Getting a Personal Loan for Credit Card Debt Consolidation

Dealing with many credit card debt can be taxing to your well-being. It could give any healthy person bouts of anxiety and countless sleepless nights.  The best thing you can do to make things a little easier is to consolidate all your credit card debt into one loan. What exactly does this mean?

How do i Consolidate credit card debt into One Loan?

There are different ways or options you can use to consolidate credit card debts.

  • Balance transfer
  • Personal loan for credit card debt consolidation
  • Home equity loan
  • Pay off credit card debt by using other alternatives like mortgage refinance, cash out refinancing.

Since we have several loan companies offering unsecured personal loans (no collateral required) which is also called as debt consolidation loan to pay off credit card debt, lets try it first .

Personal loans such as debt consolidation loan requires credit score, credit history, and stable monthly income along with debt-to-income ratio(max 45%).

Also, it won’t affect your credit score to check rates & terms. Apply below

Why, I need a loan to pay off credit card debt:

A loan such as personal loan will provide you with a lump sum of money and use it to pay off existing credit card debt instantly. That will leave you with a single debt or a new loan, which should be at a lower interest rate and lower monthly fees than the combined payments you were making in the past.

In comparison to other debt consolidation options, the benefits of borrowing a personal loan to consolidate debt are no different. However, there are five major reasons this is one of the most effective options.

  • It will enable you to become debt free sooner or later.
  • Flexible terms
  • It has a lower fixed interest rate
  • It is simpler
  • Improves credit score.

You’d essentially be collating all your outstanding debts and taking out a personal loan that’s equal to that amount  with an interest rate less than the combined rates of your credit card debt.

That way, you’d be dealing with just one loan & monthly payment. This gets rid of the need to stay on top of different interest rates because it’ll be uniform.

Unlike other debt relief options personal loans come with lower rates, with no upfront or advance fees. Also, there are no prepayment penalties.

The main advantage of getting a personal for credit card debt is you can apply from the comfort of your home or office, less paperwork, hassle free application process, instant loan deposited to your bank checking account.

Granted, it’s a bit tricky to get a personal loan than to apply for a credit card. But with some organization and resolve, it certainly is very doable.

Is it good to pay off credit card debt with a personal loan?

It may be good, if you can get a personal loan with a lower APR than your credit card’s APR.

  • Average Personal Loan direct Lenders APR is 15%

That way, you can use the money from the personal loan to pay off the credit card balance and then just make the monthly payments on your personal loan with lesser interest.

Chances are, if you’ve build up a good credit history from making your personal loan monthly payments on time, then you should get approved for a personal loan with a lower APR with the same lender for your next loan.

Personal loans for Consolidating Credit Card Debt in 3 simple steps:

Before we guide you through the steps on how to apply for a personal loan to consolidate credit card debt, you have to do the following first:

  • Make sure that your credit report is spotless. If there are some errors in there, you need to correct them right away. Most banks hesitate to approve applications from people with low credit scores because that says a lot about their character. If your credit score is not as high as you want it to be, you have to work on improving it for now.
  • Be set on how big of a loan you’re going to apply for and determine whether you’d be able make consistent payments.
  • To take care of your debt-to-income ratio, try not to take on any more new debts and be more aware of your expenses.
  • Make time to do some research. Know where you can apply for personal loans with suitable terms. Don’t forget that aside from banks, there are also credible online lenders and credit unions to choose from.

Got everything sorted? Great. Let’s move on to the step-by-step guide.

#1 Getting a Personal Loan for Credit Card Debt: Prequalification or Pre approval

The first thing you need to do is figure out where you can get a personal loan that fits your timeline and budget. You can accomplish this by going through the prequalification process of multiple lenders. This way, you can compare offers and weigh your options.

Don’t worry. Prequalifying usually just means a soft credit check and your credit score will not be affected by this, so you can do it as much as you need to.

These days, to prequalify for a loan, you just need to fill out an online form. It won’t take more than 10 minutes if you have all your information ready. Here’s a checklist

  • The amount that you need to borrow
  • The reason that you need to borrow this amount – in this case, to consolidate your other loans.
  • Your repayment plan and how much you are able to pay every month. Creditors usually allow plans for up to 5 years.
  • Aside from your basic personal information, you must also know how much you make in a year and what your regular payments are (i.e. monthly mortgage or rent). You should also have your Social Security number at hand.

The lender will then make you sign an agreement, allowing them to do a soft credit inquiry on you. After that, they’ll tell you whether or not you’ve prequalified for a loan. They’ll also give you a rundown on what their terms are.

Go through this process a couple of times with multiple lenders and compare all the offers you’ve collected. See which ones that allow for flexible payment options and have the lowest annual percentage rates.

For a debt consolidation loan, lenders will manage your payments in such a way that it goes directly to your other creditors.

#2: Gather documents for a Personal loan application

Once you pre qualify for a loan, you’re given a window to submit your actual application for it. Some lenders will give you even up to a month to fill out the forms and gather the necessary documents. You’ll be asked to provide the following:

  • Contact information
  • If you weren’t asked for your Social Security number during the pre qualification stage, you’ll be asked for it now.
  • Your highest educational degree and when you graduated
  • Your current employment situation
  • Where your paychecks are deposited
  • How much you have saved and assets that you own (in case your homeowner).
  • Equity in your properties (for a home equity loan).

You have to be thorough about all this and ensure that all the information you put in is truthful. Lenders will cross check what you have submitted by getting in touch with your employer and examining your credit reports.

For your peace of mind, make sure that you have the documents to back you up and make several copies. These include past pay stubs, bank statements, address, and id proof.

Has everything? Then it’s time to submit your application.

 #3 Personal Loans for Consolidating Credit Card Debt: Wait for approval

You can expect a hard credit inquiry every time you apply for a sizable personal loan. Don’t be alarmed if your FICO score goes down for as much as 5 points. It’ll leave a bad mark for about two years, but you’ll see your score improving again eventually.

During the approval stage, the lender will ask for the documents that you should have prepared in stage #2. If you’ve done your homework, then you should have nothing to worry about at this point. This usually happens right after you submit your application.

You don’t have to hand them over in person. All you need to do is scan the documents and send them electronically.

If everything goes off without a hitch, you’ll get your coveted approval. Sign some more papers and the money should be deposited to your bank account within the same week.

Within the month that you receive your loan, you’re expected to make your first payment. It’s best that you automate these payments so you don’t miss your due dates by mistake.

After that, you can sleep a little more soundly, knowing that you’re on your way to being debt free. Once you’re over this hurdle, you’d be all the better for it.

Credit card debt consolidation loan companies

Loan CompaniesAnnual percentage RateReviews
eLoan7.99% to 19.49%No origination fee. If application is approved next day funding.
Marcus By Goldman Sachs®5.99% to 28.99%They won't charge any fees. Must have an excellent credit score.
Upstart8.85% to 29.99%Get up to $50,000. consolidate your debts into one loan with low rates. Need fair credit score.
Prosper loans5% to 36%Peer to peer lending industry. Best for credit card debt consolidation & home improvements. 1 to 7 days to get funded. Need min 640 credit.
Payoff5.99% to 24.99%Financial service provider company. Work with investors, trusted banks and credit unions. Best for debt consolidation.
BestEgg5.99% to 29.99%Minimum required credit score is 640.
Lightstream3.99%-16.99%Good & excellent credit history only.
Upgrade7.99% to 35.89%Bad to excellent credit score. Reasonable rates. Only need to provide bank statement along with address proof. 1 to 5 days to get funded.
60 Month LoansLow rates based on your credit score & income.Personal loans for debt consolidation $2600 to $10,000. Term up to 5 years,
Available for California & Utah residents only.
Avant9.95% - 35.99%best for the middle class borrowers with bad credit. Chicago, Illinois-based company in the financial technology industry.
Discountloans.comSecured loans, lower interest rates.Home loans and Mortgage refinance.
Lending Club6% to 36%One of the oldest peer to peer personal loans company in US. Well experienced loan company.
Freedom Plus5.99% to 29.99%Best for Prime and Sub prime borrowers. Can get loan up to $40,000 for debt consolidation.
SofiLow rates. Great benefits.online personal finance company provides student loan refinancing, mortgages, & personal loan
KingofKashRates higher than other traditional lenders.Suitable for poor or bad credit. Short term Loan up to $3,000 No credit check, no origination fees, No collateral. Best for bad credit
borrowers. Available for Alabama, Delaware, Kansas
Mississippi, Missouri,
New Mexico,
Tennessee, Texas,
Utah, Wisconsin residents only.
Onemain FinancialRates up to 36%large provider of personal installment loans debt consolidation. A+ BBB rating
Advocate Debt Relief LLCNo upfront or advance fees.best for credit counseling, cash out refinance, bankruptcy chapter 7 and chapter 13.
Cura DebtNo upfront or advance fees.a minimum $5,000 is needed to qualify for debt relief programs.
Personal & Business Debt Settlement, Debt Negotiation, Consolidation & IRS / State Tax Debt Relief.
Debt.comNo upfront or advance fees.Financial service and other debt relief options from top BBB accredited companies.
National Debt ReliefNo upfront or advance fees.Top choice a BBB A+ accredited business that helps consumers
get out of debt without loans or bankruptcy.
Lending point15.49% to 34.99%Quick approval process. Best for credit card & other high interest loans consolidation. Get $2,000 to $25,000 consolidate debt loan.
Discover Loans6.99% to 24.99%No origination fee. Loan amt $2,500 to $35,000. Loan term 36 to 84 months. Missed payment penalty $39
Credible4.99% to 35.99%Loan up to $100,000. Best for mortgage refinance. Loan term 24 to 84 months.
Personalloans.com5.99% to 36%p2p lending marketplace with large network of consolidation loan lenders. Get loan up to $35,000. Term up to 5 years.
The Debt Management GroupNo upfront or advance fees.New York based debt consolidation company offer various debt settlement like debt relief,
consolidation loan, credit counselling, minimum monthly payments etc.

If you’re looking for a better approach to lowering debt, a personal loan is the best place to start. You can pay off your mounting high-interest credit card debt and consolidate it into one payment.

Compare multiple offers on personal loans today and get up to $40,000 with rates starting from 4.99% APR.

Apply & Compare loan Rates Here
Consolidate Credit Card Debt with a New Loan, Will it Help:

You are not getting out of the debt; you are simply moving all the individual debts into one single loan.

People often take this route when they are struggling to manage and pay all accounts that are due every month. It does not solve all your problems so look at the reasons and spending habits that got you into the debt in the first place and see if changes need to be made.

You can’t borrow yourself out of debt. So be sure to manage the new personal loan well and do not start using the old credit cards or accounts again, creating more debt.

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