An Unsecured Debt Consolidation Loan can help you manage multiple debts. This is also useful when the debts come with high rates. This type of loan does not require collateral such as a house, car, or any other asset before you can get it.
Generally, there are other methods of consolidating your debts apart from applying for a consolidation loan. Before deciding on the best-unsecured loan to manage your debt, there are some key points you should know. You will discover them as you read on.
Unsecured Debt Consolidation Loan
Owing debts can be very frustrating, it’s more frustrating when the debts are much. Different interests in different debt accounts can make it more difficult to make payments. With this, debt consolidation becomes an option.
This helps you pay off your debts faster and keep track of the amount of money you owe. With a debt consolidation loan, you can easily manage your debts. So, what is a Debt consolidation loan? Read on to learn more.
What is a Debt Consolidation Loan?
A debt consolidation loan is a type of loan that helps you refinance your debts. To know the amount of loan you need, you have to calculate all your existing debts. With this, you can apply for a loan from a bank, credit union, or online lender.
Once you are approved for the loan, you can use the funds to pay off your existing debts. You will be required to pay off the new loan over time usually with a fixed monthly payment.
As earlier discussed, when choosing a debt consolidation loan, there are several factors you should consider. Consider the loan type. You can apply for a personal loan, 401K loan, or credit card with 0% introductory APR.
Home equity loans require collateral hence, they are secured loans. Also, consider the loan terms and conditions and the interest rate and length before you apply for the loan
Unsecured Debt Consolidation Loan for Bad Credit
There are so many online lenders that offer unsecured loans to borrowers but it may be difficult to qualify for these loans with bad credit. Luckily, there are still some lenders that are willing to help individuals with less than perfect credit consolidate their debts. Some of these online lenders are discussed below.
One of the online lenders which you can get a consolidation loan from is LendingClub. Lending Club is a peer-to-peer company that matches investors with borrowers.
The loans offered by this online lender are accessible to most borrowers and once you are approved, you get the funds fast. If you don’t qualify for a loan, you can apply for one jointly. Also, note that you will be required to pay an origination.
During the application process, several factors will be considered. This includes your Credit income and history, debt to income ratio, the debt you owe, and lots more. Applicants must be at least 18 years old, have a bank account, and be U.S citizens or permanent residents.
Avant is another online platform that offers unsecured personal loans to individuals with less-than-perfect credit. When you qualify for a loan, you receive the funds as soon as the next business day. There is no prepayment penalty. With an Avant personal loan, you can consolidate your debt and cover all other small emergency expenses. However, this platform does not allow for joint borrowers and the loan offers are not available in all states.
If you need a Debt consolidation loan with fast funding, you should consider getting an Upstart loan. This platform offers loan options for borrowers with low credit scores. The minimum Annual Percentage Rate attached to these loans is also low and this gives you the opportunity of consolidating your debt at a lower rate. You will also be charged an origination fee when you get this loan.
Another wonderful platform where you can get a loan is PersonalLoans.com. The loans gotten through this platform can be used for debt consolidation, debt relief, credit card refinance, and lots more. When you apply for a loan on this platform, you will be offered a variety of lenders with competitive rates. The loans are secured and borrowers also enjoy fast funding.
CashUSA.com is an online platform that connects lenders with people that want loans with bad credit. Application for this loan can be done online in a few minutes. When you apply for a loan on this platform, different offers will be sent to you. If there is no lender that offers you a loan, you may receive other offers such as debt relief, credit repair, etc.
To qualify for a loan on this platform, you need to be at least 18 years of age. You also need to be a U.S Citizen or permanent resident and have a checking account in your name. Your work and income details will be required and you must be employed for at least 90 days.
What are the Risks Associated with Consolidating My Debts?
Although consolidation is a good idea for managing debts, there are some risks attached to it. Firstly, it impacts your credit score temporarily. If you miss payments on your new debt, it further affects your credit score. In addition to this, you stand a chance of not getting a low rate when compared to other debts. Lastly, you may lose any collateral you set up if you can’t make payments.
What Credit Score do I Need to get a Debt Consolidation Loan?
There is no fixed credit score for a debt consolidation loan. This is because it varies from lender to lender. However, you need a good to excellent credit score to qualify for a loan with good interest rates. Also, note that most lenders will carry out a credit check when you apply for a loan and this slightly impacts your score.
What are the Benefits of a Debt Consolidation Loan?
Debt consolidation loans can be beneficial when you want to save money on interest and channel your multiple debts into one monthly payment. It helps you pay off your debts faster and simplifies your monthly payments. When your monthly payments are simplified, it reduces missed payments.