The Best Debt Consolidation Loans

If you’re stuck in a cycle of high interest rate debt, it can feel like you’ll never get out. Even if you make monthly payments of more than the minimum required, double-digit interest rates can mean that extra money barely makes a dent.

Enter personal loans, which can allow you to consolidate debt — whether from credit cards, medical bills or even store financing for purchases like furniture or electronics — into one monthly payment with a lower interest rate.

In general, you’ll need a credit score of 600 or more to obtain one of these loans, though some lenders are flexible or consider other factors such as your employment. If you can reach that benchmark, a personal loan is worth a look if it will save you money on interest.

Here are NerdWallet’s picks for the best debt consolidation loans.

• Best debt consolidation loans overall
• Best customer experience
• Best for borrowers with good credit
• Best for borrowers with average credit
• Best for borrowers who have a co-signer

Best debt consolidation loans overall

These lenders have competitive interest rates, reasonable credit score requirements, and no origination fees.

The landscape of online personal loan issuers is broad, but two stand out from the pack: Earnest, which offers the lowest intro APR we’ve seen, repayment flexibility that is unmatched — including the ability to set your own payment amount and change it at any time — and absolutely no origination fees. Its bar for borrower qualifications is on the high side, though it’s willing to consider factors other than credit score: Earnest has a comprehensive application process that includes a look at the borrower’s bank account balances and education.

Second to Earnest only slightly is SoFi, which has rates starting a bit higher but offers access to large loan amounts — up to $100,000 — and extended repayment terms to go with them. The company’s minimum credit score is within reach for many borrowers, and loans are funded within a few days.

APR: 4.25% to 9.25% fixed Loan amount: $2,000 to $50,000 Loan terms: 1, 2 and 3 years Minimum credit score: No minimum. Earnest considers credit in conjunction with alternative factors, like bank account balances, education and earning potential. Time to funding: One business day once approved Fees: None, including for late payments or insufficient funds. The company will instead work with you to adjust your payment amount if needed.

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APR: 5.50% to 9.99% fixed; variable rates that start at 4.04% and are capped at 10.99% Loan amount: $5,000 to $100,000 Loan terms: 3, 5 and 7 years Minimum credit score: 680 Time to funding: A few business days Fees: No origination fee. Late fee is the lesser of 4% of payment due or $5.

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Best customer experience

These lenders go above and beyond to put borrowers first.

If you’re looking for excellent customer service and perhaps a little hand-holding, Payoff and Earnest may be the lenders for you.

Payoff, which only offers credit card consolidation loans, goes out of its way to help borrowers who aren’t yet qualified for a loan with its free Lift program. Lift offers tools, training and advice to help people improve their credit scores, reduce their spending, and pay off debt faster. Earnest makes the list (again) for what it calls its “radical repayment flexibility.” Because the lender services its own loans rather than outsourcing, borrowers are able to set their own payment amount, easily adjust that amount at any time, change payment due dates and make extra payments, all from the lender’s dashboard. They can also take advantage of the company’s Precision Pricing, which allows borrowers to select irregular payment terms — like one year and seven months — and benefit from the lower interest rates that go with them.

APR: 8% to 22% fixed Loan amount: $5,000 to $25,000 Loan terms: 2 to 5 years Minimum credit score: 660 Time to funding: 2 to 5 business days Fees: Payoff charges a “Payoff Platform Fee” that ranges from 2% to 5% of the loan amount, depending on term, included in APR. No late fee.

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APR: 4.25% to 9.25% fixed Loan amount: $2,000 to $50,000 Loan terms: 1, 2 and 3 years Minimum credit score: No minimum. Earnest considers credit in conjunction with alternative factors, like bank account balances, education and earning potential. Time to funding: One business day once approved Fees: None, including for late payments or insufficient funds. The company will instead work with you to adjust your payment amount.

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Best for borrowers with good credit

These lenders have competitive interest rates and terms for borrowers who have strong credit scores.

If you have good to excellent credit, you’ll have your pick of lenders, but two leaders in the peer-to-peer space, Prosper and Lending Club, are neck and neck here, offering superior interest rates and loan terms for borrowers with high credit scores. We’d also add SoFi, mentioned above, as a runner up. That lender caters to well-qualified borrowers, with one of the highest minimum credit scores we’ve seen and extended loan amounts up to $100,000.

Just a note here: Borrowers with excellent credit should also consider a 0% credit card balance transfer, if you can pay off the transferred debt within the introductory period (generally 12 to 18 months).

APR: 5.99% to 36.00% fixed Loan amount: $2,000 to $35,000 Loan terms: 3 and 5 years Minimum credit score: 640 Time to funding: 2 to 8 business days after loan is approved Fees: 1% to 5% origination fee, included in APR. Late fee is the greater of 5% of payment due or $15.

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APR: 5.99% to 32.99% fixed Loan amount: $1,000 to $35,000 Loan terms: 2 to 5 years Minimum credit score: 600 Time to funding: Within seven days Fees: 1% to 5% origination fee, included in APR. Late fee is the greater of 5% of payment due or $15.

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Best for borrowers with average credit

These lenders offer lower-than-average credit score minimums along with competitive interest rates.

Low credit scores and high interest rates go hand and hand, but Upstart does their best to offer competitive interest rates with a low minimum credit score requirement. Upstart’s APRs seem to be more competitive for low credit score borrowers than other peer-to-peer lenders.

APR: 4.67% to 29.99% fixed Loan amount: $3,000 to $35,000 Loan terms: 3 years Minimum credit score: 640 Time to funding: Next business day Fees: 1% to 6% loan origination fee depending on loan grade, included in APR. Late fee is the greater of 5% of the payment due or $15.

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Best for borrowers who have a co-signer

One lender stands out for offering loans to people who need a little help from friends.

Many personal loan issuers don’t allow co-signers — it’s called a personal loan, after all — but one company, Vouch, has built its business around having borrowers back their loans not with co-signers, but with “sponsors.” It’s a good option for borrowers who need a debt consolidation loan but have bad credit: Sponsors agree to pay Vouch a set amount if the borrower defaults on the loan; borrowers must have at least one sponsor to be approved, in addition to meeting credit criteria (which, as you might expect, is more lenient than that of other lenders). Additional sponsors may help lower the loan’s interest rate or increase the amount available to borrow. It’s an interesting approach, one that gives borrowers who have a strong network of people willing to support them a leg up.

APR: 7.35% to 29.99% fixed Loan amount: $500 to $15,000 Loan terms: 1 to 3 years Minimum credit score: 600 for borrower; 580 for a qualified sponsor. Time to funding: Applications are approved within 1 to 2 business days, with loans funded 1 to 2 days after that. Fees: 1% to 5% origination fee, included in APR. Late fee is 5% of payment due, with minimum of $15.

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Arielle O’Shea is a staff writer at NerdWallet, a personal finance website. Email: aoshea@nerdwallet.com. Twitter: @arioshea.

from NerdWallet Credit Card Blog
http://www.nerdwallet.com/blog/loans/debt-consolidation-loans/