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Unsecured Debt Consolidation Loan

unsecured debt consolidation loan
Betsalel Cohen
UpdatedApr 19, 2024

Unsecured Debt Consolidation Loan - Compare Terms

An unsecured debt consolidation loan is a simple financial product based on the following components: Amount of loan, the term (number of months to repay the loan), interest rate, and fees.

The most common fee is an origination fee, which is deducted from the loan when the funds are sent to your account. For example, on a $10,000 loan with a 5% origination fee: You will be charged a $500 origination fee and receive $9,500 upon the successful issuance of your loan.

Lenders are obliged to show you an additional interest rate, APR (Annual Percentage Rate), that takes into consideration the interest rate, fees, and length of the loan. Check out the image to see some examples of different offers for $5,000 and their respective APR.

unsecured debt consolidation loan APR based on loan fees

Unsecured Debt Consolidation Loan Alternatives

Is an unsecured loan the right choice for you? While a personal loan lets you make one payment over a short period, it isn't the right debt solution for everyone. Check out other ways to consolidate your debt.

Do you want a low monthly payment? If you have equity in your home, then a home equity loan or cash-out mortgage offer you low-interest rates and a long-term payment schedule. You don't need excellent credit to qualify. If you are struggling with your monthly payment, your credit is damaged (or about to tank), and in financial hardship, then consider a debt settlement program. If you qualify, then you might be debt-free within 2-5 years.

Alternatives to a Personal Loan

People also ask

Frequently Asked Questions

Is it a good idea to get an unsecured debt consolidation loan?


There are a lot of good reasons to take out a debt consolidation loan. Most importantly, the loan should improve your financial situation. Here are a few of the primary reasons:

  • Lower your monthly payment

  • Save money by lowering your interest rate.

  • Pay-off your loans quickly.

  • Easier payment schedule with just one monthly payment.

  • Lower your credit utilization rates on your credit card.

What is a Good Interest Rate for an unsecured debt consolidation loan?


Your credit score is a crucial factor in determining whether you qualify for a loan, as well as the interest rate on loan. While an excellent credit score will get you the best rates, there are unsecured debt consolidation loans for people with bad credit. Interest rates vary.

In general, the shorter the loan repayment period, the lower the interest rate. If you can afford larger monthly payments, then you can choose a shorter-term loan. Interest rates also vary by lenders. Shop around and compare your options.

Who offers unsecured debt consolidation loan?


Are you looking for the best personal loan company?

Personal loans are offered by banks, credit unions, and online lenders. Each lender has its own model for approving loans and pricing their loan.

Not all lenders are the same. Some specialize in excellent credit loans and others in bad credit loans. We have provided you with tables to compare the companies based on credit score, loan amount, and loan rates. In general, lenders offer personal loans for many purposes including debt consolidation, medical bills, weddings, vacations, big-ticket items, and home repairs. However, when comparing companies, check to see if they offer discounts for certain types of loans, especially debt consolidation loans.

Can I get an unsecured debt consolidation loan with bad credit?


The short answer: Yes, it is possible to get a bad credit debt consolidation loan. However, you need to ask yourself if that is the best solution.

If you have bad credit, then expect to pay higher interest rates than borrowers with excellent credit. An unsecured loan allows you to pay off high-interest rate credit cards, create an affordable monthly fixed payment, and set you on the road to debt freedom.

However, if you run up debt again, then you didn't improve your situation. It is common for people overwhelmed with debt to think that if they could borrow enough to pay everything off they would have a fresh start and be able to take control of their finances.

If you do not qualify for a bad credit personal loan, then look for other debt solutions.

Dealing with debt

Debt is used to buy a home, pay for bills, buy a car, or pay for a college education. According to the NY Federal Reserve total household debt as of Q4 2023 was $17.503 trillion. Auto loan debt was $1.607 trillion and credit card was $1.129 trillion.

A significant percentage of people in the US are struggling with monthly payments and about 26% of households in the United States have debt in collections. According to data gathered by from a sample of credit reports, the median debt in collections is $1,739. Credit card debt is prevalent and 3% have delinquent or derogatory card debt. The median debt in collections is $422.

The amount of debt and debt in collections vary by state. For example, in Oklahoma, 35% have any kind of debt in collections and the median debt in collections is $1897. Medical debt is common and 21% have that in collections. The median medical debt in collections is $893.

To maintain an excellent credit score it is vital to make timely payments. However, there are many circumstances that lead to late payments or debt in collections. The good news is that there are a lot of ways to deal with debt including debt consolidation and debt relief solutions.