Updated on

5 Best Debt Consolidation Companies

Lower your interest rates, decrease your monthly payments and pay it all in one installment.

  • Largest Debt Settlement Programs
  • For $10,000 or more in debt
  • No risk & free consultation
  • Customer support 7 days a week
9.3
Our Score
GET RATES

How To Choose The Best Service

Financial freedom can feel like nothing more than a dream to many of us, especially if our payments seem to be never-ending. Fortunately, there is a way to have more financial stability thanks to debt consolidation services. But before you can consider making use of such a service, it’s important that you know as much as possible about them. By editing yourself and doing research about debt consolidation you can avoid any pitfalls and difficulties that you could come across.  In this article, we will discuss everything you need to know about debt consolidation services, such as APR (Annual Percentage Rates), terms, early payoff penalties, and more. 

Factors to Keep In Mind

Debt consolidation services will have many terms and conditions, fees, and various rates. It’s essential that you keep this in mind and shop around for the best possible solution for your unique circumstances rather than applying at the first one you find. Interest Rate The interest rate on offer from the lender is very important, and it should be lower than the rate(s) you’re currently paying. It can be easy to focus on lower payments, but interest rates should never be overlooked.

You should be careful when it comes to longer repayment terms. Although the payments will likely be lower, you will end up paying more in the long run. Terms will vary from one lender to the next, but try to find one with the shortest terms you can afford. APR The APR you have to pay will also vary from one lender to the next. You can expect to see rates between 2.49% and 35.99%. Be sure that you’ve noted the lender’s rates before accepting the debt consolidation service. Other Fees and Costs Any other fees and costs you have to pay will depend on the lender. There may be upfront fees, early payoff penalties, and other fees that you might not expect. Before making a deal, ensure you’ve read all the terms and conditions regarding fees and costs. Approval Time It can take anything between a few days and a few weeks before you will know whether or not your application has been approved. This is something that depends on the debt consolidation service and how it’s run by its owners. Pros and Cons of Debt Consolidation As is the case with any debt, debt consolidation has both pros and cons. Here are a few you should consider:

Pros

  • One payment instead of many
  • Simplifies debt payments
  • Lower monthly payment

Cons

  • You could pay more interest in the long run
  • Applicants need a good credit score

Bottom Line

There are many elements to keep in mind when considering debt consolidation. But if you’re well-informed on the process and what it entails, you’ll know if this route is the right one for you. Debt consolidation can help you get a better grip on your finances, but it isn’t a decision to take lightly. Remember the factors discussed here, though, and you’ll know what your next step towards financial freedom should be.

Frequently Asked Questions(FAQ)

Debt consolidation can be a good solution if you have multiple debts and often struggle to manage your finances. Debt consolidation involves combining multiple debts such as credit cards, bills, or other payments into a single debt, which means making a single monthly payment instead of several ones. Debt consolidation makes it easier to handle debts and manage your budget as it reduces the number of monthly bills you need to pay. Moreover, debt consolidation means you won’t have to deal with multiple creditors every month, which can be a daunting and overwhelming process.

Implemented properly, according to the nature of the debts you need to pay and your monthly budget, a debt consolidation program can help you save money as it can lower your overall monthly interest rate. In an ideal situation, debt consolidation enables you to manage to pay off your debts faster.

When you consolidate your debt, you can apply for several consolidation options. After the application is approved, you either receive the money that allows you to pay off your debts, or your debt refinancing service may pay your debts directly.

Since debt consolidation programs help you lower the amount you have to pay each month; the debt resolution period is normally extended.

Most people want to know if and how much money they can save with a debt consolidation program. However, as you might expect it, there is no definite answer to this question. How much money you might be able to save by paying lower interest rates (if possible) will depend on the amount you owe, your credit score, the number of debts you have, and the terms that will regulate your consolidation loan.

To manage to save money by consolidating your debt, you would need to find a service that involves a relatively low interest rate. Basically, the interest rate of your consolidation solution should be lower compared to the interest rates that currently apply to the various debts you have to pay.

To compare your current interest rate with the one you would pay for your consolidation service, you can calculate the total amount you are now paying for all your debts. Then, compare this rate with the one you would pay for your consolidation loan. To know the value of this interest, you can use an online calculator. There are different online services that enable you to calculate your potential interest rate for a debt consolidation service based on the amount of your debt. Alternatively, you might also find different interest rates advertised online, depending on the service you access.

Debt consolidation programs can also help you save money on fees and other charges, but all these depend on the amount of your debt, how many debts you've got, and ultimately, what interest rates your lender imposes.

To understand how much you could save, it is useful to seek free financial advice for your specific financial situation.

You might want to choose debt consolidation if you have to cope with different creditors and you want to streamline your payments. Debt consolidation allows you to bundle all your debts into a single one to repay it monthly. This way, you only make one payment instead of several ones, which can be an easier and more practical solution. The reason why many people resort to debt consolidation is that they find it easier to only be responsible for a single debt. Overall, this solution might be good for borrowers who know they have the necessary cash flow to afford to pay a consolidation debt service which usually extends over a longer period of time compared to the individual debts that are consolidated.

By consolidating your debt, you will be able to streamline your payment schedule and enjoy more peace of mind. Ultimately, consolidating your debt should mean less financial stress as you would have fewer monthly payments to make, and you wouldn’t have to worry about calls from creditors or debt collector.

Another advantage of debt consolidation for your mental wellbeing is that accessing this type of program enables you to know when you will become free of debt. Debt consolidation services usually have set terms so you will know when you have to make the last payment and manage your budget accordingly. Furthermore, debt consolidation might also help you improve your credit score.

There are many companies that offer debt consolidation services and free consultancy. Before you apply for this type of program, it’s a good idea to use the consultancy services first so that you can become aware of what debt consolidation implies in the long term.

Debt consolidation entails different benefits. First and foremost, it offers borrowers who are struggling to manage their finances while paying off multiple debts the possibility to cope easier with their debts by simplifying their payments. Instead of worrying about multiple due dates and necessary payments, by accessing a debt consolidation program, you combine all your debts into a single one so that you only make one monthly payment.

Secondly, debt consolidation can lower the amount of money you have to pay each month as it allows you to bundle all your debts into a single payment and repay by making lower monthly payments. However, keep in mind that this will result in extending your debt over a longer period of time.

Another advantage of debt consolidation is the fact that this procedure helps you eliminate the need to deal with multiple creditors each month. After you apply for debt consolidation, your lender provides you the amount you need to tackle all your debts. Afterward, you will only have to pay back the money you owe to the bank or non-bank lender that covered your debts.

By consolidating your debts, you can also benefit from a lower overall interest rate. Moreover, depending on your financial situation, you might be able to pay off your consolidated debts sooner, especially if you have a large amount of debt.

Since debt consolidation makes it easier to repay debts, it can also help you improve your credit history and prevent you from missing payments, which is one of the factors that negatively impact your credit score.

Debt consolidation enables you to streamline your finances, waste less time while making multiple payments, and gain more peace of mind as you will only have one single service to pay off.

There are many factors to take into consideration before applying for debt consolidation as this is not a solution that fits all debtors. Debt consolidation can be a good choice for borrowers who know they can commit to paying off their debts as they expect to have sufficient cash flow for this purpose. Therefore, it is typically a good solution for those who have a safe and steady source of revenue that allows them to make monthly payments over a longer period of time, which is usually the case after applying for debt consolidation.

Generally, debtors who have managed to improve their credit score and are confident that they will not accumulate further debts are those who find it easier to qualify for debt consolidation.

Conversely, you might not want to choose debt consolidation if you won’t have sufficient cash flow to cover your monthly payments and you are likely going to apply for new debts in the future. Moreover, this solution is usually tailored to those who have a consolidated debt that can’t be paid off in one year. If you have less, you might not qualify for debt consolidation. You might also want to avoid prolonging your repayment period for more than a year by accessing a debt consolidation program.

Debt consolidation can be a good solution for those who owe much money to several creditors and are looking for an easier and streamlined way to pay off their debt. However, there are different things to be aware of before you apply for debt consolidation and one of them are the collateral requirements you must meet.

For example, you might have to put up your home as collateral to be able to access the money you need. This raises some concerns especially if you have lots of debts and you don’t expect to get a steady cash flow while you're enrolled in a debt consolidation program. Moreover, the value of your home may decrease in time, which is also problematic if you use it as collateral and you need to sell it or you need refinance.

Therefore, you should ponder your decision carefully if you believe you might not be able to make payments according to your new plan after the debt consolidation your consolidated debts. Moreover, you should keep in mind that debt consolidation usually involves lower interest rates, but there is no guarantee that this will apply to your case. Not all debtors manage to pay lower interests after debt consolidation, especially if they have bad credit scores.

Debt consolidation is not a method of erasing your debts. In the long term, you might end up paying more after you choose to consolidate your debts. Also, remember that even if you manage to get lower interest rates for consolidated debt, these may only last for a limited amount of time. After this initial period, your service can increase your rates and may also include additional fees or costs.Always remember to read the fine print, don’t rush into the first offer you get and keep your eyes open for the following risks:


  • Origination fees - This is just the fancy term for any upfront fees charged by the lender. These fees are partly to cover the admin costs of setting up the service but also constitute part of the services own income.


These fees vary wildly between providers. Some may charge between 0.5% and 1% of the entire debt value, while others can be much higher. If you shop around you’ll be able to find lenders that don’t charge any origination fees at all. Any reputable lender will make these fees very clear at the outset, though. 


  • Understand your interest rate - Interest rates are another big variable. Two people could apply for the same debt refinance amount, from the same company, and come out with two completely different interest rates. Lenders factor in individual circumstances for every individual. The higher the risk they think you are, the higher the interest you’ll pay.


Always ask to see the total amount you’ll pay over the lifetime of the debt consolidation period. This will give you a good idea of how much interest you’ll actually be paying. If it’s too high, shop around for a better rate.


  • Early repayment penalties - The longer you take to pay off your debt, the more interest a service makes on it. Companies don’t want you paying off your debt early and many will have early repayment clauses written into the contract.


You should always try to pay down your debts as quickly as possible, so check with your lender to see if they’ll penalize you for doing so. Again, any reputable lender should make these charges very clear from the outset

Each lender has a different approach when they accept debt consolidation applications. Therefore, if you apply for debt consolidation through a bank or a third party that connects you with potential lenders, you have to carefully read the terms and conditions of each potential lender that offers to help you.

Make sure you understand the qualifications each lender poses as some of them might be costly. Generally, lenders are looking for four major debt consolidation qualifications when they review an application: credit history, proof of income, financial stability, and equity.

Your credit history will be evaluated based on your credit reports and your payment history. People with fair and exceptional credit scores are those who have higher chances to get approved. Proof of income is the most important criteria lenders consider when issuing this type of service as they want to work with clients who have a steady income that will allow them to meet the terms of service. Therefore, if they consider you have poor financial stability, your application might be rejected. Especially for larger debts, these services ask for collateral such as home equity. The collateral you have to provide will depend on the amount of your debt and the period of time you need in order to pay it off.