if that’s not with Debt Rx.
- Personalized attention: Debt Rx keeps its client base small so it can offer personalized customer service to each person seeking debt relief. This reduces hold times and increases the efficiency of the process of getting debt relief and debt settlement for its clients.
- Free confidential consultation: Get started with your debt relief program for free. Call for a free confidential consultation with one of the company’s qualified debt management counselors to see which solution works best for your situation.
- Free debt calculator: Use the debt calculator on the company’s website to determine how much money you can save with a debt relief program instead of paying interest on your existing debts.
- Free debt relief resources: Learn about your options, including credit counseling, loans, bankruptcy and debt settlement on Debt Rx’s website.
Consolidated Credit Counseling Services of Canada, Inc. is a nonprofit credit counseling organization that helps Canadians eliminate their debt responsibly. Their educational resources guide consumers to handle their current debt and learn money management skills that can prevent debt in the future.
Information in this guide is general in nature and is intended for informational purposes only; it is not legal, health, investment or tax advice. ConsumerAffairs.com makes no representation as to the accuracy of the information provided and assumes no liability for any damages or loss arising from its use.
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