fosinsurance.org gathered data on six of the top debt consolidation companies in the country and evaluated them based on their services, costs, BBB ratings, and complaint history.
“Debt Consolidation Companies”
The analysis demonstrated the wide range of approaches taken by businesses to address their debt issues, as well as the associated costs and turnaround times.
Best Debt Consolidation Companies
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InCharge Debt Solutions
A 501 (c)(3) organization, InCharge focuses on debt management and credit counseling services. The National Foundation for Credit Counseling provides training and certification for counselors. In Orlando, Florida, services are offered in person, over the phone, and online.
Fees
Monthly fees average $33. Setup fees vary by state, with a maximum of $75.
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Prosper Funding
Online loan platform Prosper is commercially driven. After providing financial details, borrowers are connected with investors who provide the loans’ funding. Both the lender and the borrower have their loans serviced by Prosper.
Fees
0.5–4.95% as an origination fee. The late fee is $15 or 5% of the monthly payment. Failure to pay is $15.
Interest rates: range from 5.99% to 35%, depending on the criteria.
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Wells Fargo
For-profit Wells Fargo & Company is the third-largest bank in the United States by assets and the biggest by market capitalization. It provides personal loans for debt consolidation that are both secured and unsecured.
Fees
For a secured loan, the origination cost is $75. There is a $39 fee for late payments or insufficient cash.
Inflation Rate
Unsecured 7.25–20%
6.5% to 8% guaranteed
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Avant
A for-profit lending company called Avant claims to have served 450,000 clients and disbursed more than $1 billion in loans in its first four years. The application process is simple and quick. Access the Avant website to submit a loan application.
Fees
A 0.95%–3.75% origination fee is charged. $25 late fee. $15 is the fee for inadequate cash.
Inflation Rate
For loans, 9.95%-36%
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Lending Club
A pioneer in online lending, Lending Club is a for-profit company. Borrowers submit an application, the business determines their creditworthiness and sets their interest rates, and investors fund the loan. Online access to Lending Club services is accessible.
Fees
1%–6% origination charge. The late fee is $15 or 5% of the monthly payment. $7 is the check processing fee.
Inflation Rate
5.99%-35%, depending on the criteria
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SoFi
Because SoFi is an internet lender rather than a traditional bank, it can provide excellent rates to customers with good credit because it has lower overhead. DTI and credit score alone do not, however, determine who gets a loan. In addition, SoFi will take a borrower’s projected cash flow, employment, and education into account.
Fees
No fees
Interest Rate
6.99%-21.78%
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National Debt Relief
A for-profit business that specializes in debt negotiation and settlement is called National Debt Relief. They seek to reach a settlement with each creditor after gathering all past due bills as part of their debt consolidation strategy. Services are exclusively offered over the phone.
What Is Debt Consolidation?
With a bank loan or debt-relief program, debt consolidation is a technique for streamlining your monthly payments and changing the terms of your loans. Borrowers can shorten the time spent switching between credit accounts and lower their interest rates to bearable levels. Your life can be made easier by consolidating some bills into a single payment, and debt consolidation makes this possible.
Which Debts Are Ineligible for Consolidation?
When it comes to debt consolidation, some bills are off limits. It won’t assist in raising money for a business endeavor that is heavily indebted. These initiatives support people with unsecured personal debt. Student loans are typically not included by lenders. Some businesses, nevertheless, might be an exception. Last but not least, it is prohibited to use debt consolidation loans to pay for unlawful endeavors, services, or goods.
Prequalification
A great strategy to compare loan programs without lowering your credit score is to prequalify. When requesting a new loan, creditors frequently perform a hard credit check. To evaluate your rate before making a decision, prequalification alternatives allow for a light credit check. As a result, you can compare various loan amounts, terms of payback, and interest rates without risking your credit.
Choosing a Debt Consolidation Company: What to Look for
Success with debt consolidation is mostly dependent on preserving a positive working relationship with your creditor and being resolute in your money management.
- Customer Service:A professional debt reduction business will set your mind at ease right away. Businesses should have a solid track record of success and clarity in their responses. A state or federal institution should provide counseling training and certification.Understanding the means of payment for credit counselors is useful. A warning sign should be raised if they receive bonuses for recommending more services.Excellent customer service should also instruct you on how to prevent making the mistakes that led to your debt troubles in the first place.
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Counseling and Education :The educational component of picking a debt consolidation organization is an often-overlooked but crucial step. Will you discover anything that will help you prevent issues in the future? Nearly all nonprofit debt consolidation agencies are responsible for educating and assisting consumers.As 501(c)(3) organizations, nonprofits are required by the IRS to provide an educational component in their services in order to maintain their tax-exempt status. In order to accomplish this, nonprofits virtually typically provide credit counseling at no cost.Counselors examine a client’s financial situation, concentrating on the conditions that led to financial issues and how budget management will address them.
Make sure the company’s counselors are qualified and certified if you go this way. If you have inquiries regarding certification, get in touch with the National Federation for Credit Counseling (NFCC).
- Longevity and Reliability:Customers gain trust in businesses after 10 to 15 years. Their actions, morals, and beliefs stay the same. They are still in business because they offer solutions to customers.The majority of companies that engage in debt consolidation are BBB-accredited and have A-plus ratings. Although the BBB is frequently kind in its evaluations, it is still a valuable tool. It provides information on how many complaints a company receives and how many of those concerns were ultimately handled.The American Fair Credit Council or the International Association of Professional Debt Arbitrators accreditation is something you should check before hiring a company. These groups make sure businesses abide by laws meant to safeguard customers from deceptive or unfair lending practices.