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Best Personal Loans For Debt Consolidation In 2017

Best Personal Loans For Debt Consolidation In 2017

I know there are plenty of good reasons to get a consolidation loan, but we at eCheck.org say there is only one good reason to get a consolidation loan–and that is to pay off your credit card debt so that you may cancel your credit cards and never use them again. If you are long-time reader, then you are probably tired of me banging on about things such as this, but I have to do it because eCheck.org is all about wealth accumulation and financial stability. Read on and you will find out the best personal loans for debt consolidation, but before you do, here are the reasons why you shouldn’t get a debt consolidation loan:

Woman getting frustrated

To Lower Your Current Monthly Payments

If you somehow got yourself into a situation where you cannot afford your monthly payments, such as digging yourself into too much debt, then that problem will not go away. If it is credit card debt, then a consolidation loan is a good way to lower your monthly payments and slowly pull yourself out of debt. On the other hand, if you have other debts and you cannot afford the monthly payment, then you need to suffer until you have fixed your problem because it is unlikely to fix itself.

Because Your Current Debt Has A Very High APR

If you got yourself into this situation, then you have a serious problem dealing with your finances. Yet again, in this situation, you need to stick with your problem and suffer so that you are forced to learn how to handle your money better. Getting a consolidation loan and dramatically extending the life of your debt is a lazy option (unless you are paying off credit card debt).

To Further Postpone Paying Off Your Debt

You want to pay off your debt, but you have bills and stuff at the moment, so you feel like you should wait until things perk up before you start paying off your debt in a big way. If that is your attitude, then you are only fooling yourself. Unless you are paying off credit card debt, then you are considerably lengthening the life of your debt.

The Winner For The Best Personal Loans For Debt Consolidation

Upstart

upstart loans review

I wanted to ding this lending company a little harder for the fact the application process can sometimes take too long, but extended and confusing application times and processes seems to be the exception and not the rule. Overall, they are the best company on this best personal loans for debt consolidation review. I am not saying they are perfect, but they are better than the many others we reviewed that never made it onto this article.

Recommended Credit Score
620

Amounts They Lend
$1,000 to $50,000

Loan Period Options
3 or 5 years

The APR Range
4.66%–29.99%

Required Origination Fee
1%–6%

Unsuccessful Payment Fee
$15

Late Payment Fee
The greater of 5% of the unpaid installment amount or $15

Pros

One of the great things about Upstart is that they offer very high loans, they offer them to people with less-than-perfect credit ratings, and they offer them to people with a minimal credit history. In addition, they approve loans for people who have a 50% debt-to-income ratio, which is far higher than most lenders. Upstart offers one of the best personal loans for debt consolidation because they approve loans for people who need debt consolidation the most (i.e. people who are in debt and have a shaky credit history).

[+] Their loans of up to $50,000 is quite high
[+] They will accept people with lower credit ratings
[+] Will accept people with minimal credit history
[+] They approve loans for people with 40% to 50% debt-to-income ratio
[+] The step-by-step process is clear and easy to understand
[+] They also consider your financial goals, education and family situation

Woman is unsure

Cons

There are some people who say that Upstart lies about its rates, but this is not strictly true. What happens is that their rates seem to go up and down on a daily basis, and the rate they offer is usually only applicable for around two weeks. If you do not get your application and verification done promptly enough, or if there is a delay with your application, then you may find that your rate has risen.

Another issue you may have is if you have a variable income, such as if you are a freelancer or contractor. They may say yes at first, but they are going to ask for things such as pay stubs, which often muddies the issue to the point where some people give up trying.

[-] Any outstanding collections of any kind will mean an instant refusal
[-] You have to get your application done in two weeks or your rate may rise
[-] They are not freelancer and/or variable income friendly
[-] They seem to investigate some people far more thoroughly than others
[-] People without a college degree seem to get higher interest rates
[-] The company is still having technical issues from time to time
[-] They have a check-processing fee of $15

Second Place Winner For The Best Personal Loans For Debt Consolidation

SoFi

Sofi Loans

They are very good and they deserve their second place position on this article, but they do discriminate against people without a college degree. People who do not have a college degree are going to have to pay higher interest rates, which is not unheard of, but it certainly isn’t fair. Sofi say that it doesn’t matter what your credit rating is because they judge people on a person-by-person basis, but only our researchers with a credit rating of 700 or more were given loans.

Recommended Credit Score
N/A (Around 700)

Amounts They Lend
$5,000 to $100,000

Loan Period Options
3 – 7 years

The APR Range
5.95%–12.99%

Required Origination Fee
N/A

Unsuccessful Payment Fee
$10

Late Payment Fee
The lesser of 4% of the payment due or $5

Pros

Don’t be put off by the comparatively low number of online user reviews about SoFi. It is because they only really offer consolidation loans to people with a credit rating of over 700, so their customer base is far smaller than most of the other companies listed on our Best Personal Loans For Debt Consolidation review.

You typically need a credit rating of more than 700, but they also look at if you have a degree, they look at your income and your payment. The fact they look at more than just your credit rating is a plus for most people, but if you have a high credit rating and no college degree, then your APR rate will be closer to 12% than 5%.

[+] Their customer service department seems quicker and more efficient than most
[+] Their APR is good for people with a 700+ credit score
[+] The online form only took us 30 minutes to complete
[+] It takes around five business days to receive your money
[+] They judge you on more than just your credit rating

Cons

They ask for a good credit rating, but they are not very credit rating friendly. If you pay down your loan in big chunks, then it takes them a very long time to update the credit scoring companies. The worst thing is that when we asked them to update the credit scoring companies a little quicker, they said they would open up a dispute and file it with Experian. We didn’t want a dispute opening. Make sure you pay your minimum payments a few days in advance every month because they will blame you if their system is slow.

[-] You cannot get a consolidation loan in Nevada or Mississippi
[-] People without a college degree will be given higher interest rates
[-] You are blamed if their payment-processing system is slow
[-] They are not an ideal option for student loan refinancing
[-] Their attitude goes downwards if you are rejected for a loan

Third Place Winner For The Best Personal Loans For Debt Consolidation

Lending Club

Lending Cub Personal Loans

I know why other reviewers place the Lending Club higher up their list and I understand why some people may be disappointed that it is at number three, but they took a serious hit in our opinion because of their origination fee protocol. For example, if you want to borrow $5000 and the origination fee is $300, then the amount you actually receive is $4700. If you actually need $5000, then you need to set your original loan amount as $5319, where your origination fee will be $319 so that you have $5000 left over. Most other consolidation loan companies will add your origination fee onto your debt and not take it out of the loan money they give you. Lending Club is pretty good compared to the great many other lenders out there, but this whole origination fee thing is quite a botheration.

Recommended Credit Score
660

Amounts They Lend
$40,000 max

Loan Period Options
3 or 5 years

The APR Range
5.99%–34.34%

Required Origination Fee
1%–6%

Unsuccessful Payment Fee
$15

Late Payment Fee
The greater of 5% of the unpaid installment amount or $15

Pros

They offer a good service. It may take a little longer to receive your money than you may hope, but it is a small price to pay for a consolidation loan from the Lending Club. There are quite a few good online user reviews about this company, so we were a little suspicious. There are definitely a few fake reviews on the Internet that were written by their marketing department, but there are also quite a few genuine reviews. Our experience with them was quite pleasant, so it is likely that the positive user reviews are true in most cases.

[+] You can get a Lending Club loan in most states except West Virginia and Iowa
[+] They give out loans of up to $40,000
[+] The interest rates of competitive for people with excellent credit ratings
[+] Their website is fairly transparent when compared to others in the industry
[+] They are BBB accredited with an A+ rating

Cons

When you apply, it will hit your credit score a little more than it may do with the consolidation loan companies on this list. I am not sure why it is, but we seemed to lose three more points than we did when our research team applied for the other consolidation loans listed on our “Best personal loans for debt consolidation” review.

This loan is not suitable for people with time-sensitive debts because it takes a little longer than usual to receive your funds. They are going to take your origination fee from the loan funds they give you instead of adding it on as extra debt. Also, we received quite a few spam emails on the email account we set up to review this company, so one or more of their staff are probably selling people’s details.

[-] They take your origination fee from the total of your loan
[-] You will probably have to wait over a week to receive your funds
[-] They only allow loans of between 36 months and 60 months
[-] They are rather picky about who they lend to
[-] There is a check-processing fee

Fourth Place Winner For The Best Personal Loans For Debt Consolidation

Avant

Avant Personal LoansTheir aggressive marketing is almost misleading. I am being very careful with my words because in a legal sense, they are not misleading people, but I can see how people may become frustrated with them. One of the biggest annoyances is their marketing that says you have been approved for a loan when that is not the case at all. Even when you call up, they make it appear as if they know what they know and they are ready to go. Yet, once your application is completed, they ask us to wait to find out if our loan is approved. Excuse me! I have had an email and a customer service rep tell me that I am already approved, what is all this “finding out” business?

Recommended Credit Score
580

Amounts They Lend
$1,000 to $35,000

Loan Period Options
2 – 5 years

The APR Range
9.95%–42.50%

Required Origination Fee
0.95%–3.75%

Unsuccessful Payment Fee
$15 in most states

Late Payment Fee
$25 in most states

Pros

In most cases, they will approve you fairly quickly and the process is hassle free. If you have excellent credit, then you may earn their lower APR, which are quite reasonable. If you have a shaky credit rating, then you probably won’t receive the advertised APR. Most people who use Avant are happy with their experience, but Avant’s aggressive marketing has generated quite a few negative user reviews online.

[+] You may borrow as little as $1000 and as much as $35,000
[+] They can have the funds to you by the next business day
[+] Loans are available in 47 states
[+] You may also get a loan in the District of Columbia
[+] They are BBB accredited with an A+ rating

Cons

If you receive marketing material from them and calls from agents, then don’t believe everything you are told. They will tell you that you are eligible for a loan before they know anything. They just want to put you through the application process to get you on their books, there is no guarantee that they will give you a consolidation loan. Don’t believe things such as “Pre-screened offer.”

If you decide you do not want the money they put in your account, then they will still ask for an interest payment for repaying it. Make it clear that you want to return the loan and that you are still within the refusal period where you may opt out of having the loan. Get in touch with the correct authority if they still insist on you paying an interest fee for returning the money within the opt-out period. Look into your “Right to cancel” and “The cooling off period.”

[-] A good credit rating may still earn you an overly high APR
[-] The late statement of $25 is a little high
[-] The customer service department doesn’t answer certain questions
[-] Their overly aggressive marketing is sometimes misleading

Fifth Place Winner For The Best Personal Loans For Debt Consolidation

Marcus by Goldman Sachs

Marcus By Goldman Sachs logo

They are a company with a brand name that is 147 years old, so they get some credit for that. They do deserve their place on our best personal loans for debt consolidation article, but their limited online applications process is the reason why this lending company is so far down this list. Marcus do offer good rates, but some people are still paying 22.99% with their Marcus loans, so don’t get overexcited about how many online reviews say their rates are the best. On the other hand, you are more likely to get a lower APR if you manage to get a loan with Marcus than you will with Avant.

Recommended Credit Score
660

Amounts They Lend
$3,500 to $30,000

Loan Period Options
2 to 6 years

The APR Range
5.99%–22.99%

Required Origination Fee
0%

Unsuccessful Payment Fee
You have to call their customer service department

Late Payment Fee
You will be asked for the entire principle of your loan

Pros

The lack of an origination fee is fun, and even though they do charge higher rates for longer terms, their rates are still reasonable if you have a credit rating of 750 or more. You can complete some of the application online, but they will demand an inquiry phone call and a verification phone call too, which isn’t bad when you consider that you can have the money in as few as two days after you are approved for your loan.

[+] It only takes around two business days to receive your funds
[+] Low and reasonable fees
[+] Ideal for people who want a trusted brand name
[+] There is no origination fee
[+] Live personalized support via the phone

Cons

If you want a loan from Marcus by Goldman Sachs, then you have to set up an automatic payment. You are not given the option of making your monthly payments manually. There is a manual method, but they have purposefully made it as restrictive as possible. Their refusal to bring themselves up into the Internet age is one thing that bothers me about this company, the other is that they will happily demand all of the principle loan amount in one go if you miss a payment.

[-] They pressure you to set up an auto-payment
[-] They do not allow cosigners
[-] There is no way to apply online
[-] You have to call them to start your loan application
[-] Very limited online application options
[-] Fewer online support options than the others on this list
[-] Being approved can take over a week

woman having a think

Top Reasons Why You Shouldn’t Apply For A Consolidation Loan

As I have mentioned again and again, consolidation loans are great for people in credit card debt who are looking to pay off their credit card debt forever and then never use credit cards again for the rest of their lives. There is no other good reason for getting a consolidation loan. Here are a few downsides to getting a consolidation loan.

You May Be Risking Your Home

If you get a consolidation loan by using your house as collateral, then you run the risk of losing your home. You cannot be sure what will happen tomorrow.

Variable Rates Do Go Up

People seem to forget the fact that variable rates go up and down. You may find yourself with significantly more debt than you thought.

Consolidating Is Almost Always Costlier

Unless you are paying off your credit cards that have maxed out balances that paid down in months, then debt consolidation is usually costlier because it lengthens the life of your debt, which means you pay more interest in the long run.

Even Paying Off Credit Cards May Be Foolish

If you have enough of a credit score to get a credit card with a 0% balance transfer offer that runs for a few months, then you may pay down your credit card debt more quickly and with less interest than if you have a consolidation loan.

The IRS Is Very Interested In Below-Market Interest Rates

If you get a consolidation loan with a below-market interest rate, the IRS may be interested to see how much tax you would have paid for interest you would have paid a traditional lender.

Your Terrible Credit Rating May Hold You Back

The old saying is that banks only give money to people who don’t need it. If you are having financial trouble and your credit rating is terrible, then you may not be able to get a good rate for your loan. You may be able to lower your monthly payments, but the overall cost of your debt may increase dramatically.

What If You Pay-Off Plan Fails

There are plenty of people who pay off their credit cards with a consolidation loan and then go back to spending on their credit card win a few months. Doing so will dig you into a deeper hole than you are already in.

Conclusion – Pick The One Most Likely To Say Yes

If you are swimming in something such as credit card debt, and if you have a less-than-perfect credit rating, then maybe forget about hunting for the best rate and start thinking about which company is going to say yes and which is not. On that point, and backtracking a little, if a company says yes, but it is somebody like Avant and they are offering an APR of 45%, then strongly consider other options before saddling yourself with a high interest rate.

Put out your most immediate fire. For most people, the most immediate fire is the fact they have a maxed credit card where they are only paying the minimum.

Take a look at your consolidation loan options and ask yourself. If I get this loan, will I be in less debt in the next six months or in the next 12 months. If your answer is, “I’m not sure,” then maybe start looking for different options. There is always balance transfer credit cards that may help you start paying down your debt a little while you repair your credit rating so your options are a little sexier later down the line.

About The Author

Ash The Great

After a varied career in different industries from the hospitality industry to the financial consultancy industry, Ash now spends his days working as a professional writer.

1 Comment

  1. Julie Silva

    Great insight and informative! Thanks Ash!

    Reply

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