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What Is a Personal Line of Credit?

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

what is a personal line of credit

When you need to borrow money, you may think to borrow a personal loan or get a credit card or home equity line of credit (HELOC). But there’s a lesser-known financing option you may not want to overlook: a personal line of credit.

Don’t confuse a personal line of credit with a credit card. It isn’t a piece of plastic you can whip out and swipe at the grocery store. Instead, it’s a line of credit from which you can draw cash that’s often offered by banks and credit unions to existing customers who meet certain requirements. Here’s what you need to know about this financial product.

What is a personal line of credit?

A personal line of credit is a loan you can use and pay back as needed. The terms of the product can vary from one lender to another.

Interest rates: In most cases, personal lines of credit come with variable interest rates. But they can come with a fixed interest rate. You can find rates starting at around 8%, but they may be as high as 20% or more.

Costs: Aside from the interest rate, personal lines of credit may have other costs. Take care to read through the fine print of the terms for these potential fees:

  • Application fees: This is the cost to apply for the account. Many financial institutions don’t charge for applications, but it’s a good idea to double-check.
  • Annual fees: This is a fee charged each year you have the account. For example, Wells Fargo and TD Bank charge $25 annually for personal lines of credit. Some banks will waive fees as long as you have an open bank account. Check the terms for details.
  • Cash advance fees: This fee may be charged each time you withdraw money from your credit line. Many financial institutions don’t charge this fee.

Credit limits: Credit limits for personal lines of credit can vary. Credit limits can be a few thousand dollars to well over $1 million.

Unsecured vs. secured personal lines of credit: What’s the difference?

As you research personal lines of credit, you’ll find that they can come secured or unsecured. An unsecured personal line of credit doesn’t require collateral. A secured personal line of credit, on the other hand, requires collateral and may be backed by the balance in a savings account, certificate of deposit or investment account.

Collateral reduces the risk for the financial institution lending you money. As a result, secured personal lines of credit generally have lower interest rates.

But a secured line of credit comes with a higher risk to you. If you fail to repay your debt, you could lose your collateral. And you may not have access to the collateral you use to secure the credit line until the debt is repaid.

Where you can find a personal line of credit

Personal lines of credit are marketed less widely than other products, but there are several available from small and large banks and credit unions. The first place to shop for a personal line of credit is the financial institution you use for banking.

Some banks, such as Citibank, only take applications from existing customers. Others, such as Santander Bank and TD Bank, will waive fees for their customers.

The requirements to qualify for a personal line of credit vary from one lender to the next. For a Citibank personal line of credit, you need to have a deposit account with a balance over $500 and a, Citibank mortgage or Citi credit card that’s at least 3 months old.

Some financial institutions may not require you to have a checking account to qualify for a personal line of the credit. Be sure to comparison shop to find a personal line of credit that makes sense for you.

How a personal line of credit works

Obtaining a personal line of credit starts with the application.

The creditor may check your debt-to-income (DTI) ratio, credit score and credit history. You may have to turn in pay stubs, W-2s, tax documents and other supporting information for the application. If you already have accounts with the financial institution, it may also dig into the history to see if you have any overdrafts or other signs of misuse that could impact their decision.

Once approved, you get the terms of the agreement to sign at a local branch or online. You will likely get access to the funds within a few days.

To use the credit line, you may be able to:

  • Transfer cash from the credit line into a bank account
  • Get an advance from a physical bank location
  • Write a credit check to yourself or someone else

Some personal lines of credit give you a draw period that lasts a couple of years. During this draw period, you can draw up to the credit limit. After the draw period, the repayment term begins, and you need to pay the money back.

A monthly minimum payment is typically required. Wells Fargo’s minimum payment for an unsecured personal credit line is 1%. The Wells Fargo CD or savings secured personal line of credit has a minimum payment that’s 1/120th of your principal balance. Additional fees may apply.

Some personal lines of credit offer an interest-only payment option. With this repayment option, you’re only required to pay the interest incurred on your credit balance for a certain period. Be careful about getting into the low-cost, interest-only payment trap. Making interest-only payments can lead to much larger payments down the line when you need to start repaying principal and interest.

What can a personal line of credit be used for?

You have the freedom to choose how you use a personal line of credit. You could pay for home repairs, education expenses, unexpected bills or debt consolidation.
The benefit of a personal line of credit is that it can cover unpredictable costs. In comparison, a personal loan gives you a set amount of money with a set repayment period.

Who is a personal line of credit best for?

Personal lines of credit are generally for borrowers who have at least decent credit with some savings socked away.

A solid credit history and savings could qualify you for the best rates and avoid the need for you to put up collateral. But even if you’re opting for an unsecured credit line, a bank may ask to see additional verifiable assets.

Citibank extends its lowest interest rates to elite Citigold and Citi Priority customers or regular account holders with balances of over $200,000. To be a Citigold customer, you must maintain a balance of over $200,000 in eligible accounts. Citi Priority customers must maintain a balance of over $50,000 in checking, retirement and investment accounts at Citibank.

The products above are tailored to high-net-worth clients. Borrowers without six figures in the bank may still be able to qualify for a personal line of credit, but the rate and terms may be less competitive. Compare financial institutions to find which one benefits you the most.

Alternatives to a personal line of credit

Not sure if a personal line of credit is right for you? Consider these alternatives:

Personal loan

A personal loan is an installment loan. You can use the funds from a personal loan for a variety of reasons, from car repairs to medical procedures to weddings. Consolidating debt is a popular reason for taking out a personal loan.

These loans can offer a low fixed interest rate on a fixed term. If you’ve had trouble managing credit lines before, a personal loan gives you a set payment to keep up with until the debt is paid off.

Personal loan amounts can range from about $1,000 to $100,000.

How it works

You can apply for personal loans online through banks, credit unions and online lenders. Each will consider your credit, income and other variables to determine your eligibility for a loan. After you’ve been approved for a loan, the funds will be deposited into your bank account.

Who personal loans are best for

Personal loans are a product for almost anyone. There are personal loans available for people with stellar credit, as well as those who have less-than-perfect credit.

The best interest rates are usually given to borrowers with good to excellent credit scores — generally 640 and above. The good news is you can shop for personal loans to check rates without a hard inquiry for most lenders.

HELOC

A home equity line of credit (HELOC) is secured by your home. HELOCs usually have a variable interest rate that can start out fairly low if there’s an introductory period. Be sure to ask about introductory rate expirations and rate caps to get a clear picture of costs.

How it works

HELOCs are offered through banks, credit unions and other lenders. You may be able to borrow up to 80 percent to 90 percent of your home equity value.

When you apply for a HELOC, your credit score, DTI ratio and the amount of equity you have in your home will be considered.

Some HELOC products allow for interest-only payments. That could be a perk if you need to settle other obligations. But it does come with the risk that you could be stuck in debt longer than you’d like.

Often, HELOCs have a draw period where you’re able to use the line of credit as needed. You may be able to renew the credit line after the draw period ends. If you don’t renew it, you’ll no longer be able to draw money and the repayment period will begin.

HELOCs may have closing costs, annual fees and prepayment penalties. Take care to read the interest rate and fee terms to avoid any surprises.

Who it’s best for

A HELOC is going to be best for borrowers who have sufficient equity in their home and decent credit. You may need a credit score of at least 620 to qualify. A score of 680 or above could make it easier to get approved.

Like a personal line of credit, a HELOC is a product for borrowers who have a history managing available credit responsibly. But a HELOC is secured by your home. If you fail to repay your debt, you could lose your house.

If you’re interested in shopping for a HELOC, you can compare products at the LendingTree marketplace. (Note: MagnifyMoney is owned by LendingTree.)

Credit card

A credit card is a form of credit with which you’re probably pretty familiar. A credit card is a line of credit you can use on the fly. Some credit cards also offer rewards for transactions. You could, for instance, get cash back or earn miles toward free flights with a credit card.

Credit cards are offered by banks, credit unions and other financial institutions.

How it works

You can apply for credit cards online within a few minutes. Your financial information will be taken into account, including your credit history. If approved, the credit card issuer will provide you with a variable interest rate, spending limit, and any other fees associated with the card offer.

A minimum payment is due each month on your account. Over time, your rate can rise or fall. Depending on the card for which you apply, you may be responsible for paying an annual fee. Expect to pay fees for late payments and cash advances as well.

Who it’s best for

You can find credit cards for bad credit, but the best rewards programs and rates are reserved for those with excellent scores.

One major advantage to credit cards is sign-up promotions. Some cards offer a cash reward or bonus miles for signing up. You could even score an introductory 0% APR on purchases and balance transfers for periods of 15 to 20 months. Pay off your balance within that promotional period, and you essentially had a no-interest loan.

Credit cards are best for borrowers who are committed to using plastic and paying it off each month. That’s how you avoid interest charges. If you’ve had a problem with credit cards before, adding a new card to the mix may not be the best idea.

Making the right move for your finances

A personal line of credit has its merits. But you should weigh your options carefully. You may find a personal loan, HELOC or credit card is a better fit.

Ultimately, the right product for you will depend on your goals and financial situation. The best way to find the most competitive product for your needs is by shopping around and considering which products and features matter most to you.

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.

Taylor Gordon
Taylor Gordon |

Taylor Gordon is a writer at MagnifyMoney. You can email Taylor here

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No Credit, or Poor Credit? Here Are Your Loan Options

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Disclosure : By clicking “See Offers” you’ll be directed to our parent company, LendingTree. You may or may not be matched with the specific lender you clicked on, but up to five different lenders based on your creditworthiness.

Mixed Race Young Female Agonizing Over Financial Calculations in Her Kitchen.

Updated April 01, 2019
Don’t have a credit history established, or have a low credit score? It can be challenging to find lenders that will approve you if you have a thin credit file or poor credit, but it’s not impossible.

You still have options when it comes to personal loans, and these options come from reputable lenders.

What’s even better is that these lenders will only conduct a soft credit inquiry when you apply to find out what rates they can offer you. This means your credit score won’t be negatively affected, so you don’t have to worry about damaging it further.

In this article we’ll review how to find reputable lenders, why you should stay away from two popular options people turn to when they’re in a poor credit situation: payday and title loans. And what you can do to increase your credit score.

Check for approval without a credit hit

It’s worth noting low scores aren’t always indicative of how responsible you are with credit. A low score, or thin file, could just be a result of a short credit history. If you have a clean history (no late payments, low credit utilization, etc.), you’ll have an easier time obtaining a loan over someone who has had delinquencies on their record, but might have a higher score.

If you have bad (or no) credit, you should apply to as many lenders as possible that use a soft pull to ensure you don’t hurt your credit score. We recommend starting with LendingTree, where you can use one short application form to get rates from multiple lenders at one.

Company
APR
Terms
Credit Req.
LendingTree

As low as 3.99%

24 to 60

months

Minimum 500 FICO®

SEE OFFERS Secured

on LendingTree’s secure website

LendingTree is our parent company

Advertiser Disclosure.

Disclaimer

A Personal Loan can offer funds relatively quickly once you qualify you could have your funds within a few days to a week. A loan can be fixed for a term and rate or variable with fluctuating amount due and rate assessed, be sure to speak with your loan officer about the actual term and rate you may qualify for based on your credit history and ability to repay the loan. A personal loan can assist in paying off high-interest rate balances with one fixed term payment, so it is important that you try to obtain a fixed term and rate if your goal is to reduce your debt. Some lenders may require that you have an account with them already and for a prescribed period of time in order to qualify for better rates on their personal loan products. Lenders may charge an origination fee generally around 1% of the amount sought. Be sure to ask about all fees, costs and terms associated with each loan product. Loan amounts of $1,000 up to $50,000 are available through participating lenders; however, your state, credit history, credit score, personal financial situation, and lender underwriting criteria can impact the amount, fees, terms and rates offered. Ask your loan officer for details.

As of 28-Feb-2019, LendingTree Personal Loan consumers were seeing match rates as low as 3.99% (3.99% 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).

6.95%-35.89%

36 or 60

months

600

SEE OFFERS Secured

on LendingTree’s secure website

Our Commitment We'll receive a referral fee if you click here. This does not impact our rankings or recommendations.

7.46%-35.99%

36 & 60

months

620

SEE OFFERS Secured

on LendingTree’s secure website

We'll receive a referral fee if you apply for this loan. This does not impact our rankings or recommendations.

9.95%-35.99%

24 to 60

months

Varies

SEE OFFERS Secured

on LendingTree’s secure website

Avant branded credit products are issued by WebBank, member FDIC.

6.95%-35.99%

36 or 60

months

640

SEE OFFERS Secured

on LendingTree’s secure website

Advertiser Disclosure.

For example, a three-year $10,000 loan with a Prosper Rating of AA would have an interest rate of 5.31% and a 2.41% origination fee for an annual percentage rate (APR) of 6.95% APR. You would receive $9,759 and make 36 scheduled monthly payments of $301.10. A five-year $10,000 loan with a Prosper Rating of A would have an interest rate of 8.39% and a 5.00% origination fee with a 10.59% APR. You would receive $9,500 and make 60 scheduled monthly payments of $204.64. Origination fees vary between 2.41%-5%. APRs through Prosper range from 6.95% (AA) to 35.99% (HR) for first-time borrowers, with the lowest rates for the most creditworthy borrowers. Eligibility for loans up to $40,000 depends on the information provided by the applicant in the application form. Eligibility is not guaranteed, and requires that a sufficient number of investors commit funds to your account and that you meet credit and other conditions. Refer to Borrower Registration Agreement for details and all terms and conditions. All loans made by WebBank, member FDIC.

59.00%-199.00%

9 to 24

months

Varies

SEE OFFERS Secured

on LendingTree’s secure website

LendingTree: Dozens of lenders partner with LendingTree – and many of them may approve people with poor or no credit. You can fill out a simple form and compare multiple offers in minutes. We highly recommend starting your shopping experience here first to have a good chance of getting a loan.

LendingTree
APR

As low as 3.99%

Credit Req.

Minimum 500 FICO®

Minimum Credit Score

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 our parent company. 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. LendingTree is not a lender.


A Personal Loan can offer funds relatively quickly once you qualify you could have your funds within a few days to a week. A loan can be fixed for a term and rate or variable with fluctuating amount due and rate assessed, be sure to speak with your loan officer about the actual term and rate you may qualify for based on your credit history and ability to repay the loan. A personal loan can assist in paying off high-interest rate balances with one fixed term payment, so it is important that you try to obtain a fixed term and rate if your goal is to reduce your debt. Some lenders may require that you have an account with them already and for a prescribed period of time in order to qualify for better rates on their personal loan products. Lenders may charge an origination fee generally around 1% of the amount sought. Be sure to ask about all fees, costs and terms associated with each loan product. Loan amounts of $1,000 up to $50,000 are available through participating lenders; however, your state, credit history, credit score, personal financial situation, and lender underwriting criteria can impact the amount, fees, terms and rates offered. Ask your loan officer for details.

As of 28-Feb-2019, LendingTree Personal Loan consumers were seeing match rates as low as 3.99% (3.99% 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).

Here are 5 personal loan lenders for people who have less than ideal credit (meaning under 700) that will let you check your rate without impacting your credit score:

LendingClub: People with credit scores below 600 may get approved. You can borrow $1,000 – $40,000 and get the money deposited into your account within a few days. Fixed APRs range from 6.95% –35.89% on monthly terms of 36 or 60. LendingClub has an origination fee of 1.00% - 6.00% its loans. LendingClub is not available in Iowa or West Virginia.

APR

6.95%
To
35.89%

Credit Req.

600

Minimum Credit Score

Terms

36 or 60

months

Origination Fee

1.00% - 6.00%

SEE OFFERS Secured

on LendingTree’s secure website

LendingClub is a great tool for borrowers that can offer competitive interest rates and approvals for people with credit scores as low as 600.... Read More

Upstart: Borrow between $1,000 and $50,000 for 36 & 60 months with APRs ranging from 7.46% to 35.99%. While the minimum credit score needed to qualify is 620 (Upstart will also consider applicants who don’t have a score), you must have a clean credit history. You could also be eligible for next day funding.

APR

7.46%
To
35.99%

Credit Req.

620

Minimum Credit Score

Terms

36 & 60

months

Origination Fee

0.00% - 8.00%

SEE OFFERS Secured

on LendingTree’s secure website

Upstart is an online lender created by ex-Googlers.... Read More

Avant: You could borrow anywhere from $2,000 to $35,000 through Avant, and you could receive your funds as soon as the next business day. APRs range from 9.95% – 35.99%. Although the minimum credit score Varies, you have a much better chance if your score is above 580. Avant is available in all states except Colorado, Iowa, West Virginia, and Vermont.

APR

9.95%
To
35.99%

Credit Req.

Varies

Minimum Credit Score

Terms

24 to 60

months

Origination Fee

Up to 4.75%

SEE OFFERS Secured

on LendingTree’s secure website

Avant branded credit products are issued by WebBank, member FDIC.

Avant is an online lender that offers personal loans ranging from $2,000 to $35,000. ... Read More

Prosper: Another peer-to-peer marketplace lender, Prosper’s loans are similar to LendingClub’s. You can borrow $2,000 to $40,000 with APRs ranging from 6.95% to 35.99% on 36 or 60 month terms. There’s an origination fee of 2.41% - 5.00%, and its minimum credit score is 640.

APR

6.95%
To
35.99%

Credit Req.

640

Minimum Credit Score

Terms

36 or 60

months

Origination Fee

2.41% - 5.00%

SEE OFFERS Secured

on LendingTree’s secure website

Advertiser Disclosure

Prosper is a peer-to-peer lending platform that offers a quick and convenient way to get personal loans with fixed and low interest rates. ... Read More


For example, a three-year $10,000 loan with a Prosper Rating of AA would have an interest rate of 5.31% and a 2.41% origination fee for an annual percentage rate (APR) of 6.95% APR. You would receive $9,759 and make 36 scheduled monthly payments of $301.10. A five-year $10,000 loan with a Prosper Rating of A would have an interest rate of 8.39% and a 5.00% origination fee with a 10.59% APR. You would receive $9,500 and make 60 scheduled monthly payments of $204.64. Origination fees vary between 2.41%-5%. APRs through Prosper range from 6.95% (AA) to 35.99% (HR) for first-time borrowers, with the lowest rates for the most creditworthy borrowers. Eligibility for loans up to $40,000 depends on the information provided by the applicant in the application form. Eligibility is not guaranteed, and requires that a sufficient number of investors commit funds to your account and that you meet credit and other conditions. Refer to Borrower Registration Agreement for details and all terms and conditions. All loans made by WebBank, member FDIC.

OppLoans: If you have no or bad credit, Opploans is an online lender that could help. If your credit score is below 0 (or if you have no credit score at all), OppLoans will work with you. You can check to see if you are approved without impacting your score. And – unlike payday lenders – OppLoans offers much more affordable borrowing options. They also have great reviews – with a customer service rating of 4.9/5 stars.

APR

59.00%
To
199.00%

Credit Req.

Varies

Minimum Credit Score

Terms

9 to 24

months

Origination Fee

Varies

SEE OFFERS Secured

on LendingTree’s secure website

There are several other personal loan lenders that will do a soft credit check. You can find them on our personal loan table here. While many of these lenders have minimum credit score requirements, you’ll find they take other factors into account aside from your FICO score.

Additionally, since these lenders only do a soft credit pull, you’re free to shop around for the best rates without fear of damaging your credit score.

Why You need to Stay Away from Payday Loans and Title Loans

Not eligible for personal loans? Don’t turn to payday loans or title loans.

If you’re not familiar with either, you might be wondering what’s so bad about them. After all, they seem convenient – most offer “fast cash,” and if you live in a populated area, you’ll probably find a payday loan or title loan shop nearby.

However, both require you to give something in exchange for funds, and neither require any sort of stringent approval process to ensure borrowers can afford the loans.

Payday Loans

Payday loan companies require you to write a check for the amount you wish to borrow, plus a set fee. The lender holds onto the check until the loan becomes due (typically on the borrower’s next payday, hence the name), and gives the borrower the money they need in the meantime.

The problem? If you can’t pay when the loan balance becomes due, you can choose to extend the term of the loan. When you do, you get hit with more fees. The APR on payday loans is extremely high, so you’ll pay more each time you extend your loan term.

Payday loans are on the smaller side – anywhere from $100 to $1,000. According to PayDayLoanInfo.org, the average term is two weeks, with 400%+ APRs. When you factor in fees, the APR can go up to 780%.

[Stuck in a Payday Loan Trap? Here are the ways out.]

Title Loans

Title loans require you to give your car’s title to the title loan company in exchange for an amount equal to the appraised value of your car. You usually have to own your car outright to be eligible for a title loan, and the term is around 30 days.

Like payday loans, if you can’t pay on time, you may choose to roll the loan over to the next month, incurring more fees. If you can’t pay back the loan at all, you run the risk of the lender repossessing your car.

As you can tell, both of these options are bad ideas if you want to stay clear of getting into a horrible debt cycle. These loans are purposely too expensive for borrowers to afford. If people are looking for quick cash because they don’t have any, it stands to reason they’ll be in the same situation a week or two from the time they borrow.

Non-Profit Credit Counseling to Rebuild Credit Score

You want to make every effort to improve your credit score, even after you’re approved for a loan, because having a good credit score will benefit you in other areas of life. For that reason, you might want to consider teaming up with a non-profit credit counseling service.

These companies can provide you with personalized advice on your specific situation so you can work on rebuilding your credit score. They can also work with your creditors and negotiate on your behalf to possibly lower interest rates or get better terms on your existing debt.

It can be tricky to find a reputable credit counseling agency – even with a non-profit organization. If you’re interested in a credit counseling service, USA.gov lists a few considerations and questions you should ask before committing. You want to make sure the credit counseling agency is actually going to help you get your credit and financial situation under control.

Alternative to Ways to Build Your Credit Score

If you don’t qualify for a personal loan, and don’t want to turn to payday or title loans, there are a few steps you can take to increase your credit score. This post has 6 tips to help get you started. These methods won’t boost your score immediately, but over time, you’ll see an improvement.

The Federal Trade Commission also has 6 alternatives to payday loans on its website, which might apply to your situation. For example, if you’re a member of a credit union, you could inquire about a loan through them as you have an established relationship already.

Also, if you haven’t started budgeting and tracking your spending, you should – doing so can help you spot problem areas with your money.

Read the Fine Print and Shop Around

Regardless of which loan you decide to apply for, always consider the cost. You want to make sure you’re getting the best possible terms, which means getting the lowest APR offered. Typically, cash advances and credit cards are going to have higher APRs than personal loans but lower than payday lenders.

Remember to always read the fine print. Loans of any type have plenty of fees associated with them that you should avoid. Shop around for the best deals and work on improving your credit score so better options become available to you.

*We’ll receive a referral fee if you click on offers with this symbol. This does not impact our rankings or recommendations. You can learn more about how our site is financed here.

Customize your personal loan offers with comparison tool

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.

Erin Millard
Erin Millard |

Erin Millard is a writer at MagnifyMoney. You can email Erin at [email protected]

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Personal Loans

Best Debt Consolidation Loans by Credit Score in 2019

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Disclosure : By clicking “See Offers” you’ll be directed to our parent company, LendingTree. You may or may not be matched with the specific lender you clicked on, but up to five different lenders based on your creditworthiness.

debt consolidation
iStock

Updated – April 1, 2019

Dealing with multiple loan payments can be a hassle. Even worse is having to pay high interest rates on one or more of your loans. A debt consolidation loan can be a great way to fix those problems by refinancing all your loans into one with a new rate and term.

Debt consolidation provides three benefits:

  1. Make payments simple: If you owe a lot of lenders and are having a tough time keeping track of all the payments, then consolidating will make your life easier. You’ll only owe one lender and have to keep track of one due date. There’s less of a chance of anything falling through the tracks.
  2. Lower your interest rate: This is where you have to run the numbers to see if debt consolidation makes sense for you. What’s the average interest rate you’re paying on your debt? If it’s quite high (which is likely if you have a lot of consumer debt), you may benefit from consolidating under better terms. Just remember to only use a personal loan if the interest rate is lower than the one you are already paying.
  3. Improve your credit score: If your credit cards are currently maxed out, your credit score will suffer. When you pay off your credit card debt with a personal loan, you will often receive a boost to your credit score, so long as you don’t start using your cards again.

But not all lenders will work with just anyone. Generally, you need to have a good credit score to qualify for the best interest rates on debt consolidation loans. Even then, some lenders offer better terms than others.

We searched through MagnifyMoney’s debt consolidation loan marketplace to identify the best lenders for you depending on whether you have excellent (700 and above), good (640-699), average (600-639) or poor (below 600) credit. To compare lenders evenly across the board, we assumed that you’re looking for a $10,000 loan and that you have a college degree. For each credit category, we picked the top two lenders who had the lowest APRs.

Here are the results from our analysis. If you’re in the market for a debt consolidation loan, it’s a good idea to customize your debt consolidation loan search so that you can find the best loan to help you get out of debt faster.

Company
APR
Terms
Credit Req.
LendingTree

As low as 3.99%

24 to 60

months

Minimum 500 FICO®

SEE OFFERS Secured

on LendingTree’s secure website

LendingTree is our parent company

Advertiser Disclosure.

Disclaimer

A Personal Loan can offer funds relatively quickly once you qualify you could have your funds within a few days to a week. A loan can be fixed for a term and rate or variable with fluctuating amount due and rate assessed, be sure to speak with your loan officer about the actual term and rate you may qualify for based on your credit history and ability to repay the loan. A personal loan can assist in paying off high-interest rate balances with one fixed term payment, so it is important that you try to obtain a fixed term and rate if your goal is to reduce your debt. Some lenders may require that you have an account with them already and for a prescribed period of time in order to qualify for better rates on their personal loan products. Lenders may charge an origination fee generally around 1% of the amount sought. Be sure to ask about all fees, costs and terms associated with each loan product. Loan amounts of $1,000 up to $50,000 are available through participating lenders; however, your state, credit history, credit score, personal financial situation, and lender underwriting criteria can impact the amount, fees, terms and rates offered. Ask your loan officer for details.

As of 28-Feb-2019, LendingTree Personal Loan consumers were seeing match rates as low as 3.99% (3.99% 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).

3.99%-16.99%

24 to 144

months

660

SEE OFFERS Secured

on LendingTree’s secure website

Advertiser Disclosure.

Your APR may differ based on loan purpose, amount, term, and your credit profile. Rate is quoted with AutoPay discount, which is only available when you select AutoPay prior to loan funding. Rates under the invoicing option are 0.50% higher. Subject to credit approval. Conditions and limitations apply. Advertised rates and terms are subject to change without notice. Payment example: Monthly payments for a $10,000 loan at 3.99% APR with a term of 3 years would result in 36 monthly payments of $295.20.

5.99%-29.99%

24 to 60

months

Varies

SEE OFFERS Secured

on LendingTree’s secure website

All loans available through FreedomPlus.com are made by Cross River Bank, a New Jersey State Chartered Commercial Bank, Member FDIC, Equal Housing Lender. All loan and rate terms are subject to eligibility restrictions, application review, credit score, loan amount, loan term, lender approval, and credit usage and history. Eligibility for a loan is not guaranteed. Loans are not available to residents of all states – please call a FreedomPlus representative for further details.

5.98%-29.99%

36 or 60

months

640

SEE OFFERS Secured

on LendingTree’s secure website

Up to 29.99%

36 or 60

months

700

SEE OFFERS Secured

on LendingTree’s secure website

Advertiser Disclosure.

*The Annual Percentage Rate (APR) is the cost of credit as a yearly rate and ranges from 5.99%-29.99%, which may include an origination fee from 0.99% - 5.99%. Any origination fee on a 5-year loan will be at least 4.99% and is deducted from loan proceeds. The APR offered will depend on your credit score, income, debt payment obligations, loan amount, loan term, credit usage history and other factors, and therefore may be higher than our lowest advertised rate. Requests for the highest loan amount may resulting an APR higher than our lowest advertised rate. You need a minimum 700 FICO® score and a minimum individual annual income of $100,000 to qualify for our lowest rate.

Best Egg loans are unsecured personal loans made by Cross River Bank, a New Jersey State Chartered Commercial Bank, Member FDIC. Equal Housing Lender. "Best Egg" is a trademark of Marlette Funding LLC. All uses of "Best Egg" on this site mean and shall refer to "the Best Egg personal loan" and/or "Best Egg on behalf of Cross River Bank, as originator of the Best Egg personal loan," as applicable. Loan amounts generally range from $2,000-$35,000. Offers up to $50,000 may be available for qualified customers who receive offer codes in the mail. The minimum individual annual income needed to qualify for a loan of $50,000 is $130,000. Borrowers may hold no more than two open Best Egg loans at any given time. In order to be eligible for a second Best Egg loan, your existing Best Egg loan must have been open for at least six months. Total existing Best Egg loan balances must not exceed $50,000. All loans in MA must exceed $6,000; in NM, OH must exceed $5,000; in GA must exceed $3,000.

Borrowers should refer to their loan agreement for specific terms and conditions. A loan example: a 5–year $10,000 loan with 9.99% APR has 60 scheduled monthly payments of $201.81, and a 3–year $5,000 loan with 5.99% APR has 36 scheduled monthly payments of $150.57. Your verifiable income must support your ability to repay your loan. Upon loan funding, the timing of available funds may vary depending upon your bank's policies.

To help the government fight the funding of terrorism and money laundering activities, federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. When you open an account, we will ask for your name, address, date of birth, and other information that will allow us to identify you.

16.05%-35.99%

24 to 60

months

Varies

SEE OFFERS Secured

on LendingTree’s secure website

Advertiser Disclosure.

Not all applicants will qualify for larger loan amounts or most favorable loan terms. Loan approval and actual loan terms depend on your ability to meet our credit standards (including a responsible credit history, sufficient income after monthly expenses, and availability of collateral). Larger loan amounts require a first lien on a motor vehicle no more than ten years old, that meets our value requirements, titled in your name with valid insurance. Maximum annual percentage rate (APR) is 35.99%, subject to state restrictions. APRs are generally higher on loans not secured by a vehicle. The lowest APR shown represents the 10% of loans with the most favorable APR. Active duty military, their spouse or dependents covered under the Military Lending Act may not pledge any vehicle as collateral for a loan. OneMain loan proceeds cannot be used for postsecondary educational expenses as defined by the CFPB’s Regulation Z, such as college, university or vocational expenses; for any business or commercial purpose; to purchase securities; or for gambling or illegal purposes. Borrowers in these states are subject to these minimum loan sizes: Alabama: $2,100. California: $3,000. Georgia: Unless you are a present customer, $3,100 minimum loan amount. Ohio: $2,000. Virginia: $2,600.

Borrowers (other than present customers) in these states are subject to these maximum unsecured loan sizes: Florida: $8,000. Iowa: $8,500. Maine: $7,000. Mississippi: $7,500. North Carolina: $7,500. New York: $20,000. Texas: $8,000. West Virginia: $7,500. An unsecured loan is a loan which does not require you to provide collateral (such as a motor vehicle) to the lender.
Peerform

5.99%-29.99%

36 or 60

months

600

SEE OFFERS Secured

on Peerform’s secure website

9.95%-35.99%

24 to 60

months

Varies

SEE OFFERS Secured

on LendingTree’s secure website

Avant branded credit products are issued by WebBank, member FDIC.

Tower Federal Credit Union

8.74%-11.74%

12 to 72

months

580

SEE OFFERS Secured

on Tower Federal Credit Union’s secure website

Personal Loans for Debt Consolidation

Start Shopping Here – LendingTree

At LendingTree, you can make dozens of personal loan companies compete for your business with a single online form. When you fill out the form, LendingTree will do a soft pull – which means your score will not be negatively impacted. Dozens of lenders will compete and you may be matched with lenders who want your business. You may be able to compare and save in just a few minutes. We recommend starting here. You can always apply directly to other lenders – but many of the lenders we recommend already participate in the LendingTree personal loan online tool.

LendingTree
APR

As low as 3.99%

Credit Req.

Minimum 500 FICO®

Minimum Credit Score

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 our parent company. 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. LendingTree is not a lender.


A Personal Loan can offer funds relatively quickly once you qualify you could have your funds within a few days to a week. A loan can be fixed for a term and rate or variable with fluctuating amount due and rate assessed, be sure to speak with your loan officer about the actual term and rate you may qualify for based on your credit history and ability to repay the loan. A personal loan can assist in paying off high-interest rate balances with one fixed term payment, so it is important that you try to obtain a fixed term and rate if your goal is to reduce your debt. Some lenders may require that you have an account with them already and for a prescribed period of time in order to qualify for better rates on their personal loan products. Lenders may charge an origination fee generally around 1% of the amount sought. Be sure to ask about all fees, costs and terms associated with each loan product. Loan amounts of $1,000 up to $50,000 are available through participating lenders; however, your state, credit history, credit score, personal financial situation, and lender underwriting criteria can impact the amount, fees, terms and rates offered. Ask your loan officer for details.

As of 28-Feb-2019, LendingTree Personal Loan consumers were seeing match rates as low as 3.99% (3.99% 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).

Best debt consolidation loans for excellent credit

LightStream

APR

3.99%
To
16.99%

Credit Req.

660

Minimum Credit Score

Terms

24 to 144

months

Origination Fee

No origination fee

SEE OFFERS Secured

on LendingTree’s secure website

Advertiser Disclosure

LightStream is the online lending division of SunTrust Bank.... Read More


Your APR may differ based on loan purpose, amount, term, and your credit profile. Rate is quoted with AutoPay discount, which is only available when you select AutoPay prior to loan funding. Rates under the invoicing option are 0.50% higher. Subject to credit approval. Conditions and limitations apply. Advertised rates and terms are subject to change without notice. Payment example: Monthly payments for a $10,000 loan at 3.99% APR with a term of 3 years would result in 36 monthly payments of $295.20.

What we like

If you’ve managed your credit well and have the credit score to prove it, LightStream can be a great option to consolidate your debt. It has some of the lowest interest rates out there — as low as 3.99% APR (that’s with a 0.50% auto-pay discount).

Going along with those low interest rates are low fees. LightStream doesn’t charge any fees at all, including origination fees or prepayment fees. The company offers loan terms from 24 to 144 months. While it’s generally best to pay off your debt as quickly as possible, sometimes having a longer-term loan makes sense, and many other lenders don’t offer loans for as long as 12 years.

The final thing we like about LightStream is that it’s quick to fund your loan. If you are approved for a loan on a business day before 2:30 p.m. Eastern time and provide the company with your bank account details, you can have your loan funded on the same day you are approved.

What could be better

If you’re trying to take advantage of the 0.50% auto-pay discount, you’ll need to set this up before your loan is funded. You won’t qualify for this interest rate discount if you do it after the fact.

Additionally, the company makes it a bit difficult if you’re trying to pay your loan off early. If you want any extra payments to go toward the principal (and not interest), you’ll have to schedule your extra payment to occur on the same day as your normal monthly payment. There’s no other way to specify that you want extra payments to go toward your principal balance.

Credit history required

LightStream doesn’t say what kind of credit history you need to qualify for a loan. But the company does describe those with excellent credit (and thus the best odds for approval at the lowest rates) as people with five or more years of credit history.

Fees and fine print

LightStream is a great option for folks who qualify for these loans because the company does not charge any fees at all. This means no origination fees or prepayment penalties. If you miss a payment, it’s not totally free because the company could report that to the credit bureaus, which could harm your credit score.

FreedomPlus

APR

5.99%
To
29.99%

Credit Req.

Varies

Minimum Credit Score

Terms

24 to 60

months

Origination Fee

0.00% - 5.00%

SEE OFFERS Secured

on LendingTree’s secure website

With a personalized application process that includes a phone interview, FreedomPlus gives people with below average credit a shot at getting approved for a personal loan.... Read More

What we like

FreedomPlus also offers some of the lowest personal loan rates in our marketplace. Those rates are running as low as 5.99% APR.

Another thing we like about FreedomPlus is that it offers multiple different interest rate discounts. The lender doesn’t specify the amounts, but you can get discounts for three things:

  • If you have a co-applicant for your loan
  • If you use at least half of your loan to pay off high-interest credit card debt (FreedomPlus will pay it for you)
  • If you have at least $40,000 in retirement savings

These discounts may (or may not) make your interest rate better than what you could get with other lenders. But at least the company is rewarding customers for good financial behavior, such as paying off high-interest debt and saving for retirement.

What could be better

Unfortunately, FreedomPlus doesn’t operate in all states. Even in some of the states in which it does operate, there are state-specific minimums: $6,500 in Massachusetts, $5,500 in Ohio, $10,500 in Arizona and $3,500 in Georgia.

We also don’t like that FreedomPlus has a narrower range of terms than LightStream. You can only choose from a term length between 24 and 60 months.

Further, FreedomPlus doesn’t provide a lot of information on its website. Rather, the company directs you to contact it for more details. That could be inconvenient if you’re shopping lenders. It also puts you in a high-pressure sales situation since you must speak with someone to get the relevant details unless you’re comfortable blindly applying for a loan.

Credit history required

FreedomPlus generally requires you to have about three years worth of credit history to stand a good chance of being approved for a loan.

Fees and fine print

The company has a variable origination fee — between 0.00% - 5.00% — depending on your loan’s APR. If you make a late payment, you’ll pay either a flat $15 fee, or 5% of your payment amount, depending on whichever is greater. If the company processes a personal check, that’s another $15. If your monthly payment is returned, it’s yet another $15 fee.

Best debt consolidation loans for good credit

RocketLoans

APR

5.98%
To
29.99%

Credit Req.

640

Minimum Credit Score

Terms

36 or 60

months

Origination Fee

1.00% - 6.00%

SEE OFFERS Secured

on LendingTree’s secure website

Rocketloans is a digital finance business that is part of the Quicken Loans family. ... Read More

What we like

Even if you don’t have stellar credit, the interest rate that RocketLoans charges isn’t bad (assuming you are offered a low-end rate). RocketLoans is charging between 5.98% and 29.99% APR. The high end is the same rate you may find on a high-interest credit card. If you fall into that interest rate band, it may be worth reassessing this lender.

RocketLoans is also fast at funding your loan. If everything matches up correctly among you, RocketLoans and the bank, you may be able to receive the money the same day.

What could be better

RocketLoans isn’t available in every state. If you live in Nevada, Iowa or West Virginia, you can’t use the company to consolidate your debt.

The company only offers two different term lengths — 36 or 60 months. You can pay it off sooner, of course, and there’s no penalty for doing so. But this means you’ll only get a maximum of two different options for a given loan amount, which may not fit your budget.

Credit history required

The company does not say what sort of credit history is required to get a debt consolidation loan.

Fees and fine print

RocketLoans charges three different fees:

  • Late payment fee: $15
  • Origination fee: 1.00% - 6.00% of the loan amount
  • Returned check fee: $15

Best Egg

APR

Up to 29.99%

Credit Req.

700

Minimum Credit Score

Terms

36 or 60

months

Origination Fee

0.99% - 5.99%

SEE OFFERS Secured

on LendingTree’s secure website

Advertiser Disclosure

People looking for a process that is fast and straightforward can’t go wrong when applying through Best Egg for a personal loan. ... Read More


*The Annual Percentage Rate (APR) is the cost of credit as a yearly rate and ranges from 5.99%-29.99%, which may include an origination fee from 0.99% - 5.99%. Any origination fee on a 5-year loan will be at least 4.99% and is deducted from loan proceeds. The APR offered will depend on your credit score, income, debt payment obligations, loan amount, loan term, credit usage history and other factors, and therefore may be higher than our lowest advertised rate. Requests for the highest loan amount may resulting an APR higher than our lowest advertised rate. You need a minimum 700 FICO® score and a minimum individual annual income of $100,000 to qualify for our lowest rate.

Best Egg loans are unsecured personal loans made by Cross River Bank, a New Jersey State Chartered Commercial Bank, Member FDIC. Equal Housing Lender. "Best Egg" is a trademark of Marlette Funding LLC. All uses of "Best Egg" on this site mean and shall refer to "the Best Egg personal loan" and/or "Best Egg on behalf of Cross River Bank, as originator of the Best Egg personal loan," as applicable. Loan amounts generally range from $2,000-$35,000. Offers up to $50,000 may be available for qualified customers who receive offer codes in the mail. The minimum individual annual income needed to qualify for a loan of $50,000 is $130,000. Borrowers may hold no more than two open Best Egg loans at any given time. In order to be eligible for a second Best Egg loan, your existing Best Egg loan must have been open for at least six months. Total existing Best Egg loan balances must not exceed $50,000. All loans in MA must exceed $6,000; in NM, OH must exceed $5,000; in GA must exceed $3,000.

Borrowers should refer to their loan agreement for specific terms and conditions. A loan example: a 5–year $10,000 loan with 9.99% APR has 60 scheduled monthly payments of $201.81, and a 3–year $5,000 loan with 5.99% APR has 36 scheduled monthly payments of $150.57. Your verifiable income must support your ability to repay your loan. Upon loan funding, the timing of available funds may vary depending upon your bank's policies.

To help the government fight the funding of terrorism and money laundering activities, federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. When you open an account, we will ask for your name, address, date of birth, and other information that will allow us to identify you.

What we like

BestEgg has similar interest rates to RocketLoans, ranging from up to 5.99% to 29.99% APR. You can also take out loan amounts as small as $2,000 to consolidate your debt, which is a lot less than the minimum requirement for other lenders. Also, there are no prepayment penalties for paying off the loan early.

Heads-up, though: The minimum loan amount does vary by state, so it may be different depending on where you live. Georgia residents can’t take out loans of less than $3,000, Massachusetts residents must borrow at least $6,000, and New Mexico and Ohio residents must borrow at least $5,000.

What could be better

If you live in Iowa, Vermont or West Virginia, you’re out of luck when it comes to getting a BestEgg loan. That’s because the company doesn’t operate in those states.

You can take out a loan of up to $35,000 to consolidate your debt through BestEgg. That may sound like a good thing at first, but consider this: The company only offers you the choice of a three- or five-year term. If you take out a large amount of money, you’ll also need an equally high income to make those whopping payments. Instead, if you’re facing a large amount of debt, it’s worthwhile to also consider a lender that offers more options.

We also don’t like that BestEgg charges a $7 monthly payment fee unless you’re signed up for automatic payments. Signing up for auto-pay simplifies things for both you and the lender, but you shouldn’t be penalized if you’re not able to do that for some reason.

Credit history required

Unfortunately, BestEgg does not disclose this information.

Fees and fine print

Here’s a quick summary of the fees that BestEgg charges:

  • Origination fee: 0.99% - 5.99%
  • Late payment fee: $15
  • Returned payment fee: $15
  • Payment processing fee for people not enrolled in auto-pay: $7

Best debt consolidation loans for average credit

OneMain Financial

APR

16.05%
To
35.99%

Credit Req.

Varies

Minimum Credit Score

Terms

24 to 60

months

Origination Fee

Varies

SEE OFFERS Secured

on LendingTree’s secure website

Advertiser Disclosure

If you have a credit score below 600, OneMain Financial is one of the few lenders that you can use to get a personal loan.... Read More


Not all applicants will qualify for larger loan amounts or most favorable loan terms. Loan approval and actual loan terms depend on your ability to meet our credit standards (including a responsible credit history, sufficient income after monthly expenses, and availability of collateral). Larger loan amounts require a first lien on a motor vehicle no more than ten years old, that meets our value requirements, titled in your name with valid insurance. Maximum annual percentage rate (APR) is 35.99%, subject to state restrictions. APRs are generally higher on loans not secured by a vehicle. The lowest APR shown represents the 10% of loans with the most favorable APR. Active duty military, their spouse or dependents covered under the Military Lending Act may not pledge any vehicle as collateral for a loan. OneMain loan proceeds cannot be used for postsecondary educational expenses as defined by the CFPB’s Regulation Z, such as college, university or vocational expenses; for any business or commercial purpose; to purchase securities; or for gambling or illegal purposes. Borrowers in these states are subject to these minimum loan sizes: Alabama: $2,100. California: $3,000. Georgia: Unless you are a present customer, $3,100 minimum loan amount. Ohio: $2,000. Virginia: $2,600.

Borrowers (other than present customers) in these states are subject to these maximum unsecured loan sizes: Florida: $8,000. Iowa: $8,500. Maine: $7,000. Mississippi: $7,500. North Carolina: $7,500. New York: $20,000. Texas: $8,000. West Virginia: $7,500. An unsecured loan is a loan which does not require you to provide collateral (such as a motor vehicle) to the lender.

What we like

If you like working with bankers in person, this might be a better option for you since you’ll be required to visit a OneMain Financial branch to get your money. This means that if you are approved by noon and can make it to a branch, you could get your money that day.

What could be better

On the flip side, visiting a local branch to complete the loan application process could be inconvenient if you live in a suburban or rural area and there aren’t any locations close to you. These loans are also very expensive.

We also don’t like that the company’s loan policies vary across the country depending on your state of residence. This makes it difficult to easily compare lenders without contacting OneMain Financial to get the most accurate information for your situation.

Credit history required

Your credit history is important to OneMain Financial. But the company itself doesn’t have any listed requirements. Rather, your credit history is taken into account along with your debt-to-income ratio and your ability to make the loan payments on time.

Fees and fine print

There are no prepayment penalties with a OneMain Financial loan. The cost of origination or late fees varies depending on the state in which you live. You’ll need to contact OneMain Financial to get this information.

Peerform

Peerform
APR

5.99%
To
29.99%

Credit Req.

600

Minimum Credit Score

Terms

36 or 60

months

Origination Fee

1.00% - 5.00%

APPLY NOW Secured

on Peerform’s secure website

Even with a credit score of 600, you still might be able to secure a loan through Peerform. ... Read More

What we like

These loans come with low rates, starting at 5.99% APR. Peerform is also open with its pricing scheme, listing in detail the APR and origination fees that come along with each credit grade, which you can see here.

What could be better

Peerform is a peer-to-peer lender, which means that the company relies on regular everyday investors to fund your loan. You could view this as a good thing since it’s not some mega-corporation that’s getting rich off funding personal loans, but it also means that it could take a while (up to two weeks) for your loan to be fully funded by investors. It’s even possible that your loan listing could end without enough investors to fund your loan, which means you may be offered less money than what you sought — or you may not even receive a loan at all.

These loans are also a bit on the fee-heavy side. For example, the company is trying to push you toward digital payments, because it will charge you a $15 fee per payment if you choose to send in a check.

Credit history required

Like many lenders, Peerform does not detail exactly what type of credit history is required to get a loan. Rather, the company takes into account other factors — such as whether your credit score is above 600 — when deciding whether to create a listing for your loan.

Fees and fine print

Here is a summary of fees that Peerform charges on its personal loans:

  • Origination fee: 1.00% - 5.00%
  • Unsuccessful payment fee: $15
  • Late payment fee: $15 or 5% of the amount due, whichever is more
  • Check payment fee: $15 per check payment

Best debt consolidation loans for bad credit

Avant

APR

9.95%
To
35.99%

Credit Req.

Varies

Minimum Credit Score

Terms

24 to 60

months

Origination Fee

Up to 4.75%

SEE OFFERS Secured

on LendingTree’s secure website

Avant branded credit products are issued by WebBank, member FDIC.

Avant is an online lender that offers personal loans ranging from $2,000 to $35,000. ... Read More

What we like

Avant does offer smaller loans than many other lenders. You can take out a loan starting at $2,000, ranging up to $35,000, depending on the state in which you live. That’s helpful if you’re trying to work your way out of just a few thousand dollars of debt.

You can also get your money relatively quickly if you are approved for a debt consolidation loan with Avant. If you finish the application process and are approved for a loan before 4:30 p.m. Central time on a weekday, you could have your money the next day.

What could be better

Avant’s rates, fees, loan amounts and loan terms are dependent upon the state in which you live, so you’ll need to check for yourself on its website. But for Illinois (where Avant is headquartered), we noticed that these loans do come with higher fees than normal. They also come with high interest rates, starting at 9.95% APR.

This isn’t unusual since Avant is willing to work with people with less-than-stellar credit scores. It does make it inconvenient for you because you’ll need to assess whether it’s cheaper to consolidate your debt with a personal loan rather than paying it off as is.

Once you add on the upfront administrative fee to the high interest rate, you may find that this loan isn’t a deal at all in the long run compared to what you’re currently paying. The only way to know is to do the math.

Credit history required

Again, Avant doesn’t disclose how long your credit history needs to be to get a loan with the company.

Fees and fine print

In Illinois, where Avant is based, you can expect to pay the following fees if you take out a debt consolidation loan:

  • Administrative fee: Up to 4.75% of the loan amount
  • Late fee: $25
  • Returned payment fee: $15

Tower Federal Credit Union

Tower Federal Credit Union
APR

8.74%
To
11.74%

Credit Req.

580

Minimum Credit Score

Terms

12 to 72

months

Origination Fee

No origination fee

APPLY NOW Secured

on Tower Federal Credit Union’s secure website

Tower Federal Credit Union offers both personal lines of credit and more common signature loans that feature a fixed term. ... Read More

What we like

We like that there is a wide range of options for term lengths at Tower Federal Credit Union. You can choose from six different term lengths, ranging from one to six years. Having a wide range of options is good for you as a consumer because this effectively offers you up to six different monthly payment amounts that you can choose from to fit into your budget.

Rates for these loans are also relatively low. For example, if you opt for a one-year loan, rates start at 8.74% APR. Be warned: The longer your term length, the higher the minimum APR. If you instead opt for a six-year loan, rates instead start at 11.74% APR. At some point, you may need to reassess whether the interest rate you’re receiving is really lower than your current debts’ interest rate.

What could be better

Since this is a credit union, you’ll have a different working relationship. It’s not as simple as applying with any old online lender, getting the money, paying it back and having everything be all right.

First, you’ll need to join Tower Federal Credit Union. There are pretty strict membership requirements, but you can always join by making a minimum $35 donation to the TowerCares Foundation. You’ll need to deposit at least $15 in a savings account to establish your membership. Then, after you’ve applied and established your membership, you can apply for this loan.

You’ll also need to maintain your bank account if you’re older than 22. If more than a year passes without any activity in the account and if your balance is less than $100, you’ll pay a $3 quarterly inactivity fee. So, you can see, going with a credit union may boost your odds of approval if you have a low credit score, but it’s certainly not without a great deal of work compared to a regular online lender.

Another downside of getting a personal loan with Tower Federal Credit Union is that there’s no way to know how much money you can take out without applying for the loan first. That’s because the credit union will offer you a range of borrowing limits based on your credit score and ability to pay, which it determines after you apply for a loan. This could be inconvenient if you go through all the hassle of applying for a loan only to find out the loan amount won’t work for you.

Credit history required

Tower Federal Credit Union will look at your credit when deciding whether to approve you for a loan. But it doesn’t detail what sort of credit history is required to be approved for a loan. Besides your credit history, it’ll also look at your ability to repay the loan.

Fees and fine print

If you make a late payment, you’ll pay a $20 fee. That’s just a touch higher than with other lenders. Additionally, you can make your monthly payment over the phone, but if you do so, there’ll be another $9 processing fee.
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3 reasons to use a personal loan to pay off debt

 

How to choose the right debt consolidation loan

To help ensure you select the best debt consolidation loan for your financial situation, consider these four tips:

  1. Do the math: See what a debt consolidation loan will cost you in the long run compared to your current debts. A debt consolidation loan may give you a lower payment or a lower interest rate, but if you choose a long-term loan, you may end up paying more in interest charges by the time your term ends. LendingTree, MagnifyMoney’s parent company, has a debt consolidation calculator so that you can run the numbers.
  2. Consider which types of debt you want to consolidate: Generally speaking, student loan debt is consolidated separately from your other types of debt, such as credit card debt, medical debt and auto loan debt.
  3. Consider whether other types of loans are right for you: Home equity lines of credit, home equity loans, personal lines of credit and 0% introductory APR credit cards are also reasonable options for debt consolidation.
  4. Check whether you’re applying for a secured or an unsecured loan: If it’s a secured loan (backed by an asset such as your car) and you fail to make your payments, the lender can repossess the item. Unsecured loans, on the other hand, aren’t backed by this kind of collateral, but often come with higher interest rates. Make sure you consider the trade-offs before you apply for the loan.

This article contains links to LendingTree, our parent company.

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.

Erin Millard
Erin Millard |

Erin Millard is a writer at MagnifyMoney. You can email Erin at [email protected]

Lindsay VanSomeren
Lindsay VanSomeren |

Lindsay VanSomeren is a writer at MagnifyMoney. You can email Lindsay here

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