The Best Debt Consolidation Loans Companies
Debt consolidation loans and programs abound today, but they are not without controversy. On the one hand, it is a reliable and relatively easy way for many people in debt to get out of their financial deficit at last. On the other hand, if you’re not careful, a debt consolidation loan can land you in hotter water than you were in previously.
How should you know if a debt consolidation loan is the right choice for you? And if it is, which one should you choose? Here is all the information you'll need to know about debt consolidation loans, what they are, how they work, and when this is the best option to help you get out of debt.
When to Consider Debt Consolidation
Debt consolidation is a good solution for some people, but it’s not for everyone. You may want to consider this type of program if:
You’re tired of being in debt
The most obvious reason to consider a debt consolidation loan is if you are tired of being trapped under the weight of debt. Often, people can into debt through no fault of their own or because of responsible decisions that simply required more funding than they had at the time. Going to college, for example, is a costly venture that will land you in tens of thousands of dollars worth of debt. But nobody would call you irresponsible for taking out a student loan.
If this is your situation, i.e., you’re in debt but not because of frivolous spending habits, then taking out a debt consolidation loan or program is a good option for you. You’re ready to pay off your loan responsibly each month, you have the funds to make the monthly payments, and you aren’t going to use the debt-free status as an excuse to go on a wild and care-free shopping spree. You’re the ideal candidate for debt consolidation.
You want to improve your credit score
Having less debt will significantly impact your credit score for the better. You can even boost your credit score by as much as 21 points just from taking out a loan and consolidating your debt payments into one.
You want to lower your interest payments
Sometimes, applying for a debt consolidation loan can lower your interest rate and overall loan payments. If the personal loan you get comes with a lower interest rate than the one you’re currently paying, then you’ll end up saving potentially thousands on your debt payments overall.
You want help with money management
A debt consolidation program is also a good idea if you are having a hard time juggling the various debt payments each month. Frequently, people fall further into debt simply because they can’t get their finances organized enough to make multiple payments required by multiple debtors each month. Having a single payment to make each month is significantly more manageable than juggling multiple payments, making debt consolidation an easier solution to handle.
When Not to Consider Debt Consolidation
On the other hand, if you only have a minimal amount of debt that you are managing responsibly, debt consolidation may not be necessary for you. It is also not a good idea if you don't intend to change your spending habits. Be honest with yourself. If you landed in debt because you frequently spent beyond your means AND you have no intention of changing your derelict ways, then debt consolidation will do you more harm than good.
Finally, debt consolidation programs are not a good option for you if you are already paying the lowest interest rates you could possibly get. The beauty of taking out a personal loan to manage your debt consolidation is that you are likely to get a lower APR or interest rate for your loan. This will, in turn, save you money per month or overall. If you won’t get a lower rate, then there is not much benefit to taking out a debt consolidation loan.
Top Three Debt Consolidation Lenders
If you've concluded that debt consolidation is right for you, you might be wondering where to find reliable debt consolidation loans. It can be tough to narrow down the choices without doing a lot of leg work. Fortunately, we've done a lot of that for you. Here are some of the top debt consolidation lenders in the industry today:
Best Debt Consolidation Loans
Best for large debts
Get debt-free without bankruptcy
Best for unsecured debt