Get a Debt Consolidation Loan Today and Conquer Your Finances

A debt consolidation loan might not make sense if you have bad credit and can’t get a lower interest rate. But if you have average-to-excellent credit, you have a good chance to qualify for a debt consolidation loan with a lower interest rate than your credit card APR. Even shaving a percentage point or two from your APR can save you money, and committing to a fixed repayment schedule allows you to conquer your debt rather than letting it snowball.

However, there are other options to consolidate debt beyond personal loans, so it’s important to explore your options. If you have a manageable amount of credit card debt, you may be able to secure a promotional 0% APR credit card and transfer your balances. If you’re in a position to pay off the debt within the promotional period, this may be a better option, although balance transfers typically involve fees (usually around 2% – 3%).

The process to consolidate debt with a personal loan is fairly simple. First, you’ll need to check rates to determine the best option – you can use a tool like Purefy’s rate comparison to see real-time offers from multiple lenders at once. Our rate comparison tool uses a soft credit pull, so there won’t be any impact on your credit score.

After receiving your personal loan offers, you can continue to the application, which typically can be completed in about 15 minutes through the lender’s website. You’ll then undergo a hard credit pull, and after approval, you may also need to provide a few supporting documents such as income verification or an ID. When your loan is fully approved and you eSign your loan documents, the lender will typically send funds directly to your bank account. From start to finish, the process can be completed within 1-3 business days on average, depending on the lender you choose.

Once you receive the funds, you’ll pay off your outstanding credit card debt. Moving forward, you’ll make one fixed payment each month instead of multiple payments.

Each lender may have their own criteria for debt consolidation loans, but generally speaking, you’ll need the following:

• A fair or good credit score – the higher the score, the lower your rate
• Verifiable income and employment
• Be at least 18 years old
• Be a U.S. Citizen or Permanent Resident with a Social Security Number

Every credit profile is unique, but in general, a debt consolidation personal loan will likely raise your credit score over time. You may see a temporary decrease in your credit score after applying and undergoing a hard credit check, but as you begin to repay the loan, your score will improve – as long as you aren’t accumulating more debt.

Since the application process is entirely online, you can be approved as soon as the same day with some lenders. On average, our partner lenders take between one and three days for approval and funding, but in some cases, it can take up to seven days to receive funds.

Even if you have bad credit, you could still qualify for a personal loan, but the lowest interest rates are reserved for the most creditworthy applicants. A cosigner can allow you to qualify for a lower interest rate if you have bad credit than you would on your own, however many lenders do not allow cosigners on personal loans.

If your credit is good-to-excellent, you probably won’t need a cosigner, but having one could help you qualify for a lower interest rate.

A balance transfer allows you to move the entire outstanding balance of one or more credit cards to a new credit card, often with a low or 0% promotional APR for a set period of time. Most credit cards will charge a balance transfer fee to accomplish this (which is typically 2% – 3%). If you are able to secure a 0% APR and pay off the balance within the promotional time period, a balance transfer can be a great way to consolidate debt. However, if you aren’t able to pay off the balance transfer within the promotional time period, your credit card APR will usually return to the double digits, and you’re back at square one.

Additionally, you may not be able to transfer all of your debt onto the card with the promotional APR if the credit limit is too low or there is a restriction on what percentage of the credit limit can be used for balance transfers.

A credit card debt consolidation loan will have a fixed interest rate and repayment period, and your monthly payment will never change. Rather than a six or 12-month period to repay a balance transfer, you’ll have an agreed upon amount of time to repay the debt consolidation loan, usually one to seven years. You also won’t need to worry about your interest rate doubling or even tripling since there’s no promotional time period like a balance transfer.

This will vary depending on the lender you choose, but if documentation is required, you can expect to provide some form of income verification (like a paystub or W-2) and identity verification.

In addition to balance transfers, there are other alternatives to debt consolidation loans, such as:

Credit counseling – non-profit credit counseling can help you create a budget and develop a plan to repay your debt. The U.S. Department of Justice has a list of approved credit counseling agencies you can work with, but be careful to avoid companies not on this list offering debt relief as they could be scams.

Debt repayment strategies – the debt snowball and debt avalanche are two methods for paying down debt. They each involve paying the minimum toward all of your accounts and focusing your attention on paying extra toward just one credit card account at a time. The debt snowball focuses on the account with the lowest balance first, while the debt avalanche method focuses on the account with the highest interest rate.

Debt consolidation and debt relief are not the same. Debt consolidation involves paying off existing credit card balances and other debts with a new loan that has an APR and repayment structure you choose.

Debt relief involves third party companies that often charge high fees to negotiate with creditors on your behalf. Debt relief services can be risky and can often leave you in more debt than you started due to fees and penalties, and your credit score can also take a hit.