Thursday, May 23, 2024

Debt Consolidation Loans For Fair Credit

Don't Miss

Best Credit Union And For Quick Funding: First Tech Federal Credit Union

How To Get A Debt Consolidation Loan By Howard Dvorkin CPA
  • Time To Receive Loan:0 Days
  • Loan Amount:$500 – $50,000

First Tech Credit Union stands out for its wide range of loan amounts and low maximum APR. Borrowers can go from application to funding in as little as one business day, and payments can be sent directly to your creditors.

  • Low maximum APR of 18%

  • First payment can be deferred for 45 days

  • Same-day funding available

  • Must be a credit union member to apply

  • Lowest rates only available for 24-month term

First Tech Federal Credit Union was founded in 1952 and has physical branches in eight U.S. states. The credit union offers personal loans for debt consolidation across all 50 states, with terms that can be attractive for borrowers with a variety of needs.

Personal loans from First Tech range from as little as $500 up to as high as $50,000, and borrowers can choose from a 24- to an 84-month repayment period. The credit union also allows joint applications and co-signers.

It only takes a few minutes to complete an online application for a personal loan from First Tech Credit Union. From there, applicants who are approved can expect to receive funds in as little as one business day.

The maximum APR of 18% is relatively low . First Tech charges no origination fee or administration fee, and it has a fairly unique loan feature: You have the option to delay the first payment for 45 days. Borrowers should note that loans may accrue interest during that time.

When Is Debt Consolidation A Good Idea

For some, consolidating debts can be life-changing, while it isnt practical for others. Here are some general guidelines to help determine if its a good idea for you.

Debt consolidation is a good idea if:

  • You are overwhelmed by multiple monthly bills and cant reliably pay them off.
  • You have taken inventory of all your existing debt.
  • Your total debt isnt more than 40% of your gross income.
  • Your credit score is high enough to secure a low to 0% interest debt consolidation loan.
  • You have done all your research and understand what youre getting into.

Debt consolidation is not a good idea if:

  • Your credit rating is too low for you to secure a low-interest loan.
  • You are consolidating unsecured debt with a secured loan.
  • You are spending more than you earn or if you still havent solved your spending problems. Before taking action, you need to reassess your financial situation to ensure you can handle the new loan.
  • Your debt load is too small in that case, applying for debt consolidation often doesnt make sense.

Still not sure about debt consolidation? This video may give you a better idea.

Best For Excellent Credit : Freedomplus

  • Term: 2 to 5 years
  • Funding Time: 2+ days

For borrowers with excellent credit, FreedomPlus has some of the lowest rates weve seen on an unsecured personal loan, which can be used for debt consolidation. If you have a credit score of 720 or higher, you may be able to score an annual percentage rate as low as 7.99%, provided you qualify for at least two rate discounts. The rate discounts are given when you add a co-borrower who has sufficient income to support loan repayment, you use at least 50% of the loan to directly pay off creditors or you have at least $40,000 in retirement savings. FreedomPlus rewards borrowers for using the loan to directly pay off creditors, making it an attractive choice for debt consolidation.

Drawbacks: The smallest amount you can borrow is $7,500 . If you need less, we recommend considering SoFi or LightStream. Both of these debt consolidation lenders also look for borrowers with strong credit and offer low rates. FreedomPlus requires each applicant to have a phone call with the company to verify information in the application. For some applicants, this may be inconvenient. Loans are not available to residents of all states and some states have restrictions on loan amounts.

Don’t Miss: How To Pay Off Auto Loan Early

How To Apply For A Debt Consolidation

Before applying for a debt consolidation loan, you should consider the following:

: If you donât know what your credit score is, find out here. A good to excellent credit rating can help you obtain loans at competitive rates.

If your credit score is below 650, your chances of getting approved by a bank are slim.

Income: Lenders want to see that you are employed and have income sources that are sufficient to cover your monthly debt repayments. Your paystubs or a letter of employment are required during the application process.

Expect lenders to also look at your debt-to-income ratio.

Budgeting: Make a plan to pay off your debt consolidation loan as fast as possible by revamping your budget. If you are unable to make your scheduled payments, a debt consolidation loan will not solve your debt problem.

If debt consolidation looks like a good idea, visit your bank or one of the online loan lenders above to submit your application.

Before finalizing your loan application, ensure you understand the rate, fees, and terms of your contract.

How Do We Choose The Best Debt Consolidation Loans

Best Personal Loans For Debt Consolidation With Fair Credit

To select the best debt consolidation loans we took into consideration,

  • Lenders offering low APR Rates
  • A variety of loan repayment terms
  • Access to loan specialists
  • Full online application and fast funding
  • No application fees, origination fees, or prepayment penalties
  • Companies with customer service available through phone, chat, or email

Also Check: Why Mortgage Companies Sell Your Loan

Use A Debt Payoff Strategy

If you have some wiggle room in your monthly budget, a debt payoff strategy might work well for you. Do-it-yourself strategies like the debt snowball or debt avalanche method cause you to restructure the way you pay down your debt each month. In the end, each approach has the potential to save you time and money in the debt elimination process.

Do You Have To Close Credit Cards After Debt Consolidation

You can keep your credit cards open even after you take out a debt consolation loan. Ideally, you should use your loan to pay off credit card debt, then use credit cards only to pay for what you know you can afford to pay off at the end of each month. If you’re worried about racking up credit card debt all over again, look into how closing the account will impact your credit score.

You might decide to keep one or two cards open for emergencies or daily spending, and close the rest of your credit cards. Use a credit score simulator like to see how much your score might drop before you start closing accounts.

Recommended Reading: What Will My Student Loan Payment Be Calculator

How Long Does It Take To Get Approved For A Debt Consolidation Loan

The debt consolidation loan approval time varies based on the lender. Some online providers may approve your report within minutes. On the other hand, some bank branches take days or weeks to process your application.

After receiving approval for your unsecured installment loans, it may take up to a week to receive your loan proceeds. If your provider has agreed to pay your debts directly, you may have to wait for several weeks before your creditors process the payments.

*This article is provided by an advertiser and not necessarily written by a financial advisor. Investors should do their own research on products and services and contact a financial advisor before opening accounts or moving money. Individual results will vary. Foreign companies and investment opportunities may not provide the same safeguards as U.S. companies. Before engaging with a company, research the laws and the regulations around that service, and make certain the company is in compliance. For comprehensive guidance on U.S. investments and financial regulations, visit the Securities and Exchange Commission âs

Check Your Credit Scores

Best Debt Consolidation Loans of 2020: Find One That’s Right For You

First, take a close look at your credit scores. Knowing your scores could give you a better idea of which loans you cant qualify for and which ones you might. Also, reviewing your could help you identify any errors that might be hurting your scores. You may even see opportunities to improve your credit.

Recommended Reading: Can I Roll My Closing Costs Into My Va Loan

Ways To Enhance Your Credit

You can likely save a lot of money in interest if youre in a position to boost your credit from the “fair” range as much as “good” or even “excellent.” Start by requesting your credit score. Make sure there are no errors on it and identify any areas you see that may be improved.

Commit to paying all of your bills on time, each time. Your payment history is the No. 1 factor in managing your credit score, and if youve missed payments previously, itll make time to rebuild that history.

You can also improve your credit score if you are paying down credit card balances and avoiding applying for new credit.

Bestegg: An Option For Homeowners

BestEgg offers personal loans from $2,000 to $50,000. Terms are either three or five years and APRs range from 5.99% to 29.99%. Youll need a 640 credit score to qualify and 700 or above to get the best APR. BestEgg will pay your creditors directly.

The notable feature here is that BestEgg offers a secured loan. If you own a home, you can use it as collateral and get a better rate. If you dont pay, you could lose the home, so be sure you can.

BestEgg loans have two loan term options: three and five years. Theres no rate discount for autopay, and you will pay an origination fee.

You May Like: How To Calculate Pmi On Fha Loan

How We Chose The Best Debt Consolidation Loans

Lenders offer personal loans on different terms. Therefore, debt consolidation loans vary in amount, interest rates, and repayment terms. To choose the right debt consolidation loan, you need to pay attention to the following:

  • What personal loan rate is offered by different lenders
  • Do you meet the conditions set by a particular lender
  • What is the debt repayment period
  • Does the company you apply for services work on a legal basis
  • Will you be able to make monthly payments within a set period
  • What alternatives do you have, etc.

Having carefully considered all the above aspects, you will certainly decide on the choice of the best debt consolidation loan without any problems.

How We Chose These Lenders

When A Personal Loan Makes Sense For Debt Consolidation

This list does not represent the entire market. We began by analyzing the most commonly reviewed and searched-for debt consolidation loan rates. We only included lenders that offered loans marketed specifically as debt consolidation loans. However, its worth noting that other lenders offer personal loans that can be used for debt consolidation purposes too. Then, we cut out any lenders based on the following criteria:

  • We eliminated lenders that dont make it easy to find essential loan information like APRs, fees, minimum and maximum loan amounts, and available loan terms on their websites without entering an email or other personal information. Many lenders prominently display this information on their sites, making it easy to compare to other lenders. If you are in the market for a debt consolidation loan, wed recommend a transparent lender that doesnt require personal information for a rate comparison.
  • Our list only features direct lenders rather than intermediaries or loan marketplaces. We also ruled out credit unions, which have unique membership requirements and limit the number of people who could easily consider them for a loan. Credit unions can offer competitive rates to those who qualify check your local area or use a to compare rates.
  • Finally, we eliminated any lenders that did not have an A rating or higher with the Better Business Bureau.
  • Also Check: What Is Fha Hamp Loan Modification

    Improve Your Credit Score

    Improving credit scores isnt just a national trend these days, its becoming a national passion.

    • Pay your bills on time. You could see an improvement in six months if this was the only step you take.
    • Pay down the balance on all credit cards. Make some sort of payment even just the minimum on every card you own. Lower balances lead to higher scores.
    • Dont ask for any more credit cards. Seeking more credit when youre already far behind is a huge negative.
    • Check your credit report. There may be reporting errors that cost you. More than one third of consumers found at least one error on their credit report. You get one free from each of the three reporting agencies. Take advantage of it and see if it helps improve your score.

    What Credit Score Is Needed For A Consolidation Loan

    The credit score you need for a consolidation loan will vary from lender to lender. Some lenders, like Best Egg, will require that you have a higher credit score while lenders like LendingPoint will accept scores as low as 585. Keep in mind that the lower your score, the higher your APR rates may be.

    Don’t Miss: How To Calculate Annual Loan Payment

    Is Parachute Legitimate

    Yes, Parachute is a legitimate business that is listed by investor platforms such as PitchBook and CB Insights. It has a permanent office address in Toronto and has been backed by venture capital firm, Highline Beta. That said, since the company only launched in May 2022, it lacks a social media presence and does not have any online reviews.

    Upgrade 560 Min Score

    Debt consolidation loan

    Top pick for: debt consolidation loans for bad credit

    Qualifications Needed: Upgrade is a debt consolidation lender who works with bad credit borrowers to help them get their finances back on track by providing them with loans to pay off their high-interest credit cards and other debts they may have piling up. To qualify for an Upgrade personal consolidation loan, borrowers should have a minimum credit score of 560. If you are a bad credit borrower with a credit score of less than 560, you may still be able to qualify for a debt consolidation loan by using an asset as collateral to secure the loan. You can use your home, a vehicle, a retirement account, or any personal property that the lender deems valuable enough to secure the loan amount you need. Loans from Upgrade range from $1,000 to $50,000 and come with loan terms spanning from 3 to 7-years. APRs can range from 6.94% to 35.97%, and each loan may come with an origination fee that can range from 2.9% to 8%. If you are going to use the debt consolidation loan to pay your creditors on your own, then you can see the funds in your personal account in as little as one business day. If you would like Upgrade to pay your creditors on your behalf, then it can take up to 2-weeks before all the creditors are paid in full.


    Recommended Reading: Can You Switch From An Fha Loan To Conventional

    Pros And Cons Of Balance Transfers And Personal Loans

    Both balance transfers and personal loans have advantages and disadvantages. A personal loan can often offer higher loan amounts and a longer repayment term than a balance transfer, for example. However, youll have to pay interest on a personal loan, whereas some balance transfer credit cards waive interest charges for a year or longer.

    Get A Friend Or Relative To Co

    You might be able to find a relative or friend to co-sign a consolidation loan. This might be a good alternative for you if your credit score disqualifies you from a bank loan, but it puts the co-signer on the hook if you default. Co-signers should be wary when they agree to this arrangement and make sure all terms and conditions are spelled out in an agreement.

    Read Also: Would Student Loan Forgiveness Include Private Loans

    Can You Get A Debt Consolidation Loan With Bad Credit

    While it is possible, it will likely be difficult. Lenders usually view bad credit borrowers as high risk. While they may appreciate and acknowledge that you are trying to improve your financial well-being with a debt consolidation loan, they have to make sound financial decisions for their institution. In some cases, you may qualify for the loan but the terms may be unfavorable. With a high interest rate, a debt consolidation loan may not offer you much or any savings. If you qualify for a debt consolidation loan with bad credit you should check the terms and conditions as well as the interest rate.

    Best For No Fees: First Midwest Bank

    How to Set Up Zero
    • Time To Receive Loan:1 Days
    • Loan Amount:$5,000 – $35,000

    First Midwest loans have an exceptionally low APR range and relatively few fees. Even with the $150 documentation fee rolled in, rates can be as low as 5.23% and won’t exceed 12.99%.

    • No origination fee or late fee

    • Co-applicants are allowed

    • Only available in 24 states

    • $150 documentation fee

    As of early 2022, First Midwest Bank is in the final stages of a merger with Old National Bank, which is headquartered in Indiana. First Midwest currently has branches in four states with over 250 physical bank locations.

    The bank is outstanding when it comes to interest and feesâor the lack thereof âwith an APR range starting at 5.23% and maxing out at 12.99%. There’s no origination fee or late payment fee. Borrowers should be aware of the $150 documentation fee, however, which will be rolled into the loan’s APR.

    A wide range of loan amounts is available from First Midwest, from $5,000 to $35,000, with repayment terms up to seven years. Funds can be received in as little as 24 hours.

    First Midwest is also a certified personal loan lender through LendingTree, where it’s received 4.9/5 stars based on more than 4,000 reviews. It gets excellent ratings for its fees, closing costs, and customer service.

    Recommended Reading: How Soon Can Refinance Car Loan

    More articles

    Popular Articles