5 Best Debt Consolidation Loans

Managing your monthly payments and calculating your budget can be difficult when you have multiple loans. The chaos of all your debtors calling you up for different requirements and trying to charge you various additional fees every month can feel pretty intrusive and overwhelming. So, what’s the solution? Merging all your loans into one big loan so you only have to pay one instalment every month can be a great convenience. And this can be done through debt consolidation programs.

So, what exactly is debt consolidation, and how does it work? In this blog, we will discuss debt consolidation in-depth and provide detailed information on helpful debt consolidation companies you can use to make your life easier. Let’s dive in!

What are debt consolidation loans?

Consolidating your loan can be a great way to streamline your loan. In simpler terms, debt consolidation is taking a new loan, preferably with low interest and a better term, to pay off all the other loans. This helps the borrower combine all their loans into one single loan that they can slowly pay off with the new interest rate.

All kinds of loans can be consolidated, but the main focus during consolidation is to pay off the highest-interest loans like credit card debts and payday loans. However, to borrow the best debt consolidation loans, the borrower must have a high credit score. The interest rates of this new loan are decided based on factors such as the borrower’s income and credit scores. It is, however, important to remember that debt consolidation programs cannot eliminate your loans. It will only lump up all the loans into one big loan.

How do these loans work?

Debt consolidation programs are calculated based on the borrower’s credit scores, credit history, income and income-to-debt ratio. Based on these factors, the lender decides the loan amount, interest rates, and repayment terms. Among these, credit scores matter the most since lower credit scores mean higher interest rates.
Here’s how credit scores work:

• Good credit: 670-739
• Fair credit: 580-669‍
• Bad credit: 300-579

While different lenders may have different requirements for their debt consolidation paperwork, certain documents are common for almost all loans. Here are some of those:

• Address proof
• Identity proof
• Documents to prove your income (salary slips, bank statements)

You can save a lot of money with the help of seasoned debt consolidation companies, thanks to their expertise in the field. But what is the expertise exactly? Let's find out!

What do debt consolidation companies do?

These companies help their clients manage and repay their debts smartly. They usually negotiate with creditors for lower interest rates, combining multiple debts into one payment while additionally educating their clients on finance to help them achieve long-term monetary stability.

Tips for choosing the best debt consolidation company

1. Research and Compare: Take ample time to research different options by comparing their services, fees and customer reviews.
2. Accreditation: A company that has been recognised by reputable organisations like Better Business Bureau (BBB) should ideally be your choice
3. Customer Reviews: Read customer reviews to get an idea about the company's debt consolidation programs. Lots of genuine customer testimonials are a green flag.
4. Licensed and Certified Counselors: Make sure that the company deploys certified counsellors to provide expert financial advice.
5. Customised Plans: Go for an option that personalises plans based on your financial needs and goals.

To save your productive hours, here is a compiled list of the top debt consolidation companies that check marks these requirements.

Top 5 Debt Consolidation Companies 2024

Debt consolidation programs make managing your finances and debt easier. But for that, you must find a consolidation loan with low or 0% interest rates, or the new debt can become a huge burden. So, here’s our list of the five most genuine debt consolidation companies taking care of that.

1. Bajaj Finserv

Our research made it clear that Bajaj Finserv is one of the most reliable debt consolidation companies. They don't need extensive paperwork, and everything is approved within 5 minutes with the right application process. The loan money is transferred to your account within 24 hours. With Bajaj, you can get up to 25L with an annual interest rate of only 12.99%. The general tenure of the loan is 2 to 7 years. They also boast no-hidden charges policy and offer loans without collaterals and guarantors, making it shine among other debt consolidation companies.

2. Upstart

One of the biggest criteria for being eligible for debt consolidation programs is the borrower's high credit score. High credit scores enable the borrower to apply for a low or 0% interest loan, and Upstart offers borrowers with lower credit scores. You might not get interest rates that are as low as the rates with high credit scores, but they can still be significantly lower than your credit card or payday interest rates. Upstart also works with borrowers with no credit history, making it a great choice for students with a student bank account. With Upstart, you can get loans up to $50,000 at an annual interest rate of 5.55% to 35.99% based on your creditworthiness for a tenure of 3 to 5 years.

3. SoFi

If you are specifically looking for a consolidation loan for bigger debts, SoFi offers one of the best debt consolidation programs in the market today. With SoFi, you can get up to $100,000 with a low-interest rate ranging from 7.99% to 23.43%. However, the process is a bit lengthy as the approval can take up to 3 days. One of the most significant features of SoFi is that they transfer the money directly to your lender, thus removing the hassles of you having to do anything. SoFi also offers its loans without any additional fees, including origination fees, prepayment fees, or late fees, making it easier for its borrowers.

4. SunTrust Bank

If you have a good enough credit score and are looking for the lowest possible interest rates, Suntrust Bank is your safe bet. LightStream by SunTrust Bank is one of the best debt consolidation programs available that offer loans up to $100,000 with a starting low-interest rate of only 3.49%. The loan processing is quick and thus is a good option if you need the money immediately. You can get an additional 0.5% discount if the borrower pays through their automatic deduction feature from their checking account. With amazing customer service, no prepayment penalties, additional fees and hidden charges, LightStream makes it to our top five debt consolidation companies list.

5. HDFC 

This company is perhaps the most trusted among the debt consolidation companies. HDFC’s debt consolidation programs can give you coverage between 40,000 INR to 40L INR. The annual interest rates are as low as 11.25% to 21.50%. With the reputation of being one of the most reliable lenders, HDFC charges a minimal amount of 2.50% of the loan amount for processing. You can apply for HDFC personal loans for debt consolidation through online and offline channels without collaterals or guarantors.

Debt consolidation programs are a great way to ease your lifestyle by saving money on interest and cutting out the hassles of managing multiple EMIs. However, you must choose only from those debt consolidation companies that can offer you low-interest rates.