Are you in the market for a debt consolidation loan but aren’t sure where to get one? Let’s explore a few options to help point you in the right direction…

Understanding debt consolidation loans

Debt consolidation loans are personal loans that combine multiple debts into a single loan, ideally with a lower interest rate and more manageable monthly payment. Before exploring where to get one, it’s crucial to understand that these loans come in two main types:

1. Secured loans (requiring collateral).
2. Unsecured loans (based on creditworthiness).

Major banks

Traditional banks like Wells Fargo, Bank of America, and Chase offer debt consolidation loans.

Advantages:

• Competitive interest rates (typically 6-24% APR).
• Higher loan amounts available ($5,000-$50,000).
• Existing customer relationships may help approval.
• Branch access for in-person support.

Requirements:

• Credit score usually 660+.
• Steady income verification.
• Low debt-to-income ratio.
• Banking relationship often preferred.

Credit unions

Credit unions frequently offer more favorable terms than traditional banks.

Advantages:

• Lower interest rates (typically 5-18% APR).
• More flexible approval criteria.
• Personalized service.
• Non-profit status means member-focused approach.

Requirements:

• Membership in the credit union.
• Credit score requirements vary (sometimes as low as 580).
• Proof of income.
• Residence or employment within service area.

Peer-to-peer (P2P) platforms

Advantages:

• Quick online application process.
• Competitive rates for good credit.
• More flexible approval criteria.
• No prepayment penalties.

Requirements:

• Credit score requirements vary (580-600+).
• Verifiable income.
• Maximum debt-to-income ratios apply.
• U.S. residency.

Online direct lenders

Advantages:

• Fast approval and funding.
• Entirely online process.
• Often no origination fees.
• Rate check without hard credit pull.

Requirements:

• Generally higher credit scores (670+).
• Stable employment.
• Good income-to-debt ratio.
• Clean credit history.

Home equity loans

For homeowners with equity.

Advantages:

• Lower interest rates (typically 3-7% APR).
• Longer repayment terms.
• Tax-deductible interest possible.
• Higher loan amounts available.

Requirements:

• Home equity (usually 15-20% minimum).
• Good credit score (620+).
• Income verification.
• Property appraisal.

Home Equity Line of Credit (HELOC)

Alternative to traditional home equity loans. See: Guide To HELOC’s

Advantages:

• Flexible borrowing as needed.
• Interest only paid on amount used.
• Potential tax benefits.
• Lower rates than unsecured loans.

Requirements:

• Sufficient home equity.
• Credit score 620+.
• Stable income.
• Clean payment history.

Credit card balance transfers

For those with good credit. See: Balance Transfer Credit Cards, Explained.

Advantages:

• 0% intro APR periods (12-21 months).
• No loan application required.
• Quick approval process.
• Flexible payments.

Requirements:

• Good to excellent credit (670+).
• Sufficient transfer limit.
• Ability to pay transfer fees (typically 3-5%).