Debt consolidation companies are lenders who offer debt consolidation loans to borrowers seeking to consolidate their debt.
Debt consolidation involves the merging of current debts into a single debt which is then cleared by a loan. This loan is provided by the debt consolidation company and is repayable according to the terms of the loan.
Choosing the right debt consolidation company is very important if you want to get out debt very fast. Debt consolidation should be a more economical and faster way to get out of debt but making the wrong choice would see you spending more and staying in debt for a longer period of time.
While there are numerous debt consolidation companies with various offers, there is only a handful of them that are good enough. These few companies can be considered by individuals who want to consolidate their debt.
These companies are not only reputable but have the best loan terms and features you can find among lenders in the industry.
This list should help you in your search for a good debt consolidation company as it contains various companies with different features that should meet the demands of every individual seeking a way out of debt.
SoFi is one of the best consolidation loan companies in the market today. Its initial focus was to offer student loan before it expanded its services to include debt consolidation loans. SoFi’s lender features are great if you have a good credit history and earn a high income.
To qualify for a loan from SoFi, you must have a minimum credit score of 680, however, credit scores of 700 or higher are better considered for loans.
SoFi offers loans from $5,000 to $100,000 to individuals based on a number of factors which include the annual income of the borrower, the debt-to-income ratio of the borrower and credit history.
Its interest rate is generally between 5.7% and 16.2%. Its interest rates are either fixed or variable depending on the loan terms and the qualifications of the borrower.
Fees and Penalties
Failing to meet up with the due date would attract fees and penalties. Some lenders would charge high fees as a penalty for defaulting payment which increases the total cost of the loan.
SoFi, on the other hand, doesn’t charge late fees for defaults in payment. Additionally, SoFi doesn’t charge origination fees, prepayment fee or loan processing fees which are quite common among many other lenders.
SoFi takes a step further by offering career development advice and hosting networking events for borrowers to help them make better choices when it comes to their finances.
All these features put together makes SoFi one of the best debt consolidation companies to consider if you want to consolidate your debt.
If you are looking for a reputable debt consolidation company that offers debt consolidation loans for credit card debts then PayOff is the company you are looking for. PayOff offers debt consolidation loans that be used to pay off only credit card debts.
Its loan terms are quite favorable compared to that of many other lenders. You will be required to have a minimum credit score of 640 which is lower than that required by SoFi. However, its loan amount is also lower.
Payoff’s loan amount is between $5,000 and $35,000 with a payment period of two to five years. Its interest rates can be tricky as you could be lucky to get a rate as low as $5.99% if you have a good credit score.
To qualify, you need to have a minimum credit history of 2 years, a minimum annual income of $40,000 and a debt-to-income ratio of less than 50%.
Fees and Penalties
Unlike SoFi, you would have to worry about fees if you decide to take a loan from Payoff.
Payoff charges origination fees which are 1% to 5% depending on the length of the loan. That means the longer the loan period, the higher the fees you are to pay.
You have to be cautious if you are planning to pay back your loan in anywhere longer than 3 years. You might end up spending more due to the consolidation than you would have if you had just stuck to your original payment plan.
When it comes to late fees, loan processing fees, Payoff becomes a favorable option as it doesn’t charge these fees.
Discover is one of those debt consolidation companies that focus on delivering quality rather than making as much as it can from borrowers when offering them debt consolidation loans.
It doesn’t just give debt consolidation loans it also offers debt consolidation and other financial counseling to help borrowers stay out of debt.
Discover loan terms are flexible and depend on the qualifications of the borrower. Discover offers the best interest rates to borrowers with the best credit scores. Basically, a credit score higher than 660 are good enough to qualify you for a loan from Discover.
Depending on your credit score, credit history and loan term, your interest rate could be as low as 6.99% or as high as 24.99%. Discover offer only fixed-rate interest loans, so you wouldn’t have to worry about increasing interest rates during the loan period.
Discover’s loan amount is between $2,500 to $35,000 with minimum and maximum repayment periods of 36 months and 84 months respectively.
Fees and Penalties
Discover doesn’t charge any fees for prepayment, loan processing or default in payment. Also, it doesn’t charge origination fees making it one of the best lenders for maximum savings.
Its loans do not require collateral that is if you are trying to pay up unsecured debts. Discover offers higher loan amounts for loans like home equity loan. With a home equity loan, you can get as high as $150,000 with low fixed interest rates.
Discover has a separate plan for student consolidation loans. It allows you to merge federal and private student loans into one loan. You can easily pay off the new loan which also has low fixed interest rates and zero fees.
4. Best Egg
Most debt consolidation companies listed above wouldn’t approve your loan application within a day even though you are qualified to receive a loan. For Discover, it might take up to a week.
This flaw makes Best Egg one of the best debt consolidation loan companies to go for if you require a loan as soon as possible. With Best Egg, you can get the funds within a day.
Best Egg offers 3 – 5-year loans for borrowers with a minimum credit score of 640. Its interest rate depends on a number of factors which include, the credit history, annual income and debt-to-income ratio of the borrower.
Generally, borrowers with a high credit would get the best interest rates. Its interest rates are fixed with APRs ranging from 5.99% to 29,99%. Its loan amount ranges from $2,000 to $35,000 which is similar to that offered by other lenders.
While Best Egg would be considered as one of the best debt consolidation companies due to its low fixed interest rates and low minimum credit score requirement, there are several features that would make it a wrong option to consider for many borrowers.
Fees and Penalties
When it comes to fees and penalties, Best Egg tops our list. Best Egg charges about 0.99% to 5.99% as its origination fee, however, the fee amount would be based on your credit. This charge would see you paying as low as $19.80 or as high as $2,096 as the origination fee.
This would easily make it difficult to settle for this debt consolidation company, unfortunately, its fees don’t stop there. Best Egg charges for late payment. This should be around $15 or more. Good news is that you wouldn’t be charged any prepayment and loan processing fees.
Best Egg is still a great choice because it is reputable and trusted. If you can deal with the late payment and origination fees, then you should go ahead to settle for this company.
With over $40 billion in loans funded, Lending Club is ranked as the largest loan marketplace. It has a good number of positive ratings from previous customers which could encourage any prospective borrower to try out the company.
However, Lending Club has its own flaws which every borrower must consider before settling for the company.
Its loan terms are quite similar to those offered by other lenders, but you will be dealing with higher interest rates of 6.95% to 35.89%.
Although Lending Club has a minimum credit score of 600 which should be good news for most borrowers, it is best to steer clear of this lender if you do not have a good credit profile.
To qualify for a loan you would need to have a minimum credit history of 3 years and a debt-to-income ratio of less than 40%. The loan amount ranges from $1,000 to $40,000 and is repayable within a period of 3 to 5 years depending on the loan terms you choose.
Fees and Penalties
Best Egg made our list with a lot of fees and penalties for origination and late payment. But with Lending Club you will be subjected to more fees that would easily make you reconsider settling for this company.
Its origination fees range from 1% to 6% of the loan amount. Late payment attracts a fee of 5% of the unpaid amount. You will be required to pay a personal-check procession fee. There are several other additional fees that will depend on the loan terms you opt for.
With Lending Club, there is no down payment or prepayment penalty. It is a favorable choice to consider if you can keep up with its fees, loan terms, and restrictions.
Marcus by Goldman Sachs is an online bank that provides debt consolidation loans to borrowers. This option is best for those who are unable to qualify for loans or keep up with the high rates charged by other banks.
There are many reasons why you should consider this debt consolidation company above all others. It has one of the best loan terms and repayment schedule amongst other lenders in our list making it a favorable option if you have a good credit profile.
With Marcus, you can get interest rates ranging from 6.99% to 24.99%. Your actual rate will depend on your credit score, credit history and the length of the loan.
When it comes to qualifications, Marcus is not as strict as most top lenders. However, you will require a minimum income of $40,000 and a minimum credit score of 660 to quality. Other necessary quantifications include a valid U.S bank account and tax ID.
The loan amount is between $3,500 to $40,000 with a minimum and maximum loan length of 36 and 72 months respectively.
Fees and Penalties
With Marcus, you wouldn’t have to worry about any kind of fees in the process of getting a loan or repaying a loan. Unlike many other lenders which charge a number of fees, Marcus is considered a fee-free lender.
You wouldn’t have to worry about late fees, origination fees, prepayment fees, loan processing fees or additional fees along the line. This makes Marcus one of the best lenders in the industry and also one of the top choices of many borrowers.
Our list consists of several debt consolidation companies with varying features to help you make the right choice. When making a choice, it is important to note their fund disbursement time.
It could take some companies up to a week to disburse the funds after the loan terms have been concluded. Lenders like Best Egg could have your funds disbursed to you within the same day while Marcus by Goldman Sachs would take 1 to 4 days to complete the process and send the funds to you.
There are many other features to consider like the loan terms and fees and penalties. All these have been outlined carefully to guide you when making your decision.