What is loan consolidation?

Imagine getting enough money to pay off all of your outstanding loans in one fell swoop: that's the essence of loan consolidation. Instead of making multiple payments every month - for your credit card loans, student loans, and so on - you pay them off with a bigger loan at a lower interest rate. Now, you have one monthly payment to make instead of several.

Is loan consolidation something I should consider?

If you have more than one loan, especially with high interest rates, loan consolidation is definitely worth looking into. It can also be one of several strategies you use to avoid bankruptcy, by simplifying your budget and helping you get on top of your finances.

Isn't loan consolidation...basically taking out another loan?

In some cases, yes. There are counseling services that work with consumers like you, to evaluate your financial situation and determine the best course of action; their recommendations may or may not include taking out a loan to consolidate your loans. A new loan makes sense if your existing loans have high interest rates or if you're having a difficult time keeping track of your payment due dates and being on time.

Are there alternatives to loan consolidation?

Yes, and only you can decide which approach is right for you. Some people borrow money from friends or family to pay down loans. Others try to negotiate with the lenders to lower interest rates, or to get a deferment or forbearance put in place during times of economic downturns. There's also the possibility of working a side hustle to make extra money. But, when those attempts fail, what then? Loan consolidation provides a hassle-free alternative that makes good financial sense for many consumers.

Will using a loan consolidation service improve my credit history?

If you use it wisely, it should. Having all of your loans consolidated into a single payment will reduce your credit utilization, and it'll make it more likely that you don't have missing or late payments. Both of these things will raise your credit score.

How much will a loan consolidation plan cost?

It varies. For loan consolidation that happens with a new personal loan, you can expect to pay interest, as well as origination fees of 1-6% of the total loan amount. If you're taking advantage of financial counseling services that offer loan consolidation, they may come free of charge. A few counseling providers charge for their programs; be sure you know exactly what you're getting before you commit to a loan consolidation plan.

Is there a satisfaction guarantee?

If you opt for counseling services only, chances are good that you'll get them at no cost. Some providers may charge a fee for specific services, and in that case you may be able to get your money back if you don't feel that the help you got was worth the cost. If you're getting a new loan for consolidation purposes, there's not likely to be a way to reverse it (especially if you've already spent the loan proceeds!).

Is loan consolidation legitimate?

Absolutely. In fact, consolidation is one of the top purposes listed by Americans taking out a personal loan! It can be a smart way to reduce your interest payments, make it more likely that you'll be on time, and get back on track financially. But, it's up to you to use the consolidation loan wisely: to pay off all of your smaller loans with the funds you get, and not spend it on unnecessary things! Also, as you choose a resource to use for your loan consolidation, be sure to check out the provider's reputation with the Better Business Bureau and any other client feedback. That will give you the peace of mind that comes from knowing you've made a good choice for your financial future.

SoFi<sup>®</sup> vs SuperMoney | Best Loan Consolidation Companies

Item: SoFi ® vs SuperMoney
Rating: 4
Author: Top Consumer Reviews

Picture yourself keeping several balls in the air, each one a different loan - your car, your student debt, maybe a big purchase on a payment plan. It can feel like a lot to track. Loan consolidation gives you one sturdy basket to hold them all, so you're handling a single payment instead of a handful. It won't make the debt disappear, but it can simplify your schedule and sometimes lower your interest rate.

Loan consolidation is simply rolling several loans into a single new one, so instead of juggling multiple monthly bills from different lenders, you make one payment to one provider. It's a way to streamline what you owe into something easier to manage - fewer due dates, less hassle. Many people choose it to simplify their budget and reduce stress, and it can sometimes help you secure a better rate or a longer payoff period.

Consolidation can be a smart move for anyone juggling multiple loans or looking to lower monthly payments, since it streamlines their finances and may save money over time. It's also useful for borrowers who want to switch from variable rates to a fixed rate, adding stability and predictability to their payments. As a bonus, it can make budgeting easier during major life changes, like a move or a new job.

Loan consolidation works like this: you apply for a consolidation loan with a reputable lender, they review your credit, income, and other details - and then decide if you qualify. If you're approved, the lender either pays off your existing loans directly or deposits the funds so you can do it yourself, and you'll replace those balances with a single monthly payment on the new loan. The goal is to roll multiple debts into one payment, which can make budgeting easier and reduce the chance of missing a due date.

Another option is to hire a debt-settlement company to negotiate with your current lenders on your behalf. Instead of taking out yet another loan, you make regular deposits into a dedicated account, and when the company secures a reduction - say it knocks a $10,000 balance down to $6,000 - it uses those funds to pay the settlement and then charges a fee based on what you saved. This approach helps you chip away at what you owe without piling on new debt and can give you a simpler plan to follow. Before you sign up, make sure you understand the fees, timelines, and potential credit impacts.

Loan consolidation isn't automatically a smart move for everyone. If you're nearing the finish line on repayment or your loans already carry very low interest rates, the potential gains are slim and the tradeoffs can outweigh the benefits. It can also stretch your repayment period, which means you'll pay more interest over time even if your monthly bill drops. And if you qualify for loan forgiveness or an income-driven plan, rolling your loans together could jeopardize - or even eliminate - those benefits.

Which option is the best to choose for loan consolidation? There are many good possibilities out there, so here are a few criteria to check out as you decide:

Loan terms. One important thing to note is that when you consolidate your loans, the terms of the new loan may be different from your original loans. This means your interest rate, monthly payment, and repayment timeline could change. So, it's crucial to carefully review the terms and make sure you understand how it will impact your finances before moving forward.
Available loan amount. Can the lender approve a new loan that will cover all of your existing loans?
Extra benefits. Some providers of consolidation loans include perks like interest rate discounts when you set up autopay, or unemployment protection that pauses loan repayments if you lose your job. You may also want to choose a service that gives you credit counseling or other help, so that the new loan will be a long-term benefit for your overall financial well-being.
Reputation. Choose loan consolidation with a provider that is known for offering top-notch customer service, with no ugly surprises during the application process or over the course of your repayments.

Ready to simplify your financial life with loan consolidation? The experts at Top Consumer Reviews have evaluated and ranked some of the most popular options out there today, so that you can streamline your payments, lower your monthly bills, or switch to a more manageable repayment plan.

SoFi^®

Loan consolidation through a new loan
Loans available from $5,000 to $100,000
Rates may include origination fees of up to 7%

Since 2011, SoFi has provided help to over two million members, disbursing a staggering $50 billion in loans. Offering personal loans ranging from $5,000 to $100,000 with competitive APRs and flexible repayment terms, SoFi stands out as a prime option for those seeking to consolidate their existing loans. With perks like interest rate discounts for autopay and direct deposit, SoFi maintains an impressive reputation, earning an "A+" rating from the Better Business Bureau and thousands of five-star reviews from happy clients. For anyone navigating the complexities of loan consolidation, SoFi emerges as a compelling choice among loan consolidation companies.

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SuperMoney

Loan consolidation through a new loan
Loan referral platform
Transparent about their partners

SuperMoney connects you with reputable lenders offering personal loans tailored for loan consolidation. Their platform simplifies the process of comparing loan offers from various sources, providing comprehensive information about lenders and user reviews. Whether you need a loan as substantial as $100,000 or as modest as $500, SuperMoney offers flexibility. Your privacy is prioritized, and SuperMoney boasts an impressive client rating average of 4.9 stars. For consolidation loan options, SuperMoney stands out as a reliable choice, earning a solid rating from us.