Our Premium Selection of Top Debt Consolidation Loans

Helping you make an informed decision, Consumer Opinion Guide has made a selection of debt consolidation loans based on their reviews. If you have several credit commitments and having a difficult time keeping up with repayments, debt consolidation loans might be a good idea for you.

Endeavoring to keep up with the Joneses or just get by in the world plunged into the increasing economic uncertainty, the nation has become awash in red ink. Consumer Opinion Guide looked at the numbers. In the spring of 2021, American household debt hit a record $14.6 trillion, according to the Federal Reserve. If you had to draw that check – it would read $14,600,000,000,000. A large number, huh? Unfortunately, debt has become a reality for many Americans. And for most – it is not sustainable. And after rearranging the budget failed to tip the scales in their favor, many sought to bring into play a more elaborate menu of viable actions they could take to lift the weight of consumer debt off their shoulders. One possible strategy was debt consolidation loans. Consumer Opinion Guide brings you a selection of debt consolidation loan options to help you decide.

What are debt consolidation loans?

In a nutshell, debt consolidation allows you to roll in multiple high-interest debts into a single, larger loan, usually with more favorable payoff terms. Consolidating everything into a single liability gives you a lower interest rate and a more predictable monthly payment. It’s important to note, however, that debt consolidation loans aren’t a silver bullet for debt problems. In other words, consolidation will not erase the original debt. But, with the right approach, it can simplify bill paying and save you thousands of dollars, interest payments, and headaches down the road.

What are the types of debt consolidation loans?

Consolidation loans are either “secured” or “unsecured.” When you take out a secured debt consolidation loan, it is backed by collateral such as your house or your car. For instance, if you get a mortgage loan, your house becomes security for payment. Unsecured loans, on the other hand, are backed only by your promise to repay. However, since they carry more risk for the lender, this type of loan typically has a higher interest rate. An example of unsecured loans is credit cards. There are different ways to consolidate credit card debt, and reaching a debt consolidation company is one of them.

Recommended Debt Consolidation Loans

• LightStream
• BestEgg
• PenFed Credit Union
• PayOff
• Discover

When debt consolidation loan is a smart move?

Consolidating debts only makes sense if borrowers have:

• Several high-interest loans. A small amount of debt that you can pay off within six months to a year isn’t at all worth the credit check and fees.
• Strong credit score. You are much more likely to qualify for a lower interest rate if your credit score has improved since taking out your other loans.
• Stable income. Do you have a cash flow that can consistently and comfortably cover your monthly debt service? If yes, then debt consolidation loans may be a good idea.
• Additional plans to improve their finances. Consolidation only makes sense if you have previously evaluated your habits and figured out a plan to get your finances under control.

What are the benefits of debt consolidation loans?

Taking out a consolidation loan:

• Streamlines your finances. You will have fewer monthly payments and interest rates to worry about.
• May expedite payoff. Accruing less interest allows you to make extra payments with the amount you save each month. This will help you pay off your debt earlier, and in doing so, save even more on interest in the long run.
• Might lower your interest rate. Debt consolidation loans work best if you’ve managed to improve your credit score since applying for your other loans. This way, you could qualify for a lower overall interest rate.
• Can improve your credit score. Ideally, the utilization rate in your credit report should be less than 30%.

How to choose a debt consolidation loan?

Before applying for a debt consolidation loan, it’s best to shop around a bit to make sure you find the one that best fits your needs. When comparing debt consolidation loans, make sure to look for low rates, flexible terms, as well as some consumer-friendly features (e.g., direct payment to creditors).