Personal loans for debt consolidation are usually unsecured, meaning they don't require collateral. If you're struggling to get approved for an affordable unsecured debt consolidation loan, it's worth considering a secured loan. The vast majority of consolidation loans are unsecured. This means that the borrower does not back up the loan with a guarantee and no assets are at immediate risk if the borrower is unable to repay.
If you have a credit score above 660, you should be able to qualify for a personal loan with no opening fee. And some credit cards for balance transfers with scores over 700 have no balance transfer fees. Other loans and cards may charge fees that increase what you owe by between 1% and 8%, which could make debt consolidation a bad idea. A personal loan is the best way to consolidate debt for people who can't or don't want to use a home as collateral, but who still need more funds than a credit card could provide.
A good credit score (greater than 689 FICO), a low debt-to-income ratio, and a credit history of at least a few years will help you qualify in most cases. It can help you pay off your debts faster and lower your monthly payments, as well as saving you money on long-term interest. Debt relief services, commonly known as debt settlement companies, offer another way to deal with your debt if you can't qualify for a consolidation loan. Some common examples of unsecured loans are student loans, as well as most credit cards and personal loans.
Monthly income after paying other debts and living expenses should be enough to cover payments on the new personal loan. Non-profit credit counseling agencies offer free and low-cost services to people who are struggling to keep up with debt. LendingPoint has the lowest minimum credit score on this list, giving consumers with scores below 585 the opportunity to qualify for a debt consolidation loan. Many LendingClub applicants find out if they are approved for an unsecured personal loan within 24 hours.
If you don't have the income or credit score needed for a debt consolidation loan, consider taking these steps before formally applying. You'll be able to reduce your debt burden more quickly and create a good payment history, which will contribute to your score. However, FreedomPlus is the only one of the three that offers direct debt consolidation in the sense that it will send payments to your former creditors on your behalf, rather than giving you the money to disburse. The APR is the cost of credit as an annual rate and reflects both your interest rate and an opening fee of 0.99% to 5.99% of your loan amount, which will be deducted from any loan income you receive.
You can use WalletHub's loan calculator to estimate the amount you'll end up paying over the life of the loan.