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Personal Loans

Santander Personal Loan Review

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been previewed, commissioned or otherwise endorsed by any of our network partners.

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APR

6.99%
To
16.99%

Credit Req.

Not specified

Terms

24 to 60

months

Origination Fee

No origination fee

SEE OFFERS Secured

on LendingTree’s secure website

Advertiser Disclosure

Santander’s personal loan might be a great option for you if you want to work with a traditional brick-and-mortar bank. ... Read More


To get a Personal Loan (“Loan”) with the Annual Percentage Rate (APR) shown, you must reside in MA, MD, RI, CT, NH, NJ, PA, NY,DE, ME, VT, or DC, meet our highest credit standards, and use automatic payment (ePay) from any Santander Bank N.A. checking account. Fixed loan APRs (with ePay) range from 6.99% to 16.99%, depending on your creditworthiness. The minimum Loan amount is $5,000 and the maximum is $50,000. The APR on the Loan will increase by 0.25 percentage points and the payment will increase, if ePay is not elected or is discontinued. APRs and other terms are accurate as of 10/01/2018 and may change thereafter. A Santander checking account is not required to qualify for a Loan, but use of ePay from a Santander checking account will result in an interest rate discount. Personal Loans cannot be used to finance post-secondary educational expenses. Loan accounts are subject to approval.

Santander personal loan details
 

Fees and penalties

  • Terms: Terms range from 24 to 60 months.
  • APR range: Loan APRs range from 6.99% to 16.99%. If you do not elect for ePay, your APR will be 0.25% higher.
  • Loan amounts: You can borrow a minimum of $5,000 and a maximum of $50,000.
  • Origination fee: There is no origination fee for Santander personal loans.
  • Prepayment fee: Santander has no prepayment penalties for personal loans.
  • Other fees: There are no application or annual fees.

Eligibility requirements

Although Santander doesn’t provide explicit credit requirements to qualify for a personal loan, it does state that borrowers must meet its “highest credit standards” — however, there is no specific credit score requirement listed.

When you apply, Santander will review your score and your debt-to-income ratio, among other factors, and your APR will vary according to your creditworthiness. You do not have to have a Santander checking account to be eligible for a personal loan, but without one, you won’t qualify for the APR discount.

Santander also requires that you live in one of the following states: Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island and Vermont, as well as Washington, D.C.

Applying for a personal loan from Santander

You can apply for a Santander personal loan online. If you choose the latter, expect the process to take 10 to 15 minutes. You’ll need the following information to complete your application:

  • Social Security number
  • Employment history
  • Income information

Santander allows co-applicants on personal loans. You’ll be asked to provide that person’s information as well.

Pros and cons of a Santander personal loan

Pros:

Cons:

  • Low rates. Santander has lower starting rates than many lenders, although those rates are reserved for borrowers with the highest credit scores.
  • Minimal fees. There is no origination fee. The lender also doesn't charge application, prepayment or annual fees for personal loans.
  • Term options. With terms ranging from 24 to 60 months, you have the option to pay your loan off quickly or over a longer period.
  • Limited to borrowers in certain states. Santander only serves personal loan customers in states that have — or are near — brick-and-mortar branches. If you live outside of the Northeast or Mid-Atlantic, you likely won’t qualify.

Who’s the best fit for a Santander personal loan

If you are looking for a lender you can meet with face-to-face, Santander is one to consider. Thanks to the residency requirement to apply for a personal loan, you won’t be far from a bank branch if you’re actually eligible for its services.

Santander’s loan terms (24 to 60 months) give borrowers a lot of flexibility to pay off their loans quickly or reduce their monthly payments by extending the term out longer. Many personal loans have terms of 36 or 60 months, so if you’re looking to minimize the time you carry this debt, Santander might be a good option for you.

Santander has reasonable APRs compared to other lenders — its highest APR is set at 16.99% with the ePay discount — though you will need a good credit history to qualify. These loans are also good for those who want to avoid fees. Assuming you make your payments on time, you are unlikely to owe anything extra.

Santander consumer reviews

Santander has an A+ rating from the Better Business Bureau but has received mixed reviews from borrowers on LendingTree (MagnifyMoney’s parent company), granted there are few reviews to glean information from.

One consumer review praises the bank’s customer service, while another notes that the loan application process was slow and the customer support poor.

Keep in mind that Santander personal loans are only available to borrowers in a few states. One advantage to working with Santander is that a brick-and-mortar bank won’t be far away, so if you have customer service concerns, you can meet with an employee face-to-face.

Santander FAQ

Santander offers personal loans as well as personal lines of credit. The bank also finances auto and home loans.

No, but you’ll get an interest rate discount if you make loan payments using a connected Santander account.

No, Santander personal loans are unsecured, which means you don’t have to put up assets to receive funds.

There are very few limits on how you can use the cash from your personal loan. Santander doesn’t allow you to finance post-secondary educational expenses, but home improvement projects, vacation cost, debt consolidation and other areas are fair game.

One benefit of a personal loan (versus a line of credit) is that you’ll have consistent and predictable monthly payments. Of course, if you choose to pay your loan off more quickly, you may pay more in some months. Santander doesn’t charge a prepayment penalty, so paying your loan off early could save you some interest.

Santander may charge a fee for late payments.

If you don’t meet Santander’s residency or credit requirements, not to worry. There are other lenders that might work for you.

Alternative personal loan options

Upgrade

Upgrade
APR

7.99%
To
35.97%

Credit Req.

620

Minimum Credit Score

Terms

36 or 60

months

Origination Fee

2.90% - 8.00%

SEE OFFERS Secured

on LendingTree’s secure website

Advertiser Disclosure

Upgrade is an online lender that offers fairly priced personal loans for a term of either 36 or 60 months.... Read More


Personal loans made through Upgrade feature APRs of 7.99%-35.97%. All personal loans have a 2.9% to 8% origination fee, which is deducted from the loan proceeds. Lowest rates require Autopay and paying off a portion of existing debt directly. For example, if you receive a $10,000 loan with a 36-month term and a 17.98% APR (which includes a 14.32% yearly interest rate and a 5% one-time origination fee), you would receive $9,500 in your account and would have a required monthly payment of $343.33. Over the life of the loan, your payments would total $12,359.97. The APR on your loan may be higher or lower and your loan offers may not have multiple term lengths available. Actual rate depends on credit score, credit usage history, loan term, and other factors. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. There is no fee or penalty for repaying a loan early. Accept your loan offer and your funds will be sent to your bank or designated account within one (1) business day of clearing necessary verifications. Availability of the funds is dependent on how quickly your bank processes the transaction. From the time of approval, funds should be available within four (4) business days. Funds sent directly to pay off your creditors may take up to 2 weeks to clear, depending on the creditor. Personal loans issued by Upgrade's lending partners. Information on Upgrade's lending partners can be found at https://www.upgrade.com/lending-partners/.

If you need your loan quickly, want to check rates without impacting your credit, or need to borrow less than Santander’s minimum loan amount, online lender Upgrade is a good option. Fill out an online form to apply for personal loans between $1,000 to $35,000 — you’ll receive a decision almost immediately and your money within four business days of approval. Loan APRs range from 7.99% to 35.97%, higher than many other lenders, and terms are set at 36 or 60 months. Upgrade does charge an origination fee of 2.90% - 8.00% and may assess other charges and fees over the life of your loan.

Marcus by Goldman Sachs®

Marcus by Goldman Sachs®
APR

6.99%
To
19.99%

Credit Req.

Not specified

Terms

36 to 72

months

Origination Fee

No origination fee

SEE OFFERS Secured

on LendingTree’s secure website

Advertiser Disclosure

Marcus by Goldman Sachs® offers personal loans for up to $40,000 for debt consolidation and credit consolidation. ... Read More


Your loan terms are not guaranteed and are subject to our verification of your identity and credit information. To obtain a loan, you must submit additional documentation including an application that may affect your credit score. The availability of a loan offer and the terms of your actual offer will vary due to a number of factors, including your loan purpose and our evaluation of your creditworthiness. Rates will vary based on many factors, such as your creditworthiness (for example, credit score and credit history) and the length of your loan (for example, rates for 36 month loans are generally lower than rates for 72 month loans Your maximum loan amount may vary depending on your loan purpose, income and creditworthiness. Your verifiable income must support your ability to repay your loan. Marcus by Goldman Sachs is a brand of Goldman Sachs Bank USA and all loans are issued by Goldman Sachs Bank USA, Salt Lake City Branch. Applications are subject to additional terms and conditions.

Marcus by Goldman Sachs offers a no-fee personal loan — that means all you’ll pay is your loan principal and interest, even if you pay late or miss a payment. APRs range from 6.99% to 19.99% APR and terms from 36 to 72 months, and you can borrow up to $40,000. If your credit is lower or you choose a longer term, you will generally pay a higher rate. If working with a traditional bank appeals to you, this may be a good alternative to Santander.

SoFi

SoFi
APR

5.99%
To
18.53%*

Credit Req.

680

Minimum Credit Score

Terms

24 to 84

months

Origination Fee

No origination fee

SEE OFFERS Secured

on LendingTree’s secure website

Advertiser Disclosure

SoFi offers some of the best rates and terms on the market. ... Read More


Fixed rates from 5.99% APR to 18.53% APR (with AutoPay). SoFi rate ranges are current as of September 18, 2020 and are subject to change without notice. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, years of professional experience, income and other factors. See APR examples and terms. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.

SoFi has lower APRs, longer terms, and higher loan amounts than many other lenders, and it doesn’t charge any fees. Fixed APRs range from 5.99% to 18.53%, and terms are set at 24 to 84 months for loans of $5,000 to $100,000. Like many lenders, SoFi offers lower APRs to borrowers who sign up for automatic payments. SoFi will only do a soft pull when you check your APR with its online form, and you’ll never encounter origination fees or prepayment penalties. Another advantage to borrowing from SoFi: if you lose your job and apply for its unemployment protection program, SoFi will suspend your payments without penalty and provide job placement assistance.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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Personal Loans

Using a Personal Loan to Pay Off Taxes

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been previewed, commissioned or otherwise endorsed by any of our network partners.

Written By

paying taxes
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So you have a big tax bill to pay this April. Maybe you had too little withheld from your paychecks throughout the year or made more money as an independent contractor than you anticipated. Regardless of your circumstances, that outstanding debt can feel overwhelming — especially if you weren’t expecting it. Some borrowers may look into personal loans — generally used to consolidate debt, pay for home repairs or cover other big, planned-for expenses — as a way to pay back the IRS. But before you commit, learn more about whether these loans are the right choice for paying taxes.

Should you take out a personal loan to pay taxes?

The short answer: probably not.

“I can’t think of a time when it would be appropriate to take out a personal loan to pay income taxes,” Adam Funk, a CFP at Savings Coach in Troy, Mich., told MagnifyMoney.

Financial experts agree that, in general, personal loans shouldn’t be the go-to solution for unpaid taxes. One reason? It may cost more to take out a personal loan than to work directly with the IRS via one of their payment, installment or compromise plans. Interest rates for most personal loans range from around 6% to nearly 36% — and you’ll only qualify for the lowest rates if you have excellent credit.

By comparison, interest rates on outstanding taxes are the same for all borrowers and lower than most personal loans. The IRS updates interest rates on a quarterly basis. For underpayments, the rate is equal to the federal short-term rate plus 3 percentage points. As of Jan. 1, 2019, that rate is 6%.

Another benefit of working with the IRS, Funk told MagnifyMoney, is that you have more leverage to negotiate — and even have some or all of your debt forgiven — than you do once you pay off your bill and transfer the balance to a third-party lender.

In addition to interest, unpaid taxes will also incur monthly penalties — even if you have an agreement with the IRS. The IRS does note that paying via debit, credit or third-party loan may be less expensive than accruing these penalties on your outstanding bill, so you may want to explore all your options.

But before you use one of these alternatives, determine how much you’ll owe if you fail to pay off a credit card or loan balance in a timely manner. If your interest rate is high or you can’t tackle the total, you may be better off working directly with the IRS. Of course, simply failing to pay is the most expensive option.

Where to find a personal loan (if you need one)

If you do need to take out a personal loan, check with your bank first. A lender with whom you already have a relationship may be more flexible and open to working with you, especially if you have less-than-stellar credit. A local credit union may also be a good place to start — while you generally have to be a member to access personal loans and other financial products, credit unions often have lower interest rates and less strict qualification requirements for loans than traditional banks.

Online lenders may also have lower rates on personal loans than brick-and-mortar banks. With minimal overhead costs, these lenders are able to pass on savings to customers — though the lowest rates are reserved for borrowers with better credit.

Regardless of which type of lender you choose, make sure you shop around for your best rate. Start your research with MagnifyMoney’s personal loan marketplace, where you’ll find information about rates, terms, fees and requirements from a variety of lenders. You can also check your rates and offers directly — and see which lenders require a hard pull on your credit upfront.

LendingTree, which owns MagnifyMoney, also has a personal loan tool that may match you with lenders and loan offers. You do have to enter some personal information, including your address, employment status, and estimated income and credit score, before you receive any offers. Keep in mind: There’s no guarantee of offers using this tool.

LendingTree
APR

As low as 3.49%

Credit Req.

Minimum 500 FICO®

Terms

24 to 60

months

Origination Fee

Varies

SEE OFFERS Secured

on LendingTree’s secure website

LendingTree is our parent company

Advertiser Disclosure

LendingTree is not a lender. LendingTree is unique in that you may be able to compare up to five personal loan offers within minutes. Everything is done online and you may be pre-qualified by lenders without impacting your credit score. Terms Apply. NMLS #1136.



As of 17-May-19, LendingTree Personal Loan consumers were seeing match rates as low as 3.49% (3.49% APR) on a $10,000 loan amount for a term of three (3) years. Rates and APRs were based on a self-identified credit score of 700 or higher, zero down payment, origination fees of $0 to $100 (depending on loan amount and term selected). Terms Apply. NMLS #1136

Can’t afford your taxes? Consider these 4 alternatives

If you’re faced with a huge tax bill that you can’t afford outright, you do have options, including a number of payment plans and agreements you can negotiate directly with the IRS. Your specific tax situation will determine which alternative you qualify for.

1. Pay what you can, even if you request a filing extension

Tax returns and payments are generally due on April 15 (unless April 15 falls on a weekend or observed holiday). You can request a six-month filing extension directly with the IRS, which will push the deadline for your return to mid-October.

However, this extension does not apply to payments. If you don’t pay your estimated tax bill in April, you’ll owe penalties and interest on your balance. The IRS recommends paying what you can by the deadline to minimize these additional charges — from there, you can make a plan to pay the rest.

2. Apply for an installment agreement

If you can pay off your balance in 120 days or less, you can apply for a short-term payment plan. There’s no additional setup fee, but you will be responsible for any interests and penalties that accrue in addition to your outstanding taxes.

The IRS also offers a long-term payment plan, also called an installment agreement, which allows you to pay over 120 days or more. If you allow automatic withdrawals from your checking account, you’ll pay a fee of $31 for an online application or $107 to apply in person, by mail or over the phone. For other methods of payment (debit, credit, check or money order), the setup fees jump to $149 and $225, respectively. Interest and penalties apply.

3. Request an “Offer in Compromise”

If you can’t pay your taxes in full or via an installment agreement, you can apply for an Offer in Compromise. The IRS will look at your financial situation and may agree to settle your debt for less than what you owe. You may be eligible if your tax debt is inaccurate, you have insufficient assets to cover your bill or paying would cause economic hardship.

4. Request a collections delay

If paying any part of your tax bill would prevent you from meeting your basic needs, you can request that the IRS delay collections of your outstanding debt. You will have to provide information about your financial circumstances. Keep in mind: Delaying collections does not exempt you from your meeting your tax obligation, including interest and penalties. These will still accrue until you pay your full bill, and the IRS may still file a tax lien notice, which lets creditors know about your debt.

What happens if you don’t pay your tax bill

If you don’t pay your tax bill by the filing deadline in April — and don’t take any additional action — you’ll likely get hit with interest on your outstanding balance and a monthly fee for late payments. The late payment penalty is generally 0.5% of your unpaid taxes per month and can add up to 25% of what you owe.

There’s also a penalty for not filing your return. For 2016 tax returns, the minimum penalty for filing 60 days or more after the deadline was the lesser of $205 or 100% of the tax owed. According to the IRS, this penalty can be as much as 5% of your unpaid bill each month, up to a maximum of 25%.

If you don’t file or pay, the IRS will levy a combined penalty of up to 5% per month. There are exceptions to late payment penalties, however: If you’ve requested a filing extension and have paid 90% of your outstanding balance, you’ll only owe interest until your bill is paid off. Similarly, the IRS may waive penalties if taxpayers can show reasonable cause for failing to file or pay on time.

The IRS will send you at least two bills for outstanding taxes. If you don’t pay after your final bill, the agency will begin collections actions. The IRS can apply your unpaid balance to future refunds or seize your property — including everything from wages and retirement savings to your home — to cover your tax debt.

The bottom line: File your tax return and pay your balance by the due date. If you can’t afford to pay in full, at least pay what you can and actively explore options to minimize fees and penalties.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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Pay Down My Debt

Should I Get A Debt Consolidation Loan with Bad Credit?

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been previewed, commissioned or otherwise endorsed by any of our network partners.

Written By

debt consolidation loan for bad credit
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Debt can feel overwhelming for anyone, but if you have bad credit, tackling it can seem nearly impossible. Keeping track of what you owe, finding the cash to cover your bills and making payments to a half-dozen creditors as you rack up interest each month may be discouraging, but there are options to help you through. Debt consolidation loans is an option when dealing with bad credit but are they the best choice?

Handling debt with bad credit – consider debt consolidation

If you have a bunch of outstanding bills with different minimum payments, penalties, and due dates, debt consolidation is one way to get organized and perhaps even reduce the interest you pay over time.

A debt consolidation loan may allow you to roll all your monthly bills into one payment. Not only does this simplify your finances, but it may qualify you for a lower interest rate than you have on one or more credit cards, which can save you money as you pay down your debt.

The most recent consumer credit data from the Federal Reserve found that the average credit card interest rate in May 2018 was 14.4%, while interest rates on 24-month personal loans averaged 10.31%.

Consolidation loans — unsecured personal loans are the most common type — are a more viable option than balance transfer cards for those with lower credit scores due to being able to qualify.  To qualify for a balance transfer credit card it’s best to have a credit score in the 700’s or higher.

Debt consolidation loans, on the other hand, can still be had with a bad credit score (580 or below). If you are able to secure a debt consolidation loan for bad credit, you’ll probably be dealing with fairly high interest rates. Before committing to a loan make sure you’ve budgeting so you don’t fall behind on your loan payments.

It’s best to compare loans regardless of your credit score to secure one with the best rates. Companies like LendingTree, the parent company to MagnifyMoney, allows those with a minimum of 500 credit score to compare up to five lenders to find the best option even when dealing with bad credit.

Use our widget below to find and compare the best debt consolidation loans for bad credit!



Compare Debt Consolidation Loans for Bad Credit

Is a debt consolidation loan a good idea for people with bad credit?

For borrowers without solid credit histories, a debt consolidation loan can be an option — but one that they should carefully weigh. Jonathan McAlister, a certified financial planner at Legacy Wealth Management in Memphis, Tennessee, said debt consolidation loans can help those with bad credit reduce their interest rates, pay down bills more quickly and keep better track of monthly obligations.

“However, it could have an unintended downside if the debt came from overspending and now the consolidation loan is being used to free up cash flow to continue an overspending habit,” he said.

Here’s a closer look at the pros and cons of getting a consolidation loan when you have poor credit.

Pros:

  • It’s easy to shop around for debt consolidation loans. Many lenders allow you to pre-apply, telling you if you’re likely to get approved for a loan and what interest rates you could get. This lets you quickly zero in on the best lenders to work with.
  • You can combine different debt accounts into a single installment loan. The loan will have a single monthly payment that will be the same each month, making it easier to budget around it.
  • A debt consolidation loan could give you a chance to lower your interest costs. This is especially true if you’re facing expensive debt such as payday loans or credit card balances, as these types of debt typically have higher rates than what lenders charge on debt consolidation loans.
  • You have a clear path to getting out of debt. You can even choose a shorter loan term to get out of debt faster and pay less interest. Consolidating debt and repaying it responsibly can help you build credit. Using this loan to pay off credit card balances could lower credit utilization ratios. Adding an installment loan could also improve your credit mix, which could boost your score.

Cons:

  • Getting approved for a debt consolidation loan can be tricky when you have bad credit. You might have to spend more time looking for a lender that will work with you or even add a cosigner to qualify for a loan.
  • Your new loan’s payments could be higher than previous minimum payments on credit card balances or other debt. If monthly costs are a concern, a longer loan term could be a wise choice — though it will increase what you pay over the life of the loan.
  • With bad credit, you won’t qualify for the lowest debt consolidation loan rates out there. Some lenders will also charge origination fees to set up a loan, which could add to what you pay. Compare all options to make sure you don’t wind up paying more.
  • A shorter term will get you out of debt faster, but you’ll need to pay more each month to make this happen. Check monthly payment estimates to be sure you can afford to do so. Some consumers might see their credit score temporarily dip after taking out a consolidation loan, McAlister said. You’ll also need to stay on top of your bills and always make on-time payments to avoid damaging your credit.

6 alternatives to debt consolidation loans for bad credit

1. Debt management plans

If you’ve already tried to manage your debt yourself with little success, or if you aren’t sure where to start, a debt management plan may be a good option. In a debt management program, you consolidate your payments through a nonprofit credit counseling agency, which in turn negotiates interest rates and fees with your creditors. Your debt stays with the original lenders, and the agency takes your single monthly payment and distributes it.

Pros:

  • You’ll make one payment each month rather than multiple to several creditors, which can simplify your debt.
  • You get help negotiating interest rates and fees down, so your debt is costing you less.
  • Ideally, you’ll pay your principal down more quickly and save on interest over time thanks to negotiated rates.

Cons:

  • Debt management programs aren’t free — expect to pay an enrollment fee between $25 and $35, plus a monthly cost in that same range. If you don’t have the cash flow to make minimum monthly payments on your outstanding bills plus these fees, debt management likely won’t be a good fit.
  • You can’t use debt management to consolidate secured loans such as an auto loan or a savings-secured loan.

2. Home equity loan

A home equity loan is a type of secured loan in which you receive a lump-sum payment in exchange for putting up your home as collateral, which the lender uses to guarantee that it’ll get its money back if you don’t pay. As a result, lenders are often more willing to work with those who have less-than-excellent credit and to offer lower interest rates than you might get on an unsecured loan.

Here’s what you should know about consolidating debt with a home equity loan.

Pros:

  • You can get approved for a home equity loan even with bad credit. The loan is secured by the home, which lowers the lender’s potential risk and can make it likely to accept applicants with poor credit.
  • Home equity loans traditionally offer lower interest rates than unsecured loans. This can make a home equity loan a more effective way to consolidate debt in a way that lowers your costs.
  • Ideally, you’ll pay your principal down more quickly and save on interest over time thanks to negotiated rates.

Cons:

  • If you don’t own a home, a home equity loan won’t be an option — and if you do, you must have enough equity built up to qualify.
  • The lender can foreclose on your home if you default. If you already have poor credit and struggle to make payments on existing credit lines, a loan that puts your home at risk could add to your debt woes.
  • Home equity loans can have more upfront costs than personal loans, such as application fees, appraisal fees, brokers fees, and closing costs.

3. Home equity line of credit

Like a home equity loan, a home equity line of credit (HELOC) is secured by your property. But instead of a fixed-rate loan you pay back over time, a HELOC is a revolving credit line similar to a credit card — you pay interest at variable rates, but only on what you draw. In general, your “draw period” lasts between five and 10 years.

Pros:

  • You can borrow up to the credit limit on your HELOC, giving you more flexibility in how much and when you borrow.
  • A HELOC has similar qualification requirements as a home equity loan — and similar limitations. It might be easier to get a HELOC with bad credit than, say, a personal loan.
  • You’ll face lower closing costs on a HELOC than you would on a home equity loan. Some HELOCs even have discounted introductory rates that you can take advantage of to pay off debt faster.

Cons:

  • HELOCs often have a minimum draw or an amount you must borrow. If you don’t borrow at least that much you could face a fee.
  • Similar to credit cards, HELOCs have variable rates that can rise if market interest rates go up, meaning you could end up with a higher rate later.
  • If you don’t own a home, don’t have much equity built up or have a limited or difficult credit history, lenders are less likely to take that risk. Not paying off your HELOC balance can also put your home at risk of foreclosure.

4. Cash-out refinance

A cash-out refinance is a third way to leverage the equity in your home in which you apply for a new mortgage that exceeds the amount of your existing loan and receive the additional amount in cash.

Pros:

  • Unlike a home equity loan, a cash-out refinance is a first mortgage, so interest rates may be more favorable and poor credit less of a limitation.
  • A cash-out refinance can also be used to lower your current interest rate or improve the terms of your mortgage, such as switching from an adjustable rate to a fixed rate.

Cons:

  • You’ll need to have equity in your home to benefit from a cash-out refinance. You’ll also need to maintain a loan-to-home-value ratio under 85%.
  • As with a home equity loan, a cash-out refinance can bring in several fees and closing costs. This can add to what you owe or offset savings from a lower interest rate.
  • This option will likely lengthen your mortgage, keeping you in debt longer and increasing the interest you pay on your home.

5. Negotiating a debt settlement

Debt settlement sounds similar to debt management, but they are not equal. For-profit debt settlement companies help you negotiate and settle debt in collections using payment plans or a dedicated savings account.

Alternatively, some creditors may be willing to negotiate with you directly. If you have outstanding medical bills with a hospital or a physician’s office, for example, you may be able to reduce or even eliminate your debt. It doesn’t hurt to call your creditors to ask about your options.

Pros:

  • Successful debt negotiation can help you eliminate debt for much less than you owe.
  • If you can settle a debt, doing so can help you get rid of unaffordable debt and avoid bankruptcy.

Cons:

  • Most debt settlement companies will charge you a fee to negotiate debt on your behalf, but can’t guarantee a beneficial outcome. These can vary widely, so compare different services so you don’t end up overpaying.
  • Watch out for debt relief scams: If a company asks for fees upfront, makes any promises or pushes you to sign up for services, avoid it.

6. Bankruptcy

Bankruptcy is a debt relief option that can help you discharge your debt and start with a clean slate.

Under Chapter 7 bankruptcy, also known as liquidation bankruptcy, a trustee will sell off some of your unprotected assets to partially repay your creditors. The court will then discharge your remaining debt.

Pros:

  • Bankruptcy will discharge many of your debts, providing relief if you’ve accrued more debt than you can realistically repay.
  • Filing for bankruptcy will immediately bar lenders and collection agencies from pursuing payment from you.
  • You can keep certain assets through a bankruptcy, including retirement accounts, your home, and other essential personal property.

Cons:

  • Declaring bankruptcy will significantly lower your credit score and make borrowing difficult. A bankruptcy can be listed on your credit reports for up to 10 years. However, the impact lessens over time and the process can help you move on from your debt more quickly.
  • You’ll lose some of your property, which will be resold to satisfy your outstanding debts.
  • Some debt and financial obligations are very difficult to wipe out in bankruptcy, such as student loans or back taxes.

To qualify for Chapter 7 bankruptcy, you must also undergo a means test. If your income exceeds the threshold, you might be eligible for Chapter 13 bankruptcy. In this scenario, you get to keep your assets but will be required to repay your debt over three to five years.

What option should I use?

Debt consolidation loans are a good option but aren’t the be-all and end-all for those with bad credit. Before you commit to anything, determine what you’re eligible for, weigh all your options and calculate how much each will cost over time. And don’t be afraid to ask for assistance.

“Consumers should always approach debt with a plan to pay it off,” McAlister said. “Seek professional help from a financial planner if you feel in over your head.”

This article contains links to LendingTree, which owns MagnifyMoney.

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