Most people have several kinds of debt, such as multiple credit cards, lines of credit (perhaps through your home equity), car loans, students loans, mortgages, and personal loans. Each separate account comes with a different interest rate, time frame, monthly due date, and monthly payment amount.
And if you have credit card debt or loans with a variable rate, you might find your monthly payment creeping higher and higher due to rising interest rates. You may feel like you’re losing track of what you owe and when and this can make it almost impossible to put a noticeable dent in your accumulating debt.
That’s where a debt consolidation loan comes in. You can significantly ease the burden of managing multiple monthly payments while ideally saving money along the way. Some lenders could likely make you a loan offer even if you have bad credit.
5 Best Debt Consolidation Loan Companies
Here are the top five lenders available to people with bad credit.
Features & Benefits
- See if you qualify with no obligation to sign-up
- High-level of company transparency
- Matches you with 4 trusted in-house partners
- Includes a multitude of free debt management tools and resources
DebtConsolidation.com is a site that provides users with information and tools related to consolidation loans. Their goal is to help people and families get out of debt – and stay out of debt.
They provide guides about bankruptcy, budgeting, credit debt, and debt management. All of their guides and resources focus on their mission to help ease the growing debt burden in the US.
Loan Amount$1,000 – $35,000
Loan Term3 to 72 months
Features & Benefits
- Multiple loan types available
- Fast loan decision
- Funds deposited as soon as you accept an offer
- Nationwide availability
You can get a loan through PersonalLoans.com with credit scores as low as 600. Each lender in their network offers its own unique interest rates.
The quick and easy online application only takes minutes. You’ll have a decision within a business day of submission.
Loan Amount$500 – $10,000
Loan Term3 – 60 months
APR5.99% – 35.99%
Features & Benefits
- No cost to check loan approval
- High approval rate despite credit history
- Funds available as soon as next business day
- Assisting people with bad credit since 1998
Bad Credit Loans is an online lender marketplace that allows you to connect with multiple lenders by filling out a single application. The service is 100% free.
Once you’re approved, your lender will provide you with the APR, loan fees, and other terms.
Read through the terms, compare all the offers you’ve received, and only accept the loan you’re most comfortable with. You are not obligated to accept the personal loan from any lenders that you are matched with.
Loan Amount$250 – $40,000
Features & Benefits
- Funds deposited directly into your account
- Get money as soon as the next business day
- Loans for poor credit or good credit
- More than 750,000 customers since 1998
CreditLoan works with many borrowers to find the best match for their situation. Although CreditLoan is not a direct lender, the platform can help you find a lender that is willing to work with you.
With CreditLoan, you might be able to secure a small loan to cover your needs. The company is generally successful in finding a lender match. With over 750,000 loans funded by CreditLoan, you have a great shot at finding the perfect match.
Loan Amount$2,000 – $35,000
Loan Term24 to 60 months
APRAs low as 9.95%
Features & Benefits
- Fast approval
- Funds available next business day
- Trusted by over 600,000 satisfied customers
- No prepayment fees
Avant is a direct lender that specializes in borrowers with bad credit. Loans are frequently used to consolidate debt, but Avant’s shorter-term loans also work for financial emergencies.
Most users report an average of a 12-point increase in their credit score within six months of taking out a loan. An installment loan that reports to the credit bureaus can be an effective way to repair your credit each month.
How do debt consolidation loans work?
Debt consolidation is combining high-interest debts into one personal loan with a lower interest rate. The idea is that you take several loans or credit card balances and roll them into a single, easy to manage monthly payment. In most cases, you’ll get a fixed interest rate with payments spread out over a predetermined period of time.
That’s good for you because it means that you’ll never have to wonder how much you owe each month. The payment amount stays the same and you have a concrete plan for getting out of debt and moving forward.
Plus, you could ideally save money if you get a better interest rate than your existing credit accounts. Whether you have a high-interest car payment, credit cards, or payday loans, consolidating them may be more affordable. That’s one of the most important things to consider when comparing loan offers: are you actually saving money in the long run?
A loan used to consolidate your debt can also help keep you organized. If you’re constantly making late payments because you can’t keep track of multiple due dates, you could benefit greatly from consolidating your debt.
Credit Card Consolidation
Credit card debt is one of the most popular types of debt to consolidate for borrowers today. There are a couple of reasons for this. First, interest rates are typically higher than what you find with loans, even with bad credit.
Second, a debt consolidation loan spreads your debt payments out. With a credit card, you’re using revolving credit. You just have to make a minimum payment each month, but in the meantime, your interest is accumulating more and more each month. Even if you don’t add any more debt to your credit card, your balance would still get higher each month if you only make the minimum payment.
If you keep spending more with your credit card, your debt could quickly spiral out of control. By consolidating, you can curb your spending and future debt accumulation compared to paying off your credit card little by little each month.
It may also improve your credit score because installment loans are viewed more favorably on your credit report than revolving debt like credit cards. Pair that with committing to making your monthly payments on time and you could quickly see your credit scores increase.
You ideally want to pay off your credit cards each month. However, it’s not always possible, especially if you’re just starting to get your finances back on track. Be sure to weigh the potential savings with the true cost of a loan, including origination fees and interest rates. Once you know you won’t pay extra to consolidate, you can quickly get yourself on a repayment schedule that doesn’t involve an ongoing cycle of minimum payments.
Student Loans Consolidation
More young Americans are burdened by student loans today than ever before. But even parents who helped finance their children’s college educations may be feeling the pull of too many payments each month.
How can debt consolidation alleviate your student loan debt?
There are a few different ways you can find relief. If you have multiple student loans out, you may still appreciate consolidating them all into a single loan. This can really simplify your monthly bills and help you avoid costly fees and a worsening credit score.
Moreover, many private student loans have variable rates. Depending on your loan agreement, your payment amount could change every month or every quarter, even if the repayment term is fixed. As interest rates rise, you could be surprised by how much you end up owing on one or more student loans.
Just remember, when you could consolidate your federal student loans for a potentially better interest rate, you will lose all the unique protections that come with these loans. That includes things like income-based repayment plans, loan forgiveness, and more.
Getting a Debt Consolidation Loan with Bad Credit
As you can see, there is a wide range of lenders available to borrowers with poor credit. You can still expect, however, higher interest rates than if you had a good credit score. That means it’s especially important for you to make sure you’re benefitting from debt consolidation.
For starters, check to see if you’ll save money over the life of the loan compared to your current payoff schedule for your debt. Maybe you get a slightly lower interest rate, but will you have to pay a heavy origination fee or have a much longer term? Both of those factors can affect the cost of your loan.
If you’re considering a loan because you can’t meet your financial obligations each month, then the total cost of the loan may be less significant to you. Perhaps extending the term of the loan to lighten your monthly load is worth it, even if you end up paying more over time.
Like all things, deciding the best way to pay off your debt is extremely personal. For many people, however, an unsecured personal loan can be an excellent solution.