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5 Banks That Offer The Best Debt Consolidation Loans

Debt consolidation refers to the process of combining multiple debts into one debt. So with that, we are going to share with you the best debt consolidation loans as of this writing. This gives you an idea of where to go to get one based on what you need.

best consolidation loans options

Debt is inevitable. Do you agree?

According to Debt.org, America’s debt help organization, there are different types of debt in the United States.

For one, consumer debt was approaching $14-trillion after the second quarter of 2019. This data was from the New York Federal Reserve. Meanwhile, mortgage totaled to $9.4-trillion for the same period, which was higher compared to the year before that. Auto loans are at $1.3 trillion, while student loans escalated to $1.48 trillion. Lastly, for credit card loans, it has crossed the $1 trillion mark.  

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At once in our lives, we will borrow money from someone or from a well-trusted institution — may be for buying a home, a car, for school, or simply for home renovations or personal vacations. With so many loan options around, you will surely give in on one. Though, there are also some circumstances when even if you do not plan to borrow money, you just need to — for emergency reasons.

You see, there are so many reasons we get ourselves caught in debt.

But, don’t worry, borrowing money is not a bad thing at all. What makes it worse is when you do not pay off the funds you borrowed. Not paying on time is one of the factors that could leave you drowning in debt. When you don’t pay off on time, charges pile up until you cannot afford to pay off anymore.

In some cases, people borrow money for different reasons. And with a lot of loan obligations, it can get overwhelming sometimes.

So, what now? Do you just run away?

No, you should definitely not do that. One thing to be able to manage your debts is through debt consolidation.

Debt consolidation helps you manage your debts better. Through debt consolidation, you only pay to one debtor, which makes it easier and more convenient for you. The money loaned to you is basically used to pay off any existing debts. Needless to say, the loaned amount is payable depending on the terms agreed between you and the lender.

Now, there are a lot of financial institutions out there that offer debt consolidation loans. While it can be tempting to sign an offer immediately, we highly recommend you check your options first.

Please, even when you feel like you are desperate enough to get a loan, make sure to take time to research and compare, and to always settle for the best deal. After all, you do not want to commit a mistake in loaning money and then eventually realizing you cannot afford to pay off your monthly obligations, right?

So, with that, allow us to help you by sharing with you our list of the best debt consolidation loans as of this writing. These institutions, we bet, have the best deals so far in this aspect.

But first, here’s a quick information on what debt consolidation is all about.

WHAT DEBT CONSOLIDATION IS ALL ABOUT

According to The Economic Times, debt consolidation is the act of “combining more than one debt obligation into a new loan with a favorable term structure such as lower interest rate structure, tenure, etc.” The amount received from the new loan is used to settle all existing debts.

Many people use debt consolidation in paying off small debts in just one go by taking one big loan instead of paying them off one by one. By doing so, they get to save on interest, as well as other financial costs that go with small loans.

Basically, by getting a debt consolidation loan, the borrower or consumer will just make payments to one loan instead of multiple ones from different creditors.

However, just like other types of loans, debt consolidation loans have their limitations. It is not ideal rather it does go with debts that are tied up to an asset. So, yeah, basically debt consolidation loan is only applicable to unsecured debts.

Now, when planning to consolidate debt, make sure to check the total amount of any existing loans. Also, jot in the time period or tenure of loans. Once you have this information, apply for a consolidation loan. Once approved, immediate pay off the other loans, and stick to the payment cycle of the consolidated loan.

PROS AND CONS OF DEBT CONSOLIDATION LOANS

Just like any product or service out there, debt consolidation loans also comes with its share of pros and cons, which include the following:

PROS CONS
It can potentially reduce the overall interest rate, which in turn can help you save money. Some financial institutions’ origination fees could add up to the cost of the new loan.
It can help you finish off your debt faster. There is a tendency that interest rates are higher if you have a poor or fair credit score.
It makes debts more manageable by placing all debts in one.

Given the above-mentioned pros and cons, it is safe to say that debt consolidation loans make sense only if you want to simplify your bills, at the same time, you hope to get out of debt as soon as you can. Also, debt consolidation is an ideal option if you have good or excellent credit because you can take advantage of lower rates.

Otherwise, weigh other probable options in paying off your debts like a home equity line of credit (HELOC), credit card balance transfer, and more.

If you want to know more about the advantages and disadvantages of debt consolidation, here’s very good input from Michael Bovee. Click the play button below to watch the whole thing:

THE BEST DEBT CONSOLIDATION LOANS

So, now that you already know the whole concept of debt consolidation loans, let’s proceed to our list of best debt consolidation loans as of this writing.

As we have said earlier, always make time to compare one financial institution to another become making a decision where to sign a loan agreement. While it is tempting to sign immediately to the first bank or financial institution that offers you a consolidation loan, it is always best to check your options and look for the best possible deal.

So, having said that, we are going to share with you some of the best options out there. But first, here’s a quick look to give you an idea:

Lender APR (Fixed) Loan Amounts Terms Credit Score Requirement Receive Funds In
Marcus by Goldman Sachs 6.99%-19.99% $3,500-$40,000 36-72 months 660+ As little as 1 to 4 business days
Avant 9.95%-35.99% $2,000-$35,000 24-60 months 600+ At least 1 business day
LightStream 5.95%-19.99% with autopay $5,000-$100,000 24-84 months 680+ Same day or 1 business day
Discover 6.99%-24.99% $2,500-$35,000 36-84 months 680+  
SoFi 5.99%-19.96% with autopay $5,000-$100,000 24-84 months 680+  

This time around, let’s take a closer look at each of these financial institutions (in no particular order):

MARCUS BY GOLDMAN SACHS

Marcus by Goldman Sachs is one of the most popular financial institutions in the country. The bank is a division of the investment banking giant Goldman Sachs, which was formed back in 1869 by Marcus Goldman.

Marcus by Goldman Sachs offers a variety of banking products and services, which include online savings accounts, certificates of deposit (CDs), and personal loans.

To be honest, among all the financial institutions we listed that give the best debt consolidation loans, we got to say that Marcus is the best overall.

First thing, Marcus by Goldman Sachs does not charge any fee, which really attracts people to get a loan from them and avail their services. With regards to loans, the bank lets you borrow amounts from $3,500 up to $40,000.

Apart from the fact that Marcus does not charge late fees in addition to no origination fees, its rates are also relatively low as compared to its competitors. Marcus’s fixed annual percentage rate is 6.99% to 19.99%, which makes it really the best overall debt consolidation loan, and the best for providing low fees — at the list on this list.

What makes Marcus stand out more from the rest is that, should you make a mistake in making payments, the bank will not charge you for a fee.

The only downside we see with Marcus is that, for you to be able to qualify to take advantage of the bank’s really good deals, you got to have relatively good credit.

By the way, Marcus’s loan terms vary from 6 to 72 months (three to six years).

PROS

  • Does not charge any fees
  • Have a very easy application process
  • Provides adequate loan limit

CONS

  • Requires good credit standing
  • There’s a chance that APR may be lower

AVANT

Avant, LLC, formerly AvantCredit is a private company in the financial technology industry. The company was established in 2012 by three excellent minds namely, Albert “Al” Goldstein, John Sun, and Paul Zhang. Avant is based in Chicago, Illinois

Though Avant’s relationship with WebBank, it gets to offer personal loans to qualified borrowers. Since it was founded, the company has already issued more than 800,000 loans.

If you are a middle-income borrower without an excellent credit history, then Avant’s personal loans may be your perfect match. Avant’s personal loans’ rates begin at 9.95% and could go up to 35.99%, which are high enough as compared to other lenders out there.

But what made Avant on our list is the fact that borrowers with bad credits could potentially save money with the bank’s personal loan as compared to other high-rate financing options out there.

Avant let borrowers’ loan money from $2,000 up to $35,000. Unfortunately, Avant charges an administration fee of 4.75%. Meanwhile, loan terms range from 24 to 60 months (two to five years).

PROS

  • Does not charge prepayment penalties
  • Performs soft credit inquiry upon checking your loan rates and terms for the first time
  • Comes with an easy to use app where you can manage your account through your smartphone
  • Allows borrowers to borrow for as low as $2,000

CONS

  • APR is quite high compared to its competitors
  • They charge an administration fee of up to 4.75%, which comes directly out of your loan
  • Charges late fees as well as dishonest payment fees

LIGHTSTREAM

LightStream is the online lending division of SunTrust Bank. It specializes in creating competitive, and fixed-rate personal loans.

LightStream’s mission is to rewards borrowers with good or excellent credit history with low-cost personal loans through an easy, convenient, and virtually paperless application process.

Regarding the company’s personal loan per se, it offers rates that start from 5.95% (with autopay) on personal loans intended for debt consolidation. Rates vary depending on the amount of loan, as well as the duration of the loan.

Qualified borrowers can loan money at $5,000 and up, while larger loans range from $25,000 to $100,000. Fortunately, LightStream does not charge any fee, which makes it an affordable option to consolidate other high-interest debts that you have.

With LightStream, you could potentially get an APR between 5.95% and 19.99% that is if you have good to excellent credit, at the same time, you sign up for automatic payments.

Furthermore, LightStream gives a rate that’s 0.10 percentage points lower than the rate you’re offered from a competing lender provided the loan has the same terms.

One thing we found unique with LightStream is that they pay $100 for those who are not happy with their loans for some particular reasons.

PROS

  • Provides low APR on debt consolidation loans when signing up for autopay
  • Comes with a rate beat program
  • Same day funding in most cases
  • Does not charge any fees

CONS

  • Ideal for borrowers with good or excellent credits only
  • No pre-approvals, which means you have to let a hard inquiry of your credit report to check your rate
  • Minimum interest rate may increase to 6.99% if you borrow more than $50,000
  • Minimum amount that can be borrowed is quite high at $5,000

DISCOVER

Discover strives to be “the leading digital bank and payments services company.” Its mission is “to help people spend smarter, manage debt better, and save more to achieve a brighter financial future.”

Discover offers a variety of products and services, which include checking and savings accounts, personal loans, home equity loans, student loans,, and credit cards.

Compared to the ones on this list, we got to say that Discover runs second to Marcus. Just like Marcus, Discover allows borrowers to secure an APR between 6.99% and 24.99%. It also does not charge fees.

The only downside of Discover is that borrowers can only borrow money up to $35,000.

But you will surely not mind the limitations because what makes it an ideal choice is that it offers flexible payment terms, which includes personal loans that come with repayment times of up to seven years! That’s definitely a great deal especially to those with good credit.

PROS

  • Allows borrowers to loan at least $2,000
  • Offers flexible payment options
  • Offers seven-year repayment option
  • Charges no fees

CONS

  • Requires good credit to qualify
  • May take a day or more before you get the funds

SOFI

Social Finance, Inc. or more commonly known as SoFi, is an online personal finance company headquartered in San Francisco, California. It provides a variety of financial products and services, which include student loan refinancing, mortgages, personal loans, investing, and banking. 

Unlike the other financial institutions that offer best debt consolidation loans on our list that have borrowing limits of $35,000 to $40,000, SoFi stands out by offering a personal loan of up to $100,000.

Such loan comes with a fixed rate that ranges from 5.99% to 19.96% APR — that is if you sign up for autopay.

To qualify for SoFi’s personal loan, you need to have a relatively good credit history. For personal loans, SoFi requires at least $5,000 loan amount.

On a personal note, what we like about SoFi is that it offers a very unique feature — the unemployment protection feature, which basically means, should the borrower loses his or her job and it was not the person’s fault, SoFi allows you to take a break from paying your loan in three-month increments, for up to a total of 12 months. Although interest will still accrue, SoFi provides some flexibility while you are looking for a job or a new source of income to help pay off your debt.

PROS

  • Provides high loan amount limit of up to $100,000
  • Has an unemployment protection feature
  • Flexible loan terms of up to seven years

CONS

  • Requires at least $5,000 minimum loan amount (quite high compared to others)
  • Requires good credit history to qualify
  • Has an income requirement

FINAL THOUGHTS ON BEST CONSOLIDATION LOANS

As we have said earlier, making loans or borrowing money is inevitable. Sometimes, we encounter life events or we get into financial situations when the only option left is to borrow money.

Good thing there are a lot of lenders out there. You can choose from banks, credit unions, online lenders, and so much more.

While there is totally nothing wrong with borrowing money, sometimes it gets piled up and you end up drowning in debts. But you can avoid this situation through debt consolidation loans. This lets you pay off your existing loans through a new loan.

By the way, one very important reminder when borrowing money intended for debt consolidation, make sure that the new loan is cheaper or at a lower cost as compared to the other debts you currently have. Otherwise, it will defeat the purpose of consolidation loans.

So, have you decided yet where to loan money from based on our list?

Remember that as a responsible borrower, you should make time to look at the best consolidation loans out there to ensure that you land with the one that provides the best deal possible.

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