Generally, a bank or credit union offers debt consolidation loans for people with good to stellar credit. Debt consolidation loans for bad credit can be hard to find at a bank or credit union.
People with less than stellar credit can benefit in many ways from debt consolidation loans for bad credit. Having one affordable monthly payment for all your credit obligations is easier to manage.
Whether you’re contemplating bankruptcy or just trying to better manage your finances, a debt consolidation loan for bad credit may be a good option for you, and here is why.
Debt consolidation can save you money
Debt consolidation can speed up the repayment process. If you take a loan with a 4-year term, you have a pay-off date to look forward to. Consolidating credit card balances and loans into one single amount may help you obtain a lower interest rate. Over time you can save money in addition to simplifying your debt repayment. It can take you 20+ years to pay off credit cards assuming you’re only making the minimum payment.
Pay-off credit card debt sooner
Making minimum payments on credit cards could mean months or years before they’re paid off, all while accruing more interest than the initial principal (original balance). The longer you carry a balance on credit cards and loans, the more interest you’ll rack up on your debt. By consolidating your debts with a loan for bad credit, you’ll have a fixed interest rate, one monthly payment, one due date, and a fixed number of months to pay off the loan. You’ll be able to see the light at the end of the tunnel.
Online lenders offer debt consolidation loans
Online lenders offer debt consolidation loans for bad credit. With online lenders you can prequalify for a debt consolidation loan without impacting your FICO score. Unlike banks and credit unions, online lenders typically allow you to see what interest rate and amount you qualify for without a “hard inquiry” on your credit report. It’s a secure and fair process because you can determine whether you want to commit to the loan offer prior to signing the loan agreement.
With shaky credit, you can pretty much expect a higher rate for a debt consolidation loan for bad credit. Online lenders don’t charge fees or penalties for paying off your loan early. This is an important fact to keep in mind because paying off a high-interest loan early will save you money in accrued interest.
How to get a debt consolidation loan for bad credit
Below are the basic application steps to apply for debt consolidation loans for bad credit. This includes the pre-application process where it is determined how much you can qualify for, choosing your loan terms, finalizing your application with a hard inquiry and finally, repaying the loan.
1. Apply. The first step is typically the pre-approval application process. This involves a soft inquiry on your credit that produces the amount you can qualify for and a rate quote. Most lenders have requirements including:
- At least a FICO score of 500 to 680.
- Source of Income (Employment, Self-Employment, SSI or Benefits)
- Proof of identification
Your credit history will significantly influence the interest rate quoted for your debt consolidation loan. People with a lower FICO score are considered a higher risk and will likely be offered a higher interest rate.
2. Choose your loan terms. Your loan terms determine how much you will borrow and how long you will take to pay it back. Typical loan amounts range from $500 to $35,000, depending on your creditworthiness. Repayment terms are typically between 12 to 60 months. You will confirm your interest rate and any origination fees associated with the loan. Many online lenders do not charge an origination fee.
3. Finalize your application. When you finalize your application, you review and confirm the details of the loan, the lender will pull a “hard inquiry” on your credit report to verify your identity and creditworthiness. You will then electronically sign and date the loan agreement.
4. Final approval and loan disbursement. Once final approval occurs, you will go through the closing process and disbursement of funds. Most online lenders offer direct deposit which can be done by the next business day or you can opt to have a check mailed to you which may take 7-10 business days.
5. Repay. After you receive funds, you will begin repaying the loan according to the terms set forth in the agreement.
Top Debt Consolidation Loans for Bad Credit
[ultimate_info_table design_style=”design04″ color_scheme=”custom” color_txt_main=”#333333″ color_bg_highlight=”#ffffff” package_heading=”” icon_type=”custom” icon_img=”51244″ img_width=”180″ button_font_color=”#1b98e0″ heading_font_family=”font_family:Source Sans Pro|font_call:Source+Sans+Pro” heading_font_size=”desktop:28px;” features_font_family=”font_family:Source Sans Pro|font_call:Source+Sans+Pro” button_font_size=”desktop:24px;” features_font_size=”desktop:20px;”]OppLoans offers unsecured installment loans to customers with poor to fair credit. OppLoans will typically provide a credit approval decision instantly and fund the loan within 1 business day. Borrowers should have a minimum FICO Score of 350.
Loan Details
- Loan amounts up to $5,000
- OppLoans is a direct lender based in Chicago, IL
- No prepayment penalties
- Loan terms up to 36 months
- 350 minimum score required
- Applicants must have an active and valid checking account
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[ultimate_info_table design_style=”design04″ color_scheme=”custom” color_txt_main=”#333333″ color_bg_highlight=”#ffffff” package_heading=”” icon_type=”custom” icon_img=”51672″ img_width=”180″ button_font_color=”#1b98e0″ heading_font_family=”font_family:Source Sans Pro|font_call:Source+Sans+Pro” heading_font_size=”desktop:28px;” features_font_family=”font_family:Source Sans Pro|font_call:Source+Sans+Pro” button_font_size=”desktop:24px;” features_font_size=”desktop:20px;”]Upgrade offers a fixed APR personal loan product that ranges from 6.98% APR up to 35.89% APR. Loan amounts start at $1,000 and go up to $50,000. Borrowers should have a minimum FICO Score of 600.
Loan Details
- Loan amounts up to $50,000
- No prepayment penalties
- Loan terms from 36 – 60 months
- 600 minimum score required
- Payments reported to credit bureaus
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[ultimate_info_table design_style=”design04″ color_scheme=”custom” color_txt_main=”#333333″ color_bg_highlight=”#ffffff” package_heading=”” icon_type=”custom” icon_img=”48327″ img_width=”180″ button_font_color=”#1b98e0″ heading_font_family=”font_family:Source Sans Pro|font_call:Source+Sans+Pro” heading_font_size=”desktop:28px;” features_font_family=”font_family:Source Sans Pro|font_call:Source+Sans+Pro” button_font_size=”desktop:24px;” features_font_size=”desktop:20px;”]BadCreditLoans.org has been helping people with bad credit secure loans since 1998. Get an instant decision for loan amounts up to $5,000. Loans can be funded as soon as the next business day. Borrowers should have a minimum FICO Score of 500.
Loan Details
- Loan amounts up to $5,000
- No prepayment penalties
- Loan terms up to 48 months
- 500 minimum score required
- Payments reported to credit bureaus
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Conclusion
Always consider the pros and cons when making major financial moves. Consolidating debts into one lump payment may lower your monthly payments and provide financial relief. But, consider the discipline needed to refrain from incurring new debt. It could be tempting to create new debt when you see zero balances on credit cards and loans. Once your debts are paid off with a consolidation loan, don’t let your guard down and incur additional debt.
