With credit card interest rates at all-time highs and American consumer debt at record levels, many people find themselves struggling to pay off mounting bills across multiple accounts every month. Making payments while trying to chip away at balances on cards charging 20% APR or more becomes an endless source of stress.
This is where debt consolidation loans can provide some much-needed relief. Debt consolidation allows you to roll multiple debts into a single new loan, ideally with a lower interest rate. This simplifies the payoff process with just one monthly payment instead of keeping track of balances across many credit cards or other unsecured debts.
One lender that specializes in personal loans for debt consolidation is LightStream. With rates starting as low as 5.74% APR and no fees, LightStream offers an attractive way to consolidate and save money compared to high-interest credit card debt. But how does LightStream work, and is it the right choice for your debt consolidation needs? Let’s take an in-depth look.
What is LightStream?
LightStream is the online lending division of SunTrust Bank, one of the largest banks in the United States. The LightStream has been operating since 2004 and is a wholly owned subsidiary of SunTrust, which is now owned by Truist after a 2019 merger with BB&T.
LightStream focuses specifically on unsecured personal instalment loans from $5,000 up to $100,000. These loans allow borrowers to receive a lump-sum of cash, which can then be used for any purpose including consolidating credit card balances or other unsecured debts into one place.
Some key attributes that make LightStream a compelling debt consolidation option:
- Their direct lending model, LightStream offers very competitive interest rates to borrowers. Rates start at just 5.74% APR with Autopay.
- LightStream loans have no origination fees, prepayment penalties, or any hidden costs. The loan amount you apply for is exactly what you get.
- Applications can be completed online in minutes, with funds deposited in your account as soon as the next business day after approval.
- Pick any loan repayment term between 24 and 144 months (12 years). This allows you to tailor payments to fit your budget.
- With an easy online application and direct funding, LightStream makes getting a debt consolidation loan painless.
What Makes LightStream Loans Different?
There are a few unique advantages that set LightStream debt consolidation loans apart from other lenders:
- Low Rates for All
What makes LightStream special is that they offer their absolute lowest rates to all qualified borrowers, regardless of credit score. So even applicants with “good credit” can get their best interest rates.
- No Origination Fees
Many lenders tack on upfront fees of 1-6% of the total loan amount. With LightStream, the loan amount you apply for and are approved for is the full amount you receive. There are no cut-offs or hidden costs.
- You Pick the Terms
Having the flexibility to select any loan repayment term from 24 to 144 months is valuable. It allows you to tailor monthly payments and total interest paid to your needs.
- Next-Day Funding
Once approved, LightStream issues funds on the very next business day in most cases. The efficiency of their online lending process means you get money fast.
- Use Funds However You Want
There are no restrictions on how to use a LightStream personal loan. Pay off credit card debt, consolidate other loans, or anything in between.
What Credit Score is Needed for LightStream?
LightStream does not advertise or publish any official minimum credit score requirement. They make it clear that having excellent credit is not required, but good to great credit is needed for the best rates.
Based on anecdotal research from applicants, here are some general LightStream credit guidelines:
- Credit scores of 720+ receive the very lowest rates down to 5.74% APR. 720 is a good threshold for ideal rates.
- Scores between 660 to 719 will qualify for a loan but will have higher rates.
- You can be approved with scores in the low to mid 600s but will pay higher interest rates on the loan.
- Scores under 600 will generally not qualify for LightStream.
Along with reviewing your credit report and score, LightStream will want to see a stable income sufficient to make the monthly payments. Providing evidence of employment income or assets to repay the loan is required.
Note that, LightStream loans are targeted to those with prime to super prime credit. However having pristine 850 scores is not necessary to get approved and consolidate debt at reasonable rates.
The LightStream Loan Application Process
One of the easiest parts of LightStream is how simple and fast the loan application process is:
- You start by answering a few basic questions to view customized interest rates for your scenario. No impact on your credit.
- Complete the online application at your convenience in about 15 minutes.
- LightStream checks employment and income info. No need to submit pay stubs or tax returns.
- Approvals come instantly for most borrowers. You find out if you are accepted right away.
- After signing your loan agreement electronically, LightStream deposits money directly into your bank account as soon as the next business day.
That’s it! For such an important financial product, LightStream makes getting a debt consolidation loan incredibly easy and fast from application to funding.
How to Use a LightStream Loan for Debt Consolidation
Once approved and you have the loan money deposited, it’s time to put it to work consolidating debt:
- List out all debts you want to consolidate and target payoff order. Start with the highest interest accounts first.
- To close each account, contact them for payoff amounts and where to send payment.
- Use your LightStream loan funds to pay off credit cards and other unsecured debts. Make sure accounts reflect a $0 balance afterwards.
- Going forward you now have just one manageable monthly loan payment to focus on.
- Be sure to make payments on time and pay more than the minimum when possible to pay down the principal faster.
The lower interest rate of a LightStream loan compared to credit cards will allow more of your payment to go toward paying down the actual debt each month rather than just interest. This saves money over time.
Pros of Using LightStream for Debt Consolidation
There are many good reasons to consider using a LightStream personal loan to consolidate debt:
- Lower Interest Rates
Consolidating credit cards that charge 15-25% APR or higher to a LightStream loan with rates from 5-12% APR will substantially lower interest costs. This alone can save thousands in the long run.
- One Monthly Payment
Instead of tracking 5, 10 or more minimum payments across different credit cards and loans, you’ll have a single predictable instalment payment each month. Much easier to budget.
- Simplifies Payoff Process
No more trying to determine which card to pay down first while juggling so many different APRs, balances, and due dates. Everything is merged into one loan with LightStream.
- May Improve Credit
Consolidating credit card balances can lower your overall credit utilization, which is good for your credit score as long as you avoid maxing out the LightStream loan.
- Fixed Repayment Term
Having a set end date when the LightStream loan will be fully paid off is motivating. Gives you a clear payoff target rather than revolving credit card debt.
Cons of Using LightStream for Debt Consolidation
While there are many benefits, some potential drawbacks to think through include:
- Paying Interest Over a Long Period
While rates are lower than credit cards, total interest paid increases for longer repayment terms like 5+ years.
- Closing Credit Accounts
Consolidating by closing credit card accounts can decrease your available credit ratio which can negatively impact credit scores until loans are paid off.
- Taking On More Debt
Some may see debt consolidation as a danger of taking on even more debt when the ideal approach is to pay off debts entirely.
- Qualifications
Only applicants with good/excellent credit will qualify. Those with poor credit scores may not be approved.
- Draw Period Temptation
Having access to a large lump-sum cash amount can lead some borrowers back into bad habits rather than sticking to their payoff plan.
Overall, the savings in time, headache, and interest will outweigh short-term credit score drops for most prime borrowers. But weigh the pros and cons carefully for your unique situation.
Conclusion
Debt consolidation with a LightStream personal loan offers an affordable way to simplify debt payoff, lower interest costs, and take control of your finances. If you have good credit, need to consolidate high-interest credit cards or loan balances, and want a simple online solution, LightStream is an excellent option worth exploring further.
Visit the LightStream website to check your potential interest rates and learn more with no impact on your credit score. Then you can decide if consolidating with LightStream is right for your debt payoff needs.
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