Top Debt Consolidation Loans

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The top debt consolidation loans will save you quite a bit of money in interest charges and fees over the life of the loan. The very best loans are offered to consumers with impeccable credit, but consolidation loans are usually available to people with varying credit scores.

Debt Consolidation

A debt consolidation loan is designed to combine multiple accounts into one account. The top debt consolidation loan will be the loan which combines all the debt. This consolidation into one loan will usually result in a considerable savings for the consumer. The goals of consolidation usually include:

  • Save money with a lower interest rate
  • Combine debt into an account with fewer – or no – additional fees
  • Switch from several payments a month to one payment per month
  • Change the amortization of the loan by:
    • Extending the payments to make them smaller each month
    • Shortening the payments to pay off the debt more quickly

The goals of the consolidation often dictate whether a specific consolidation loan can meet the needs of the consumer. There is much more to consider than the interest rate. Some consumers don't care if an interest rate is slightly higher as long as all the debt can be lumped into one easy payment they can concentrate on instead of scattering money among several payments a month. Other consumers need to consolidate for the sole purpose of lowering monthly payments; so, even if the loan takes longer to pay off, it's still ideal for them.

Options: Top Debt Consolidation Loans

There are several options available for the top debt consolidation loans. Not everyone qualifies for all the options.

Home Equity

One of the most popular debt consolidation loans – and oftentimes the best deal with regards to interest rates – is a consolidation loan secured by the equity within your home. This option is only an option for homeowners who have some equity in their homes available. Equity is the amount of money your home is worth minus the amount of money you owe.

Equity consolidation loans are available in two forms:

These consolidation loans have notoriously low interest rates when compared to other consolidation products. They often have positive income tax implications; however, the drawback is that an equity consolidation loan creates a secondary mortgage on your home. If payments are not made in a timely manner, the home can be foreclosed on even if the primary mortgage is paid on time, every time.

Unsecured Consolidation Loans

If you do not have a home to use for an equity consolidation loan, or if you prefer not to put your home on the line to consolidate your debt, look for a consolidation product from a lender offering low interest rates and no additional fees. The better your credit score, the better your opportunity to be approved for a lower interest rate.

In order to get approved for the best consolidation loan, you may need to agree to close the accounts you consolidate with the loan. This is to make sure you don't turn around and increase the balances on the accounts after they are paid off by the loan, making you a larger credit risk to the lender.

Balance Transfers

Credit card companies often offer attractive balance transfer options that can be used to consolidate credit card debt. In fact, with good credit, cardholders may be able to transfer several high interest credit card account balances onto a new card featuring an introductory low interest rate.

Be sure you understand the terms of the balance transfer so you don't wind up paying more money in the long run.

Find Top Debt Consolidation

Although interest rates and loan terms change constantly, many lenders offer attractive products for debt consolidation products. For example:

Check with your existing lender to find out what products are available. Credit unions usually offer attractive interest rates and terms, so if you are a member of a credit union be sure to take a look at the products offered by that lender.

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