This is a great question, but it’s one that doesn’t have a cut-and-dry answer. There are times when it absolutely makes sense to refinance your student loans, but there are also scenarios where you’d be better off keeping the student loans you have.

With that in mind, there are some important questions you can and should ask yourself before you move forward. By asking these questions and answering them openly and honestly, you can decide whether to refinance your student loans now, or later, or stick with your current repayment plan.

What Does Your Credit Score Look Like?

Before refinancing your student loans, you should have a general idea of your credit standing. Fortunately, there are free, quick, and easy ways to check your credit score online.

If you have a good credit score or a FICO score of 670 or higher, you’ll have a much better chance of getting approved for student loan refinancing. If your credit score is on the low end, however, you may not get approved without some additional help.

Do You Need a Cosigner?

If your credit score isn’t great, having a cosigner with good credit can help you qualify for much better refinance loan rates and terms than you can get on your own.

Ask yourself if someone in your life, such as a spouse, might be willing to cosign to help you get approved or get a better rate.

What Steps Have You Taken to Get the Best Deal?

Take note: you should never go with the first student loan company you come across. Rather, you should always check interest rates and loan fees with different lenders before you apply. This is true for both student loans for school and student loan refinancing products.

Take College Ave Student Loans, for example. They offer refinancing options that can reduce your monthly payments and even the total cost of your loan. Additional benefits include:

• Low Interest Rates

• No Application or Origination Fees

• An Autopay Discount

These are just a few perks to keep in mind as you research potential lenders.

Before you refinance your student loans, however, you should use a free credit pre-qualification tool to gauge your approval odds without a hard inquiry on your credit report. Doing so can help you figure out whether you can qualify for student loan refinancing with or without a cosigner and the type of rate you may qualify for.

How Safe Is Your Job?

Determine how steady your income is before you refinance. If you refinance federal student loans with a private lender, you will lose access to federal income-based repayment and forgiveness options.

Typically, student loan refinancing works best for borrowers who have a stable income and want to repay their loans faster or on their own terms. If your job is shaky or you are worried about losing your income in the near future, it could make sense to hold off on refinancing until your career is in a better place.

What Do I Have to Gain by Refinancing?

Before you refinance, you’ll want to have a strong sense of why. You should mostly stand to gain something substantial from refinancing, whether that be a lower interest rate, a lower total amount of interest charges, a more reasonable monthly payment on your loans, a better repayment plan, or something else.

A good student loan refinance calculator can help you figure out whether refinancing your student loans is right for you. You can even use it to compare your new loan options (including monthly payments and total interest charges) to the loans you have.

What Is My Plan to Pay off This Debt?

Once you have a plan on how to pay off your student loans, you can figure out what kind of repayment plan to look for as you compare student loan companies and what best next steps to take.

Also, determine what kind of monthly payment you can afford as you shop for new loans. This step can help you figure out which loan term will get you the type of monthly payment you’re hoping for.

Do You Want Access to Loan Forgiveness Plans in the Future?

If you have federal student loans, you should consider whether you have the potential to qualify for student loan debt forgiveness in the future. After all, forgiveness plans like Public Service Loan Forgiveness (PSLF) and Teacher Loan Forgiveness only apply to federal student loans.

The same is true for income-driven repayment plans, which let you pay a percentage of your discretionary income for 20 to 25 years before having your remaining student debts forgiven.

If you are angling for forgiveness through one of these plans, you may want to keep any federal student loans you have instead of refinancing. On the flipside, refinancing can make sense if you are on a path to pay off your loans over a standard timeline and you want a lower interest rate, a better monthly payment, or both.

The Bottom Line

Refinancing your student loans is a big step to take. Especially if you have federal student loans, you need to ensure that it’s the right move for you — and one that will yield benefits for years to come.

Remember, no one is going to ask you to refinance your student loans – you’ll have to research and plan yourself if you want to make it happen. Fortunately, online student loan companies like College Ave Student Loans make it easy to check your rate and your approval odds before you apply.

The post 7 Questions to Ask Yourself Before You Refinance Student Loans appeared first on Good Financial Cents®.

That said, the best bad credit loans are still a lot better than nothing — particularly for people who need money quickly and don’t have access to other sources of funding. Fortunately, we took the time to compare more than 20 bad credit lenders to find loan options with the best rates and terms, plus reasonable eligibility requirements.

If you need money quickly and you’re looking for a bad credit loan you can actually qualify for, read on to learn about our top picks.

Our Picks for Best Personal Loans for Bad Credit

• Avant: Best Overall
• OneMain Financial: Best Customer Service
• NetCredit: Best for Low Loan Amounts
• LendingPoint: Best for Fast Funding
• Upstart: Best for Easy Approvals
• Best Egg: Best for Large Loan Amounts

Avant is easily one of the top lenders in the bad credit loan space, and it shows in their reviews from past users. In fact, this lender currently boasts an average star rating of 4.7 out of 5 stars across more than 21,000 user reviews on Trustpilot.

Borrowers who choose to work with Avant can borrow anywhere from $2,000 to $35,000, and they can repay their loans over 24 to 60 months. Current interest rates fall between 9.95% and 35.99% depending on creditworthiness, although an administrative fee of up to 4.75% can also push up the costs of each loan.

One major benefit of Avant is the fact this company lets you get prequalified without a hard inquiry on your credit report. This step lets you gauge your approval odds and find out how much you may be able to borrow before you take the time to apply.

OneMain Financial made our ranking of the best bad credit loans due to their customer service options and user reviews. This company has more than 1,400 physical branches around the country, so you can visit an office and speak with a loan professional in person if you want to.

Borrowers who choose OneMain Financial may be able to borrow anywhere from $1,500 to $18,000, and interest rates can range from 18.0% to 35.99%, depending on creditworthiness. Loans can be paid off over 24, 36, 48, or 60 months as well, so it’s possible to tailor monthly payments to fit the borrower’s budget and goals.

On the downside, bad credit loans from this company come with an origination fee of up to 10% of the loan amount.

If you need to borrow up to $10,000 and you need your money quickly, NetCredit is also worth considering. This lender lets you check your rate and approval odds with no impact on your credit, and you can borrow up to $10,000 in most states. NetCredit also has an average star rating of 4.7 out of 5 stars across more than 7,500 user reviews on Trustpilot, which shows they care about customer satisfaction.

The rates and terms of online loans from NetCredit depend on the state an applicant lives in. In the state of Florida, for example, borrowers can access $1,000 to $10,000 in funding with an APR of 34.99% to 99%. In South Dakota, borrowers can also access up to $10,000, but interest rates range from 34% to 36%.

If you choose to go with NetCredit, make sure to check for origination fees that can cost up to 5% of the loan amount.

LendingPoint is another company that offers bad credit loans to consumers who need financing. Loans from LendingPoint come with APRs between 9.99% and 35.99%, and origination fees can add up to 7% to each loan amount. Fortunately, LendingPoint has some pretty good reviews across all major platforms, including an average star rating of 4.9 out of 5 stars across more than 6,000 reviews on Trustpilot.

Repayment options from LendingPoint range from 24 to 60 months, and borrowers may be able to access up to $36,500 in funding. Borrowers can also check their rates online before they apply and without any impact on their credit scores. That said, you do need a minimum credit score of 580 to qualify for a bad credit loan from this provider.

Upstart is an online lender that claims to have helped more than 2.1 million customers access the funding they need. This company also has a slew of positive reviews and rankings online, including an average star rating of 4.9 out of 5 stars across more than 35,000 reviews on Trustpilot.

This company lists a minimum credit score of 300 for applicants, and they use data other than credit scores as consideration for approval. In fact, Upstart says the following on their website:

“At Upstart, our model considers other factors such as your education and employment in addition to your financial background.”

If you choose Upstart for your bad credit loan, you may be able to borrow $1,000 to $50,000 and repay your loan over 3 to 5 years. Interest rates range from 5.4% to 35.99% depending on creditworthiness, and an origination fee of up to 10% of the loan amount can apply.

Best Egg is another top lender that offers bad credit loans, as well as loans for people with fair credit and good credit. This lender lets borrowers access up to $50,000 in funding, and they have an average star rating of 4.6 out of 5 stars across more than 6,000 reviews on Trustpilot.

Borrowers can check their rate on Best Egg without any impact on their credit scores, and two repayment plans are available — 3 years or 5 years. Interest rates fall between 5.99% and 35.99% depending on creditworthiness. However, borrowers should watch out for origination fees of up to 5.99%, which can make loans from this company more costly over the long run.

Bad Credit Loan Guide

As you compare the best personal loans for your credit profile, you should try to learn as much as you can about bad credit and the steps you can take to improve it. Read on to learn the ins and outs of credit scores, steps you can take to increase your credit score incrementally, and what happens if your credit score stays low over the long term.

What Is a Bad Credit Score?

There are several different credit scoring models that are commonly used, including the VantageScore and the FICO scoring model. However, we’ll use the FICO scoring model as an example here since it’s the most popular type of credit score that is used by 90% of top lenders.

Generally speaking, a bad credit score is any FICO score below 580 on a scale of 300 to 850. According to the Fair Isaac Corporation (myFICO.com), FICO credit scores fall into the following ranges:

• Exceptional: 800+
• Very Good: 740 to 799
• Good: 670 to 739
• Fair: 580 to 669
• Poor: 580 and below

If your credit score is in the “poor” range, this typically means you have limited credit history, or you have made credit mistakes in the past. Common credit mistakes that can cause your credit score to drop include late payments on your bills and using too much of your available credit.

How to Fix a Bad Credit Score

If you’re wondering how to build your credit score, you should know that many different strategies can help. Most importantly, you’ll want to use any credit you have access to responsibly, which means paying all your bills early or on time with no exceptions.

Other steps you can take to repair your credit include the following:

• Be Proactive About Your Finances. If you want to improve your credit score over time, you should start by getting serious about your finances. Take the time to create a monthly budget that works, start building an emergency fund, avoid racking up too much debt, and make sure all your bills are paid early or on time.
• Pay Down Your Current Debts. If you have been wondering how to get out of debt, you should also know that paying off unsecured debts like credit card debt can help you boost your score. For the best results, experts suggest keeping your credit utilization rate below 30% of your available credit.
• Work With a Credit Repair Agency. The best credit repair agencies can help you find the biggest problems with your credit so you can fix them. They’ll also take on a ton of credit repair tasks for you, such as negotiating with your creditors and disputing incorrect information on your credit reports.
• Dispute Incorrect Information on Your Credit Reports. Also, be aware that you can and should dispute false information on your credit reports that could be harming your score. You can check your credit reports from all three credit bureaus — Experian, Equifax, and TransUnion — for free at AnnualCreditReport.com. From there, you can dispute negative items and have them removed.
• Monitor Your Credit. Make sure you keep an eye on your credit so you know if any negative information has been reported, including negative reporting that results from identity theft. Also, note that the best identity theft protection services can help you spot problems with your credit in real-time as they occur.

Consequences of Having a Bad Credit Score

If you never take steps to improve your credit score, you’ll be stuck dealing with the consequences of bad credit for a lifetime. These consequences can make life more expensive and stressful, so you should strive to avoid them if you can.

Higher Interest Rates and Loan Fees

While there are plenty of bad credit loans to choose from, online loans for people with poor credit always come with higher interest rates and loan fees. High APRs can make interest charges considerably more expensive when compared to loans for good credit, and many bad credit loans come with origination fees that can cost up to 10% of the loan amount upfront.

Fewer Loan Options in General

People with bad credit also have fewer borrowing options in general. Not only can they access only a handful of companies that offer personal loans, but they may be limited to credit cards for bad credit, too. 

Higher Auto Insurance Rates

Many auto insurance companies consider your credit score when determining your auto insurance rates. Not surprisingly, your rates can come in higher than average if you have a low credit score.

Missed Career Opportunities

Federal law allows employers to request a modified version of your credit reports for hiring purposes. If you have a low credit score or troublesome information in your credit reports, you could miss out on a job you really wanted.

Difficulty Renting an Apartment

Landlords can also do a credit check before they rent you an apartment or a home, and having a low credit score will not help your cause. You may not be able to rent from some landlords at all if you have poor credit, or you may need a cosigner in order to qualify.

How We Found the Best Bad Credit Loans of 2024

To find the best bad credit loans of 2024, we searched for lenders that have a low minimum credit score requirement or no requirement at all. We also looked for lenders that offer the lowest interest rates and fees for borrowers with poor credit, as well as companies that properly disclose their fees and loan terms.

Lenders that made our ranking were also required to have a star rating of at least 4.5 out of 5 stars among their user reviews on Trustpilot. All lenders in our ranking also have a “B” rating or better from the Better Business Bureau (BBB). 

Finally, we looked for companies that let borrowers get prequalified online without any impact on their credit scores. All the companies in our ranking also offer an entirely online loan process for borrowers who do not want to apply for funding in person.

Summary of the Best Bad Credit Loans of 2024

• Avant: Best Overall
• OneMain Financial: Best Customer Service
• NetCredit: Best for Low Loan Amounts
• LendingPoint: Best for Fast Funding
• Upstart: Best for Easy Approvals
• Best Egg: Best for Large Loan Amounts

Bottom Line – Best Bad Credit Loans: 6 Lenders to Get Approved

Navigating the realm of bad credit loans can be challenging, especially given the higher interest rates and fees associated with them. 

Despite these obstacles, there are lenders available that offer reasonable rates and terms even for those with less-than-perfect credit. 

Our research highlights six top lenders, from Avant’s comprehensive offering to Best Egg’s suitability for larger loan amounts. 

Crucially, these lenders allow potential borrowers to check eligibility without impacting their credit scores. 

Borrowers should prioritize improving their credit to access better terms in the future. Meanwhile, for immediate financial needs, the options listed here provide viable avenues to consider.

The post Best Bad Credit Loans: 6 Lenders to Get Approved appeared first on Good Financial Cents®.

While most borrowers should focus on federal student loans first, private student lenders can help you fill in funding gaps so you can get through school and graduate on time. If you’re in the market for a student loan from a private lender, read on to learn which seven companies we recommend, the type of student loans they offer, and details on who can qualify.

Our Picks for Best Student Loans

• College Ave Student Loans: Best for Flexibility
• Splash Financial: Best for Student Loan Refinancing
• Sallie Mae: Best Career Training Loans
• Discover: Best Student Loans for Great Rates
• SoFi: Best Student Loans for No Fees

Best Student Loans – Lender Reviews

The following reviews explain how the best student loans work, which companies and online lenders offer them, and their main features and benefits.

College Ave offers private student loans for undergraduate and graduate students as well as parents who want to take out loans to help their kids get through college. Interest rates are highly competitive, and its student loans come with no origination fees, no prepayment penalties, and no hidden fees of any kind.

If the student attends a qualifying institution, they can apply for $1K or up to the total cost of attendance. Undergrads who need a larger amount can apply to the Multi-Year Peace of Mind loan program.

This student loan company also makes it possible for borrowers to complete their entire student loan application online, and it offers an array of helpful tools that can help you figure out how much you can afford to borrow, what your monthly payment will be, and more. Most College Ave student loans also come with multiple repayment options that can last for five years, eight years, 10 years, or 15 years.

Finally, students can decide when to begin making payments on their private student loans through College Ave. They can choose to make full interest and principal payments right away, but they can also opt to make interest payments, flat payments, or defer loan payments altogether during a grace period until after they graduate.

Splash Financial is a loan comparison site that makes it easy to shop around and compare rates for in-school student loans and the best student loan refinance products. Its interest rates and terms are highly competitive, and applicants can even check their rates online without any impact on their credit score.

If you have 100k in student debt or more, it’s worth noting that refinancing with a company like Splash Financial could help you save thousands of dollars on interest, get out of debt faster, or both.

This company focuses on student loan refinancing products specifically, including refinancing offers for medical school debt. Once you enter some basic information online, you’ll be shown an array of loan offers that have the potential to work for your needs.

Note that the lowest rates from Splash Financial include a .25% discount for auto-pay. Since it’s not a direct lender, you’ll need to research individual lenders offered through the platform before you move forward.

Sallie Mae offers student loans for undergraduate students, graduate students, and individuals participating in career training programs. Its career training student loans are especially unique because they work well for students taking professional training or certificate courses in fields such as culinary arts and aviation, yet it still offers highly competitive rates and terms.

Sallie Mae student loans don’t require any origination fees, and they don’t have hidden fees. Sallie Mae even extends its loan products to students who are enrolled in college for less than half-time, which is not the case with many other lenders in this niche.

Discover offers undergraduate student loans, graduate school loans, student loans for parents, and student loan refinancing to eligible borrowers. Its rates and terms are some of the best on the market today, and applicants can complete the full loan application online and from the comfort of their homes.

Student loans from Discover also come with an auto-pay discount, and you can qualify for a one-time cash reward of 1% of the loan amount when you can prove a minimum 3.0 GPA (or equivalent). Also, note that multiple loan repayment plans are offered and that students can choose to begin payments during school or defer them until they graduate.

SoFi is a financial technology company that offers banking and investing products, personal loans, and student loans. Its student loan offerings, in particular, are rather broad, considering borrowers can take out undergraduate loans, graduate school loans, parent loans, or student refinance loans.

SoFi members gain access to a number of benefits, including six months of Best of Evernote and a rewards program. To add up points, members must use the app to manage their bank accounts, credit cards, loan payments, or investments.

Note that SoFi offers its own unemployment protection program that makes it possible to skip payments temporarily when you are experiencing financial hardship. Auto-pay discounts are available, and borrowers can choose to repay their student loans over five, seven, 10, or 15 years.

SoFi also lets potential borrowers check their rates online without any impact on their credit scores. If they decide to apply, the entire application process takes place online. Be aware that international students (even if they’re permanent residents) aren’t eligible to apply for a cosigner.

Student Loan Guide

Direct subsidized, unsubsidized loans, parent plus loans, fixed or variable interest rates… the sheer variety of types of loans and related information can be overwhelming, and with the total cost of attendance to college so expensive, odds are you’ll need help. Whether you’re wondering how student loans work or you’re just trying to avoid student loan scams, your best bet is to arm yourself with as much information as you can.

Our student loan guide will help you figure out what you need to know about the best private student loans and federal student loans, how they’re different, and the steps you should take before you decide which student loan option makes the most sense for you.

Federal vs Private Student Loans

Federal student loans are backed by the federal government, whereas private student loans are offered independently through private student loan companies. Generally speaking, federal student loans should be used first since they come with federal protections like deferment and forbearance, as well as the chance to participate in income-driven repayment plans and other forgiveness programs.

Federal student loans limit the amount each student can borrow each year (and over their academic career) depending on the academic year, type of loan, whether it’s an undergraduate or graduate student loan, and whether the borrower is a dependent or independent student.

Private student loans are typically used by student loan borrowers who have tapped out all the available federal financial aid available to them, including federal student loans. Many borrowers also refinance federal student loans with private lenders or credit unions in order to secure lower interest rates, better loan terms in line with their financial needs, or even for debt consolidation. 

However, it’s important to note that refinancing federal loans with a private lender means giving up all the federal protections afforded to you.

How to Choose a Student Loan

Before you choose a student loan, there are an array of factors to consider. Keep the following details in mind as you compare lenders and offers.

• Fill Out the FAFSA: Since students should take advantage of federal student loans first, the first best step is filling out the Free Application for Federal Student Aid (FAFSA). This form will let you know details of the federal student loans you’re eligible for, plus how much you can borrow.

• Compare Interest Rates and Terms: Once you begin shopping for private student loans, make sure to compare lenders based on their interest rates and loan fees. 
  
  If you have been wondering how to pay off student loans as quickly as possible, scoring a loan with a low rate and no fees can help. Check whether the lender has any disbursement or prepayment penalties as well. 

• Check for Flexible Repayment Plans: Make sure you’re satisfied with the payment schedules being offered to you. If you need a lower monthly payment, look for student loan companies that let you repay your loans over 15 to 20 years.

• Check for Eligibility Requirements: Check whether lenders you’re considering have a minimum credit score or minimum income requirement. If your credit score is in really poor shape and you don’t have a cosigner, the best credit repair companies may be able to help.

• Use a Loan Calculator to See Your Monthly Payment: Use a student loan calculator to see how much your payment might be with different lenders. This metric will be impacted by the interest rates you’re offered as well as the payment plans you get to choose from.

• Check Your Rate Without a Hard Inquiry: Finally, look for student loan companies that let you gauge your ability to qualify and check your rate without any impact on your credit score.

What Is Student Loan Deferment?

In March of 2020, the U.S. Department of Education announced the decision to pause payments on eligible federal student loans while fixing interest rates at 0%. The emergency measure, which was put into action to help deal with the fallout of the COVID-19 pandemic, also brought all collections activity on federal student loans to a halt.

This emergency measure was originally intended to last several months, but the expiration date has been extended six times so far. The emergency deferment period expired on August 31, 2022. This is not to be confused with student loan forgiveness plans, which propose the federal government waive a fixed amount from federal education loans.

How We Found the Best Student Loans

To find the best student loans on the market today, we compared lenders based on factors including the interest rates and annual percentage rates they offer, their loan fees and rate discounts, and the ease of their application process. We focused on lenders that offer student loans with no origination fees and no hidden fees, and we gave preference to companies that let borrowers check their rates without a hard inquiry. 

We also looked for companies that have reasonable qualification requirements many consumers can meet.

Summary of the Best Student Loans for 2024

• College Ave Student Loans: Best for Flexibility
• Splash Financial: Best for Student Loan Refinancing
• Sallie Mae: Best Career Training Loans
• Discover: Best Student Loans for Great Rates
• SoFi: Best Student Loans for No Fees

Final Thoughts – Best Student Loans

Selecting the right student loan for 2024 involves considering key factors such as competitive interest rates, repayment terms, and flexible payments. While federal student loans should be prioritized, private lenders like College Ave, Splash Financial, Sallie Mae, Discover, SoFi, Ascent, and Credible offer valuable options to bridge funding gaps. 

Each lender caters to specific needs, from flexibility and refinancing to career training and favorable rates. Careful assessment of eligibility requirements, repayment plans, and loan features will empower students to make informed choices in managing their education finances.

The post The 7 Best Student Loans for 2024 appeared first on Good Financial Cents®.

Let’s drill down into the basics of debt consolidation to help you decide when it’s the right move, and when it holds the potential to only make your situation worse.

Debt Consolidation Guide

What Is Debt Consolidation?

Debt consolidation is a financing arrangement with the goal of wrapping two or more loans or credit lines into a new, single loan. It’s one of the best strategies to consider if you’re contemplating how to get out of debt. For many individuals and couples, it’s the first step toward debt freedom.

But what’s critical to understand with debt consolidation is that it doesn’t reduce the amount of debt you owe. It simply repackages it into a single, more manageable debt.

That alone can be an excellent strategy to get out of debt. Many debtors find it easier to manage a single monthly payment on one loan than to juggle multiple payments on several obligations.

But in a classic debt consolidation scenario, you’re not only consolidating multiple debts under a single loan, you’re also working to reduce your monthly payment. That will be possible if you’re able to obtain a loan that has a lower interest rate than the debts you’re consolidating.

The problem with credit cards is their revolving nature. Even as you make payments on your credit cards, the balance never seems to go down. That owes to a combination of very high-interest rates – often over 20% – as well as continued use of the card for new purchases.

With a fixed-term debt consolidation loan, you may be able to pay off all your outstanding debt in no more than three or five years. By contrast, credit cards tend to become permanent debt. Debt consolidation is a way to put a stop to that.

How Does Debt Consolidation Work?

Let’s say you have outstanding balances on five credit cards. The five cards together have a combined balance of $20,000, with an average interest rate of 24%.

Your monthly payment is about $500, or 2.5% of the outstanding balance. But $400 of that is interest! That means only $100 per month is going toward principal reduction. At that rate, it will take you at least a dozen years to pay off your credit cards, if it ever happens.

You have an opportunity to do debt consolidation. The loan is for $20,000, which will enable you to pay off all five cards. The term is five years at an interest rate of 8%. That’ll give you a monthly payment of $405.53.

By taking the debt consolidation, you’ll not only save almost $95 per month on your monthly payment, but you’ll also chop years off the payoff of the credit cards. Just the peace of mind that comes from knowing you’ll be debt-free in five years will justify debt consolidation.

But you’ll also save a fortune in interest. The monthly interest charge on the debt consolidation loan will be $133.33. That’s just one-third of the amount of interest you’re currently paying on your credit cards!

The best way to do debt consolidation is by using a personal loan. By taking advantage of the best personal loans you may be able to get a high enough loan amount to pay off all your debt and at a much lower interest rate. To do that, you’ll need to thoroughly understand how to get a personal loan approved. Many personal loans are now available from online sources, so you’ll need to know exactly how the application process works.

Some debtors have been known to do serial debt consolidations, rolling one consolidation loan into an ever-larger one.

Debt Consolidation and Your Credit

One of the unexpected benefits of debt consolidation is that it can improve your credit. Many borrowers have experienced an almost immediate 20 to 30-point upward bounce in their credit scores after doing a consolidation.

The reason for this score improvement is the way credit scores are calculated.

Two important factors in the calculation are 1) the number of accounts with outstanding balances, and 2) revolving credit vs. installment debt.

By doing a debt consolidation and paying off several credit cards, you’ll be reducing multiple credit lines down to one debt. That alone is worth a few points on your credit score. But you’ll pick up a few more points because you’ll be moving from revolving debt to installment debt. The credit bureaus prefer installment debt, because of its greater predictability, especially with regard to interest rates.

But that’s only the beginning. As you make regular, on-time payments on the debt consolidation, your credit score will continue to rise.

In fact, debt consolidation can be an important step in how to build your credit score, especially if your score needs improvement.

As you can see, good credit starts at 670. If your score is lower, you may need to consider working with one of the best credit repair services to bring your score up to where it needs to be.

When to Seek Out Debt Consolidation

A debt consolidation loan is never something that should be done automatically. You’ll first need to fully consider your financial situation, then ask yourself the question: should I do debt consolidation?

A debt consolidation loan makes sense if any of the following apply:

1. Your income and credit score are high enough that you can get a large enough loan to pay off all your debts.

2. Your credit score is high enough to give you the benefit of a lower interest rate than you’re currently paying on your debts.

3. The monthly payment on the debt consolidation loan will be lower than the combined payments on your current debts.

4. You have a budget in place and you’re able to live within your means.

5. You’re fully committed to the idea of getting out of debt. You’re prepared to avoid new debt once the debt consolidation loan is in place.

A debt consolidation loan may not make sense if any of the following apply:

1. You’re unable to get a debt consolidation loan for enough money to pay off all your debts.

2. Your credit score is fair or poor, and there’ll be no savings on the interest rate.

3. The monthly payment on the debt consolidation loan may be higher than the combined payments on your current debt.

4. You have no budget in place, and it’s not certain you can live within your means even after the consolidation.

Neither you nor your spouse are fully prepared to avoid using credit in the near future.

Bottom Line – Debt Consolidation

Debt consolidation can be a debtor’s best friend. You can think of it as something of a get-out-of-jail-free card. That’s because debt consolidation is something like voluntary bankruptcy.

Rather than defaulting on your loans, you’re consolidating them into a single loan with one monthly payment and then paying off all your debt within a few years. And as a bonus, the debt consolidation will produce an improvement in your credit score, which is the exact opposite of what will happen with bankruptcy.

But just remember that debt consolidation will only work if you have the discipline to maintain control over your finances and avoid incurring new debt until the consolidation is fully paid.

If you can get those two factors under control, debt consolidation may be the right strategy for you.

The post What Is Debt Consolidation and How Does It Work? appeared first on Good Financial Cents®.

These are unsecured installment loans that are generally available for any purpose. Not only do they have lower interest rates, but at the end of the term, the loan is gone forever.

We compiled this list of the 10 best personal loans for 2024 to help you find the right one for you.

Our Picks for Best Personal Loans of March 2024

Here are our picks for the 10 best personal loans for 2024, with more information on each provided in the summary reviews below:

• Credible: Best for Fair Credit
• LendingTree: Best for Comparison Shopping
• Fiona: Best for High Loan Amounts
• Marcus by Goldman Sachs: Best for Debt Consolidation
• SoFi: Best for Recent College Grads
• LightStream: Best for Home Improvement Loans
• Best Egg: Best Customer Service
• Payoff: Best for High Debt-To-Income ratios
• Upstart: Best for Limited Credit History

Best Personal Loans – Company Reviews

Credible: Best for Fair Credit

Minimum/Maximum Loan Amount: $600 to $100,000
APR Range: 7.49% APR – 35.99% APR
Fees: Varies by lender
Loan Terms: 24 to 84 months
Minimum Credit Score: 580

Credible isn’t a direct lender but an online loan marketplace. That means you can complete a single application on their website and receive personal loan offers from multiple lenders. Credible also offers mortgages, credit cards, student loans, and student loan refinances.

Because it’s an online loan marketplace, there are participating lenders who will make loans to borrowers with credit scores as low as 580.

That makes Credible the go-to personal loan source for people with fair or average credit. That’s important because people with lower credit scores are often those who most need personal loans.

But not only do they offer personal loans, mortgages, and credit cards, but also student loans and student loan refinancing.

Credible will pay you $200 if you can find a lower personal loan rate from another source. That practically guarantees they provide the lowest rates.

LendingTree: Best for Comparison Shopping

Minimum/Maximum Loan Amount: $1,000 to $100,000
APR Range: 4.37% to 35.99% APR
Fees: 0% to 10%
Loan Terms: 24 to 144 months
Minimum Credit Score: 585

LendingTree is another online loan marketplace offering personal loans for up to $100,000 with terms as long as 12 years. And like Credible, it’s also a source for mortgages, credit cards, and car loans.

Based on our search on the site, LendingTree has no fewer than 11 lenders providing personal loans. Not only does that include some of the biggest personal loan lenders in the industry, but also some of the lenders we’ve listed in this guide.

Fiona: Best for High Loan Amounts

Minimum/Maximum Loan Amount: $1,000 to $100,000
APR Range: 4.99% to 35.99% APR
Fees: Varies by lender
Loan Terms: 24 to 84 months
Minimum Credit Score: Varies by lender

Fiona is a financial services platform that offers personal loans for just about any purpose. You can borrow up to $100,000, with rates starting at 4.99% APR and terms ranging from 24 to 84 months.

Like Credible and LendingTree, Fiona is an online loan marketplace where you can get quotes from competing lenders by completing a single application.

Marcus by Goldman Sachs: Best for Debt Consolidation

Minimum/Maximum Loan Amount: $3,500 to $40,000
APR Range: 6.99% to 19.99% APR
Fees: None
Loan Terms: 36 to 72 months
Minimum Credit Score: 660

Marcus by Goldman Sachs may be the perfect personal loan source for debt consolidation. That’s because they offer terms ranging from 36 to 72 months, with current interest rates ranging between 6.99% and 19.99%. That will enable most borrowers to consolidate and eliminate credit cards with interest rates well above 20%.

Marcus by Goldman Sachs is also famous for its high-interest online savings accounts. That can be the perfect platform for both paying off all debt and accumulating fresh savings.

SoFi: Best for Recent College Grads

Minimum/Maximum Loan Amount: $5,000 to $100,000
APR Range: *8.99-25.81% APR
Fees: None
Loan Terms: 24 to 84 months
Minimum Credit Score: 680

*Personal Loan Disclaimer: Fixed rates from 8.99% APR to 25.81% APR reflect the 0.25% autopay interest rate discount and a 0.25% direct deposit interest rate discount. SoFi rate ranges are current as of 05/19/23 and are subject to change without notice. 

Not all applicants qualify for the lowest rate. The lowest rates are reserved for the most creditworthy borrowers. Your actual rate will be within the range of rates listed and will depend on the term you select, your creditworthiness, your income, and a variety of other factors.

Loan amounts range from $5,000– $100,000. The APR is the cost of credit as a yearly rate and reflects both your interest rate and an origination fee of 0%-6%, which will be deducted from any loan proceeds you receive. See Personal Loan eligibility details. 

Not all applicants qualify for the lowest rate. The lowest rates are reserved for the most creditworthy borrowers.

Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including your creditworthiness, income, and other factors. See APR examples and terms.

Autopay: The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by automatic monthly deduction from a savings or checking account.

The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. Autopay is not required to receive a loan from SoFi.

Direct Deposit Discount: To be eligible to potentially receive an additional (0.25%) interest rate reduction for setting up direct deposit with a SoFi Checking and Savings account offered by SoFi Bank, N.A. or eligible cash management account offered by SoFi Securities, LLC (“Direct Deposit Account”), you must have an open Direct Deposit Account within 30 days of the funding of your loan.

Once eligible, you will receive this discount during periods in which you have enabled payroll direct deposits of at least $1,000/month to a Direct Deposit Account in accordance with SoFi’s reasonable procedures and requirements, to be determined at SoFi’s sole discretion. 

This discount will be lost during periods in which SoFi determines you have turned off direct deposits to your Direct Deposit Account. You are not required to enroll in direct deposits to receive a loan.

SoFi is practically synonymous with student loan debt refinancing, which was the original purpose of the company. But it has dramatically expanded its product menu to include other types of loans, including personal loans and credit cards.

They also offer comprehensive financial services, including investing, budgeting, banking, insurance, and credit scores. And if you’re one of the 3.5 million SoFi members, you may even have access to free financial advisors.

LightStream: Best for Home Improvement Loans

Minimum/Maximum Loan Amount: $5,000 to $100,000
APR Range: 2.99% to 19.99% APR
Fees: None
Loan Terms: 24 to 144 months
Minimum Credit Score: High, but not specified

LightStream is the online personal loan program for Truist Bank (formerly SunTrust). The company is a direct lender, offering personal loans up to $100,000 for just about any purpose.

They charge low rates with terms of up to 144 months. The ability to stretch your payments over 12 years can make LightStream the perfect source for a personal loan for home improvement.

However, LightStream is also on the higher end of the personal loan qualification spectrum. Their loans are designed for those with good or excellent credit, including no history of delinquencies.

They also require that you be well-established financially, and own real estate and financial assets.

Best Egg: Best Customer Service

Minimum/Maximum Loan Amount: $2,000 to $50,000
APR Range: 5.99% to 35.99% APR
Fees: 0.99% to 5.99%
Loan Terms: 36 or 60 months
Minimum Credit Score: 600

Best Egg has a strong reputation for customer service. The company has a Better Business Bureau rating of A+, which is the highest rating the agency provides.

Meanwhile, they also score 4.89 out of 5 stars among consumers reporting to the BBB. That’s extraordinary, considering consumers often harbor something less than positive feelings about their lenders.

Best Egg is a direct lender, with loans provided by New Jersey-based Cross River Bank. Though the minimum credit score requirement is 600, the company requires a minimum individual income of $100,000.

Payoff: Best for High Debt-To-Income ratios

Minimum/Maximum Loan Amount: $5,000 to $40,000
APR Range: 5.99% to 24.99% APR
Fees: 0% to 5%
Loan Terms: 24 or 60 months
Minimum Credit Score: 640

Payoff (now rebranded as Happy Money) is a direct online lender providing personal loans. But unlike other personal loan lenders, these loans are available only for debt consolidation. That may be why the company calls itself Payoff. 

Loans are available in amounts up to $40,000, with rates as low as 5.99% APR. You’ll have a choice on the loan term of either 24 or 60 months. But expect to pay an origination fee as high as 5%.

The big advantage with Payoff is that they accept higher debt-to-income ratios. While most personal loan lenders will allow the ratio to go as high as 40% or 45%, Payoff will consider borrowers with a debt-to-income ratio as high as 50%.

Upstart: Best for Limited Credit History

Minimum/Maximum Loan Amount: $1,000 to $50,000
APR Range: 3.09% to 35.99% APR
Fees: 0% to 8%
Loan Terms: 36 or 60 months
Minimum Credit Score: 600

Upstart offers personal loans and other financing arrangements. That includes auto loan refinancing, medical loans, and home improvement loans. You can borrow as much as $50,000 with rates starting as low as 3.09% APR. 

With a minimum credit score requirement of just 600, Upstart will be a good choice for borrowers with average or fair credit.

But the big advantage with Upstart is that they’ll consider borrowers with a limited credit history or even no credit history at all. However, if you fall into this category, it’s likely that loan amounts will be more limited.

Best Personal Loans of 2024

Personal Loan Guide

What Is a Personal Loan?

A personal loan is an unsecured loan made by a bank, credit union, or online lender. Because it is unsecured, qualification is based entirely on your income, debt-to-income ratio, and credit history. After all, the lender has no collateral to seize if you fail to pay.

Lenders typically lend between $1,000 and $50,000 (or more). The loans usually have a fixed interest rate, a monthly payment, and terms of up to five years.

In most cases, there are no restrictions on how the proceeds are used or the loan purpose. They can be used to make major purchases, pay for upcoming events (such as weddings and vacations), or for debt consolidation.

People wondering how to get out of debt, especially a lot of credit card debt, often turn to a personal loan to consolidate their high-interest debt into a financial vehicle with a low-interest rate.

Further, a personal loan will give you the benefit of a single monthly payment. And because it has a specific term, you’ll eventually pay the debt off completely.

If you do, the real question is, Should I consolidate my debt? That’s because using a personal loan to pay off debt doesn’t actually eliminate the debt but rather consolidates several debts into a single loan.

How to Find the Best Personal Loans

Personal loans are available from financial institutions such as banks, credit unions, and online lenders. But while you may be able to get a low-interest personal loan from your bank or credit union, the loan amount may be limited to no more than a few thousand dollars.

Online lenders offer higher loan amounts and are generally more accommodating to those with lower credit scores. We’ve included lenders that will accept a credit score as low as 580. Many banks and credit unions set the minimum score much higher.

Even though personal loans are issued by many different lenders, the terms and conditions are remarkably similar from one loan to the next.

When comparing lenders, look for the small perks or differences between their offers, such as loan funding within the next business day or no late fees. 

We favored lenders with low minimum credit score requirements, longer terms, higher maximum amounts, and few to no fees.

It’s important to understand how to get a personal loan approved. Personal loans can come in both unsecured and secured loan options.

The former means that you won’t have to put up an asset as a guarantee that you’ll repay the debt, while the latter type does require collateral such as a car or other high-value property.

If you choose an unsecured personal loan, lenders will be interested in the reason for the loan, even if there are few restrictions.

For example, the likelihood of approval is higher if you are taking out a debt consolidation loan because you will be paying off high-interest lines of credit rather than incurring new debt.

The lenders also look very closely at your income and credit to determine eligibility. You’ll need stable employment (or self-employment) and an income that will comfortably accommodate the new loan payment.

Lenders will usually accept a debt-to-income ratio of up to 40%. But some may allow it to be higher if you have excellent credit.

What is a good credit score? That really depends on the lender. But a really good credit profile is one that will get you the lowest personal loan interest rate possible. While 580 may be enough to get a loan, you may need to score well above 700 to get the best rate.

Part of having good creditworthiness will be maintaining a relatively low credit utilization ratio. That’s the amount you owe on your credit lines divided by your total credit limits. The lower the utilization ratio, the higher your credit score will be.

How to Apply for a Personal Loan

The application process for a personal loan is fairly straightforward.

1. Gather Your Paperwork: You’ll likely need to provide proof of income, bank statements, proof of your U.S. citizenship, and a legal form of identification.
2. Check Your Credit Report: Credit itself may be the single most important part of applying for a personal loan. While a higher credit score increases the likelihood of approval, it will also get you a lower interest rate. That’s important because interest rates have a wide range for personal loans. 

Remember that your potential lenders will conduct a credit inquiry, so try to submit your applications around the same period to lessen the hit on your score.

3. Determine How Much Money You Need to Borrow: Personal loan amounts usually top out at around $40,000 or $50,000, though a small number of lenders will go as high as $100,000. Do the math and see what interest rate you can afford and what your ideal loan term is. 

As you can see from the list of lenders in this guide, the interest rate range is incredibly wide. It can be as low as 2.49% or as high as 35.99%.

When you complete your loan application with an online lender, you can get a rate quote in as little as a few minutes. You will need to submit supporting documentation for your income and other financial disclosures, but you can expect the loan to close and be funded within just a few days.

How to Prequalify for a Personal Loan

That’s as easy as going on the website of any of the online lenders we’ve included in this guide. You’ll complete a short online application, which will ask for basic information. You will be expected to supply your employment and income, as well as your estimated credit score range.

Based on that information, you’ll be presented with a loan scenario from the lender without a hard credit check. If you’re making an application with an online loan marketplace, you may get several loan offers.

Once you have the offer(s) in front of you, you can decide if you want to go ahead with the loan. If you do, the loan will usually be closed and funded to your bank account within a few days.

How We Found the Best Personal Loans

We used certain very specific criteria to come up with this list of the 10 best personal loans for 2024.

Those criteria include:

• Minimum/Maximum Loan Amount: We favored those lenders offering high maximum loan amounts.
• Annual Percentage Rate (APR) Range: Though the range is wide among personal lenders, we favored those with the lowest starting rate.
• Fees: Our preference was for lenders that charge no fees, but fees are not unusual among personal loan lenders.
• Loan Repayment Terms: Though the typical term is between 36 and 60 months, we leaned toward those lenders offering longer terms.
• Minimum Credit Score: The lower the credit score accepted, the more favorably we considered the lender.

We also considered the special features and niches each lender offers to their customers. Those are listed within the summary review for each.

Summary of the Best Personal Loans

One last time, here is our list of the 10 best personal loans for 2024:

• Credible: Best for Fair Credit
• LendingTree: Best for Comparison Shopping
• Fiona: Best for High Loan Amounts
• Marcus by Goldman Sachs: Best for Debt Consolidation
• SoFi: Best for Recent College Grads
• LightStream: Best for Home Improvement Loans
• Best Egg: Best Customer Service
• Payoff: Best for High Debt-To-Income ratios
• Upstart: Best for Limited Credit History

If you’re looking for financing for a project that’s too big for credit cards — or maybe you just want to get rid of your credit cards — a personal loan can be the perfect solution. Any one of the lenders reviewed in this guide will be an excellent choice.

Final Thoughts – 9 Best Personal Loans of 2024

Considering the high-interest rates associated with credit cards, personal loans emerge as a favorable option for managing unexpected expenses or major expenditures. 

This compilation of the 9 best personal loans in 2024 showcases their value, offering lower interest rates and a chance to eliminate debt over the loan term.

Ranging from fair credit to limited credit history, these lenders cater to diverse needs. Features like comparison shopping, high loan amounts, and debt consolidation further enhance their appeal. 

If you’re seeking financial flexibility beyond credit cards, these top personal loan providers offer reliable alternatives.

The post 9 Best Personal Loans of 2024 appeared first on Good Financial Cents®.

It won’t make your debt go away, but it will help it become more manageable. And by setting up the right loan, you can be debt-free in a few short years.

To help you in your search for the right loan, we prepared this guide on the 10 best consolidation loans for 2024.

The table below provides a summary of the main features offered by each lender. You can then scroll down and read our summary reviews with more information on each lender that may interest you.

Our Picks for Best Debt Consolidation Loans

Here is our list of the 10 best debt consolidation loan lenders of 2024:

• LendingTree: Best Lender Selection

• Credible: Lowest Rates

• LendingClub: Best for Peer-to-Peer Loans

• SoFi: Best for Comprehensive Financial Services

• Upstart: Best for Fair Credit

• Even: Best for High Loan Amounts

• LightStream: Best for Good to Excellent Credit

• Marcus by Goldman Sachs: Best for Investing

• Best Egg: Best for Good Customer Service

• Happy Money (formerly Payoff): Best for High DTI Ratios

Below are our summary reviews for each.

Best Debt Consolidation Loans – Company Reviews

Minimum/Maximum Loan Amount: $1,000 to $100,000
Interest Rate Range: 4.37% to 35.99% APR
Fees: 0% to 10%
Loan Terms: 24 to 144 months
Minimum Credit Score: 585

LendingTree is an online loan marketplace offering mortgages, auto loans, and credit cards. For debt consolidation, you can apply for a personal loan from $1,000 to $100,000, with terms ranging from two years to 12 years.

The big advantage of LendingTree is that you can get loan quotes from at least 11 personal loan lenders at the same time. Participating lenders are some of the biggest in the industry, and even include some of the lenders in this guide.

Minimum/Maximum Loan Amount: $600 to $100,000
Interest Rate Range: 5.40% to 35.99% APR
Fees: Varies by lender
Loan Terms: 24 to 84 months
Minimum Credit Score: 585

Much like LendingTree, Credible is an online loan marketplace. Not only do they offer personal loans, mortgages, and credit cards, but also student loans and student loan refinancing.

Personal loans are available for debt consolidation in amounts up to $100,000 and with terms as long as 84 months. Credible advertises the lowest interest rates of all lenders on this list. A total of 17 lenders offering personal loans participate on the platform.

Credible has a special offer for personal loan applicants; if they can’t find you the best personal loan rate available, they’ll give you $200.

Minimum/Maximum Loan Amount: $1,000 to $40,000
Interest Rate Range: 7.04% to 35.89% APR
Fees: 3% to 6%
Loan Terms: 36 or 60 months
Minimum Credit Score: Not disclosed

LendingClub is a peer-to-peer loan platform that brings together borrowers applying for loans that are funded by investors participating in the platform. 

You can apply for up to $40,000, with a loan term of either three years or five years. All loans are fixed-rate and will be fully repaid at the end of the term.

LendingClub is one of the biggest lenders in the personal loan space, having provided more than $60 billion in financing. It also provides business loans, medical loans (patient solutions), and auto refinancing loans.

Minimum/Maximum Loan Amount: $5,000 to $100,000
Interest Rate Range: 5.74% to 20.28% APR
Fees: None
Loan Terms: 24 to 84 months
Minimum Credit Score: 680

SoFi began as a service providing student loan refinancing. But it has since expanded, and now provides comprehensive financial services that include investments, banking, credit cards, insurance, and even credit scores and budgeting. The platform boasts more than 3.5 million members.

SoFi personal loans are designed primarily for those with good or excellent credit. If you qualify, you can borrow up to $100,000 for as long as 84 months. And you can do it all with no loan fees!

Minimum/Maximum Loan Amount: $1,000 to $50,000
Interest Rate Range: 3.09% to 35.99% APR
Fees: 0% to 8%
Loan Terms: 36 or 60 months
Minimum Credit Score: 600

Upstart offers several different loan options, including auto loan refinances, medical loans, home improvement loans, and personal loans for debt consolidation.

You can borrow up to $50,000 with rates starting as low as 3.09% APR (Annual Percentage Rate). The minimum credit score at 600, will accommodate borrowers with average or fair credit.

Like many other personal loan lenders, loan terms come in two sizes: 36 months and 60 months. This lender also has potentially steep loan fees, with an origination fee as high as 8%.

That could mean a $4,000 fee on a $50,000 loan, giving you net proceeds of only $46,000.

Minimum/Maximum Loan Amount: $1,000 to $100,000
Interest Rate Range: 4.99% to 35.99% APR
Fees: Varies by lender
Loan Terms: 24 to 84 months
Minimum Credit Score: Varies by lender

Even is a financial services platform that offers personal loans for just about any purpose. You can borrow up to $100,000, with rates starting at 4.99% APR and terms ranging from 24 to 84 months.

Like some of the other lenders in this guide, Even is an online loan marketplace. By completing a single online application, you’ll get rate quotes from multiple lenders. This gives you an opportunity to choose the loan that will work best for you.

Minimum/Maximum Loan Amount: $5,000 to $100,000
Interest Rate Range: 2.99% to 19.99% APR
Fees: None
Loan Terms: 24 to 144 months
Minimum Credit Score: High, but not specified

LightStream is the online personal loan program for Truist Bank (formerly SunTrust). The company is a direct lender, offering personal loans up to $100,000 for just about any purpose. They charge low rates, with terms as long as 144 months.

LightStream will work best for those with good or excellent credit, as their credit requirements are steep. 

Not only do they require an excellent payment history with no delinquencies, but also a proven ability to save money in the form of bank deposits, stocks, real estate, retirement, and other assets, as well as a solid credit history.

Minimum/Maximum Loan Amount: $3,500 to $40,000
Interest Rate Range: 6.99% to 19.99% APR
Fees: None
Loan Terms: 36 to 72 months
Minimum Credit Score: 660

Marcus by Goldman Sachs is a direct lender that not only offers personal loans but also savings accounts, investments, and credit cards. 

Personal loans are available in amounts up to $40,000, with rates starting as low as 6.99% APR. Not only do they charge no fees in connection with their personal loans, but there are also no late fees.

The minimum credit score requirement of 660 means you will need at least average credit to qualify. This is not a lender for consumers with fair or poor credit.

Minimum/Maximum Loan Amount: $2,000 to $50,000
Interest Rate Range: 5.99% to 35.99% APR
Fees: 0.99% to 5.99%
Loan Terms: 36 or 60 months
Minimum Credit Score: 600

While Best Egg provides personal loans for debt consolidation, the company is now expanding into offering credit cards.

Personal loans are available in amounts up to $50,000, with interest rates starting as low as 5.99% APR, in terms of 36 or 60 months. The company has already provided more than $10 billion in personal loans to consumers.

Best Egg is a direct lender, with loans provided by New Jersey-based Cross River Bank. Though the minimum credit score requirement is 600, the company requires a minimum individual income of $100,000.

Minimum/Maximum Loan Amount: $5,000 to $40,000
Interest Rate Range: 5.99% to 24.99% APR
Fees: 0% to 5%
Loan Terms: 24 or 60 months
Minimum Credit Score: 640

Happy Money is a direct online lender providing personal loans. However, those loans are available only for debt consolidation. They will not be available for major expenses, like a wedding or an upcoming vacation.

Loans are available in amounts up to $40,000, with rates as low as 5.99% APR. You’ll have a choice on the loan term of either 24 or 60 months. But expect to pay an origination fee as high as 5%.

Debt Consolidation Guide

What Is Debt Consolidation?

Ultimately, debt consolidation is both a way to get out of debt and an opportunity to lower your total monthly payments.

Debt consolidation doesn’t lower the total amount of existing debt you owe or your overall credit utilization. Instead, it rolls several loans into one, with a single loan balance and one monthly payment.

Just by consolidating several loans into one single installment loan, you may be able to benefit from a lower interest rate or more manageable repayment terms. 

That can translate into a lower monthly payment. And since debt consolidation loans are typically structured with a fixed rate and term, the consolidated debt will be fully repaid at the end of the term.

This can be especially beneficial with high-interest debt, such as that of credit cards, or for unsecured debt. 

The most basic reason why it’s so hard to get out of credit card debt is because of its revolving nature. As you pay down, the monthly payment drops. 

And when you use the card for additional purchases, the balance increases. That also raises your credit card payment.

But by paying off the credit card debt with a consolidation loan, the loan — which includes your credit card debt — will be fully repaid after just three to five years.

If you ever wonder if I should consolidate my debt, crunch the numbers and see how it can work with your credit card debt.

How Do Debt Consolidation Loans Work?

Debt consolidation loans are essentially unsecured loans that offer a fixed interest rate and term. The combination makes it possible to eliminate the consolidated debt within a very specific time frame.

Debt consolidation loans can range anywhere from 24 months to as long as 84 months, though it’s possible to extend that out to 144 months (12 years) through a lender like LightStream.

Debt consolidation loans are typically offered in the form of personal loans. These work especially well for debt consolidation since they can be used for just about any purpose, from medical bills to credit card consolidation. 

While most usually deposit the loan funds into the borrower’s bank account directly, some pay the money out directly to the lenders.

The interest rate you’ll pay on a debt consolidation loan will depend on a mix of factors, including your credit score, your debt-to-income ratio, and the amount borrowed.

Debt consolidation is one of the most simple ways to improve debt management skills. At a minimum, it enables you to reduce the number of monthly loan payments. That by itself can give you better control over your debts.

Does Debt Consolidation Affect My Credit Score or Monthly Payments?

Yes, on both counts! Let’s look at credit scores first.

One of the factors credit bureaus consider when calculating your credit score is the number of loans and credit lines with outstanding balances. 

When you use a debt consolidation loan to roll multiple debts into a single loan, the number of outstanding debts declines immediately.

Something else happens as well, at least when you’re consolidating credit cards. The credit bureaus consider installment debt, which is typically what debt consolidation loans are, to be less risky than revolving debt. 

In fact, revolving debt is considered the riskiest debt of all. By eliminating it through a debt consolidation loan, you’ll have another factor working in your favor towards improving a bad credit score and increasing your overall creditworthiness.

Many people who do debt consolidation loans experience an immediate increase in their credit scores for the reasons described above, even despite the drop from the credit inquiry your lender makes. 

It will help to know what a good credit score is so you can track any positive changes in your score after taking the loan.

A debt consolidation loan can also affect your monthly payments. If the monthly payment on the consolidation loan is lower than the total of the payments on the loans you’re paying off, your net monthly payment will drop.

What Are the Risks Behind Debt Consolidation Loans?

As good as a debt consolidation loan sounds, you will need to avoid debt consolidation pitfalls.

Probably the most common is when you set up a debt consolidation loan and then continue borrowing more money.

That’s an easy trap to fall into because the debt consolidation loan can seem like a get-out-of-jail-free card. But rest assured, it’s not. If you continue with this pattern, you’ll end up with a bunch of new debt on top of your debt consolidation loan.

Another potential pitfall is not getting full control of your budget after a debt consolidation loan.

You should think of a debt consolidation loan as a financial instrument designed to help you deal with past financial mistakes, like overspending. 

But if you continue to overspend, which will likely result in new debt, the debt consolidation effort will be a failure.

How to Qualify for a Debt Consolidation Loan?

How to get a personal loan approved involves a series of steps. These will center around your credit score, debt-to-income ratio, and the amount of money you borrow.

Many lenders will assign you a credit grade based on a combination of the three. The higher your grade, the lower the rate you’ll pay, and vice versa.

Your debt-to-income ratio, which is simply your monthly recurring debts divided by your stable monthly income, indicates how well the new loan will fit within your budget. 

The lower your debt ratio—say, less than 30%—the better your loan grade will be. A high ratio (exceeding 40%) will indicate a higher risk factor, contributing to a lower grade.

The same is true with the loan amount you borrow. A $50,000 loan will be considered a bigger risk to the lender than a $15,000 loan. Your loan grade may be lower if you take a larger loan amount.

Most important is your credit score. As you can see from the lenders included in this guide, a credit score of at least 680 will get you a lower interest rate. 

Below 680, you will see you paying at the upper end of the interest rate range. For this reason, it will be important to improve your credit score, even to apply for a debt consolidation loan.

Get a copy of your credit report and concentrate on fixing errors on your credit report. 

But if your credit score is much below 650, it may be time to look into using the services of one of the best credit repair services. It could mean the difference between a 10% interest rate and 20% or 30%.

Some lenders may allow you to access a better rate or up your potential eligibility by taking out the loan with a co-signer with better credit.

How We Found the Best Debt Consolidation Loans

To come up with this list of the 10 best debt consolidation loans for 2024, we used the following criteria:

• The minimum and maximum loan amounts offered

• The interest rate range advertised by the lender

• Any and all fees a lender may charge, including prepayment

• penalties, origination fees, and application fees

• Loan terms offered

• Minimum credit score requirements

Above and beyond these five factors, we also considered company reputation, popularity with consumers, and any special features or additional services each offers.

Summary of the Best Debt Consolidation Loans

Let’s recap the 10 best debt consolidation loans for 2024:

• LendingTree: Best Lender Selection

• Credible: Lowest Rates

• LendingClub: Best for Peer-to-Peer Loans

• SoFi: Best for Comprehensive Financial Services

• Upstart: Best for Fair Credit

• Even: Best for High Loan Amounts

• LightStream: Best for Good to Excellent Credit

• Marcus by Goldman Sachs: Best for Investing

• Best Egg: Best for Good Customer Service

• Happy Money (formerly Payoff): Best for High DTI Ratios

If you’re drowning in credit card debt, a debt consolidation loan may be the right strategy for you. It’s the perfect way for you to get off the revolving debt treadmill.

The post 10 Best Debt Consolidation Loans for 2024 appeared first on Good Financial Cents®.

Our list of the seven best student loan refinance lenders for 2024 is designed to help you do just that, as each offers multiple refinance options at a wide variety of interest rates.

The table below provides a summary of the main features offered by each lender. You can then scroll down and read our summary reviews with more information on the ones that interest you.

Our Picks for Best Student Loan Refinance

Here’s our list of the seven best student loan refinance lenders for March 2024:

• SoFi – Comprehensive Financial Services

• CommonBond – Generous Forbearance Period

• Earnest – Option to Skip Payments

• Splash Financial – Online Marketplace

• College Ave – Low Minimum Balance

• LendKey – In-house Loan Servicing

• PenFed Credit Union – Low Variable Rates

Best Student Loan Refinance – Company Reviews

Best for Comprehensive Financial Services: SoFi

Minimum/maximum loan amount: $5,000 to a maximum amount of student debt owed
Minimum credit score requirement: 650
Loan terms: 5, 7, 10, 15, or 20 years
Fixed rates: 5.24% to 9.99% APR
Variable rates: 6.24% to 9.99% APR
Upfront fees:  None

SoFi has become practically synonymous with student loan refinancing because that was the company’s original product. Despite adding additional services, it’s still at the top of the class. 

Refinances start at 2.49% and run as long as 20 years. You can refinance the full amount you owe on your current student loans.SoFi now also offers almost every imaginable financial service.

This can be important for young adults starting out in life who need other services in addition to student loan refinances. That includes banking, investments, personal loans, credit cards, and insurance.

Best for Generous Forbearance: CommonBond

Minimum/maximum loan amount: $5,000 to $500,000
Minimum credit score requirement: 680
Loan terms: 5, 7, 10, 15, or 20 years
Fixed rates: 2.98% to 5.79% APR
Variable rates: 1.99% to 5.61% APR
Upfront fees: None

CommonBond is a direct lender offering student loan refinancing of up to $500,000. The company offers student loan refinances to borrowers in 48 states (Mississippi and Nevada are the exclusions). 

It also stands out as having what’s probably the most generous forbearance program in the industry at 24 months (most lenders offer only 12).

However, you should be aware that, at 680, Commonbond has the highest minimum credit score requirement of the lenders on this list.

Best Option to Skip Payments: Earnest

Minimum/maximum loan amount: $5,000 / $500,000
Minimum credit score requirement: 650
Loan terms: 5 to 20 years
Fixed rates: 4.96% to 8.99% APR (with Autopay discount)
Variable rates: 4.99% to 8.94% APR (with Autopay discount)
Upfront fees: None

Student Loan Refinance Interest Rate Disclosure

Actual rate and available repayment terms will vary based on your income. Fixed rates range from 5.21% APR to 9.24% APR (excludes 0.25% Auto Pay discount). Variable rates range from 5.24% APR to 9.19% APR (excludes 0.25% Auto Pay discount). 

Earnest variable interest rate student loan refinance loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. 

The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. 

The maximum rate for your loan is 9.13% if your loan term is 10 years or less. For loan terms of more than 10 years to 15 years, the interest rate will never exceed 9.21%. For loan terms over 15 years, the interest rate will never exceed 9.24%. 

Please note that we are not able to offer variable-rate loans in AK, IL, MN, NH, OH, TN, and TX. Our lowest rates are only available for our most credit-qualified borrowers and contain our .25% auto pay discount from a checking or savings account.

Earnest offers some of the highest refinance amounts in the industry. But what we like best about this lender is that it gives you the option to skip one payment every 12 months.

While there are certain requirements to take advantage of this feature, it can be a good option to have available.

One limitation you should be aware of is that Earnest doesn’t allow adding a cosigner. That can hurt your chance of approval, as well as the possibility of getting a lower interest rate.

Best Online Marketplace: Splash

Minimum/maximum loan amount: $5,000 / no limit
Minimum credit score requirement: Varies by lender
Loan terms: 5, 7, 10, 15, or 20 years
Fixed rates: 4.72% to 9.24% APR
Variable rates: Starting at 4.84% APR
Upfront fees: None

Splash Financial is an online loan marketplace. After completing just one brief online application, you can get loan quotes from multiple lenders at once. 

Aside from being time-saving, this also allows you to easily compare offers and select the best loan and interest rate.

Splash offers the lowest fixed rates of any lender on this list. It also has the advantage of having no maximum loan amount. Much like SoFi, it will enable you to refinance the full amount of your outstanding student loan debt.

Best Low Minimum Balance: College Ave

Minimum/maximum loan amount: $1,000 / $150,000; $300,000 for medical school grads
Minimum credit score requirement: “Proprietary”
Loan terms: 5, 8, 10, or 15 years
Fixed rates: 4.74% to 15.72% APR
Variable rates: 4.74% to 15.72% APR
Upfront fees: None

College Ave provides student loans but with lower maximum loan amounts than other lenders. The maximum loan term is also shorter, at 15 years. 

But where College Ave stands out is that it provides the smallest minimum loan balances. The company will refinance as little as $1,000 in student loan debt, whereas other lenders will not go below $5,000.

Best for In-House Loan Servicing: LendKey

Minimum/maximum loan amount: $5,000 / $125,000; $250,000 for graduate degrees
Minimum credit score requirement: 660
Loan terms: 5 – 20 years
Fixed rates: 2.49% to 7.75% APR
Variable rates: 1.90% to 5.25% APR
Upfront fees: None

Much like Splash Financial, LendKey is an online student loan marketplace where you can get an array of quotes from multiple lenders. However, unlike similar marketplaces, the company maintains servicing of your loan once it closes.

Unfortunately, it has relatively low maximum loan amounts, which could potentially exclude those borrowers in the greatest need of refinancing.

Best for Low Variable Interest Rates: PenFed Credit Union

Minimum/maximum loan amount: $7,500 / $300,000
Minimum credit score requirement: 670
Loan terms: 5, 7, 10, 12, or 15 years
Fixed rates: 3.97% to 11.89% APR
Variable rates: 1.47% to 9.05% APR
Upfront fees: None

PenFed Credit Union is a credit union that offers low variable-rate loans through a partnership with Ascent, a company dedicated to providing student loans. Those loans are available for both undergraduate and graduate degrees.

An important limitation to note is that the student loans offered are consolidations, not refinances, which we will discuss further in this guide. 

You should also be aware that the low-interest rates advertised, which are among the lowest in the industry, are offered to applicants with cosigners.

Student Loan Refi Guide

There’s much to know about how student loans work, including when they can be used and when they can’t.

Even if you’ve chosen a lender from among the best student loans available, sometimes your circumstances change — and you may want to take advantage of a bump in your credit score to refinance for a lower rate.

What Is Student Loan Refinance?

A student loan is just like any other type of loan, except it’s designed specifically to finance school loans for higher education.

As the name implies, student loan refinances are limited to refinancing school-related debt only. You can include loans from public and private lenders, as well as parent plus loans.

You won’t be able to include non-student loan-related debt, such as car loans and credit card debt, that you accumulated during your years in college.

Further, most lenders will require that you have completed your degree, and it may be difficult to find one willing to refi associate degrees.

Fixed vs Variable Rates

You’ll have noticed that the table at the top of this page (and each individual review) has information regarding both fixed and variable annual percentage rates or APRs.

APRs represent the cost you spend each year to borrow money. While shown as a percentage, it’s a little bit different than your interest rate since it also includes any fees you pay.

As the name says, a fixed-rate student loan has the same interest rate over the life of the loan, so you know exactly how much you’ll pay every month.

Variable-rate loans, then, have rates that change according to the market conditions of whichever index the lender uses — and they’re only offered by private lenders, who add an additional percentage called the margin.

Both types of loans have advantages and disadvantages. Fixed-rate loans are predictable and easy to plan your budget around. Loans with variable APRs often start at lower rates than fixed ones, but they always carry an element of risk since your rate can always increase. 

Requirements

Since it is a refinance, qualifying will generally depend on employment, credit, and annual income requirements. 

However, many lenders do allow adding a qualified cosigner if you can’t qualify on your own or you want to take advantage of your cosigner’s higher credit score.

If you’ve been wondering why check your credit report regularly? you should know it’s always a good idea to stay on top of your credit. Since your score changes continuously, you’ll need to monitor it to know exactly where you stand before making an application for a refinance.

You should be aware that applying for a refinance will require a hard credit check, similar to any other major financial commitment. 

While this will lower your score overall for about a year or so, if all your hard credit pulls are within a 14-day time frame, the credit bureaus will count them as one. 

Also, see whether the lenders you choose offer prequalification since this will give them an idea of your creditworthiness with just a soft check.

Credit scores are a major component of the student loan approval process and its eligibility requirements.

When you apply, your lender will approve or deny you based, in part, on whether they determine you have a good credit score and your debt-to-income ratio. Each lender will set its own minimum credit score requirement. 

Not only is approval heavily based on your credit score, but so is your interest rate. 

When you’re looking into different refinancing options,  check if they offer any perks or loan benefits such as rate discounts (autopay discounts for automatic payments are fairly common) or unemployment protection — and, conversely, whether they have any prepayment penalties.

How to Refinance a Student Loan

First, you’ll need to submit an application that includes information on your employment, whether you’re a U.S. citizen, your minimum income, assets, credit history, and other relevant financial disclosures.

Second, you’ll also need to submit a complete list of all student loan debts you want to include in the refinance.

The loan application process is similar to that for any other type of loan. But it’s naturally more complicated by the fact that many applicants have very large student loan balances to refinance, sometimes over 100K in student loan debt.

A debt of that size may require you to add a qualified cosigner unless your income is high enough to carry the loan by yourself.

Cosigner release. If you’re going to refinance your student loan and you’ll be using a cosigner to help you qualify, be aware of the new lender’s policy on cosigner release. The policy will vary for each lender. They’ll typically require 24 to 36 months of on-time payments.

Student Loan Refinance Costs

Virtually none of the seven best student loan refinance lenders for 2024 we’ve provided in this guide charge upfront lender fees, such as application and origination fees. 

Since there are so many high-quality lenders providing no-fee refinances, you should be able to easily avoid any lender that charges them.

While legitimate lenders don’t charge upfront fees, they do typically have late fees for student loan payments that are behind. 

These can be based on either a flat fee, a percentage of the payment, or some other metric. Some lenders may also have prepayment penalties if you pay off some or all of your loan early.

Watch out for student loan scams! One of the very best ways to know if a student loan offer is a scam is when a lender insists on the payment of fees before your loan closes. 

It’s a strong indication the “lender” intends to keep your money without providing the promised loan proceeds. Also, beware of overly generous promises, like a guarantee of a loan from a questionable source.

Never respond to an unsolicited offer to refinance your student loans. A typical red flag is being asked to provide sensitive personal and financial information, like your Social Security number, credit card information, or your bank account number. 

These are what are known as phishing schemes, and they’re designed to gain access to your financial accounts.

Student Loan Refinance During COVID-19

Due to the coronavirus pandemic, the federal government ordered a pause on student loan repayments. 

Back in December 2021, President Joe Biden extended the deferment until May 1, 2022. There’s been no official announcement of an additional extension or of student loan forgiveness initiatives.

If you’re unable to service your loan, most lenders do offer some form of forbearance options. You’ll need to apply for the program with your lender and demonstrate the cause of your hardship.

A common forbearance arrangement is a suspension of payment for up to 12 months. This will usually be granted in three-month increments, requiring you to prove the hardship each time.

Forbearance is not automatic upon application. In fact, the requirements can be quite strict.

For example, SoFi requires that you must have lost your job involuntarily, which is a common requirement. They may also refuse forbearance if you’ve had any late payments on your loan. 

In another common provision, the forbearance will be reported to the credit bureaus, which may affect your credit score.

If forbearance is required, you should know that interest will continue to accumulate on your loan, even while payments are not required. This means the principal amount of your loan will increase during forbearance.

Is Refinancing Better Than Consolidating Student Loans?

Refinancing is when you take an entirely new loan at a new and hopefully lower interest rate and with repayment terms that will fit comfortably within your budget and financial planning timeline.

Consolidating also involves a new loan to pay off all your existing education loan debts. But rather than giving you a new interest rate, the process instead applies the average of the interest on your existing debts to the new loan. 

Its main purpose is to enable you to consolidate multiple loans under a single loan but without necessarily providing a price advantage.

For example, let’s say you have five student loans you’re trying to refinance. If the average interest rate on all five loans is 7%, the consolidation loan will pay off all five loans with an interest rate that’s also 7%.

Whether refinancing or consolidating student loans is the better strategy depends on the cost of your existing debts.

If the interest rates on your outstanding loans are lower than the current prevailing rates, consolidation will be a better strategy. The average of the rates you’re paying on the various loans will be lower than what you can get on a refinance.

But if current interest rates are lower than those on your existing student loans, refinance is a better choice.

How We Found the Best Student Loan Refinance

To come up with our list of the seven best student loan refinancing companies for 2024, we considered the following criteria:

• Minimum/maximum loan amount: In most cases, we included the lenders with the highest possible loan limits.

• Minimum credit score requirement: Though we prefer those with the lowest score requirements, the student loan space does require higher scores than some other loan categories.

• Loan terms: The more options and the longer the terms, the higher the rank.

• Fixed rates: Giving preference to those lenders with the lowest fixed rates.

• Variable rates: Giving preference to those lenders with the lowest variable rates.

• Upfront fees: As you can see from our list, we selected those lenders with no upfront fees.

Summary of the Best Student Loan Refinance Companies

Here is a recap of the seven best student loan refinance companies for 2024:

• SoFi – Comprehensive Financial Services

• CommonBond – Generous Forbearance Period

• Earnest – Option to Skip Payments

• Splash Financial – Online Marketplace

• College Ave – Low Minimum Balance

• LendKey – In-house Loan Servicing

• PenFed Credit Union – Low Variable Rates

The sooner you refinance, the sooner you’ll get the benefit of the lower interest rates that will make your monthly payments more comfortable and enable you to get out of debt quickly.

The post 7 Best Student Loan Refinance Companies of 2024 appeared first on Good Financial Cents®.

For example, if you’re carrying a level of debt, you can’t hope to repay, or if the monthly payments are impairing your ability to survive, bankruptcy needs to be a consideration.

More than 387,721 people filed for bankruptcy in 2022, which is down significantly from the 500,000+ filing each of the previous several years.

Should you file for bankruptcy, and what are the implications if you do?

What Happens When You File for Bankruptcy?

Filing for bankruptcy can seem like an intimidating process, but the initial results may be something closer to relief.

Once you file for bankruptcy, your debtors are legally barred from pursuing you for payment. That will not only end the payments that are making your life a financial nightmare but also the harassing phone calls from debt collectors.

What’s more, creditors are also barred from pursuing collection. That can include garnishing your wages or seizing bank assets. In effect, the bankruptcy filing provides you with an immediate dose of breathing room.

That’s the good news. The bad news is that your financial ability to maneuver will be greatly restricted, especially in the near term.

For example, once you file for bankruptcy, you’ll be unable to obtain new credit. You may also be unable to be approved for an apartment lease. And you may not be eligible for certain jobs where credit considerations are a major factor.

You can think of bankruptcy as being something like a financial time-out. You’ll get relief from the immediate stress of your debt burden, but your options will be severely limited.

What Happens to Your Debt When You File for Bankruptcy?

The answer to that question depends on what type of bankruptcy you file. Under a Chapter 7 bankruptcy, most debts will immediately be dissolved. But under Chapter 13, some or even all of your debt may be subject to repayment through an installment plan.

It’s also important to understand that your debts will be discharged only if your bankruptcy is granted and completed. For example, if you file for Chapter 7 and fail to meet the qualifications, the bankruptcy discharge will be dismissed by the court. If you file for Chapter 13 and fail to complete the installment repayment satisfactorily, the discharge will be invalidated.

In either situation, the damage to your credit will be more severe than it would have been had you not filed for bankruptcy. That’s because not only will you have the bankruptcy filing on your credit report, but you’ll also have a bunch of unpaid debts, all reporting as past-due or in the collection.

You should also be aware there are certain types of debt that cannot be extinguished even by filing for bankruptcy.

The list includes the following debts (applying only to Chapter 7):

• Debts not included in your bankruptcy

• Debts that were incurred fraudulently

• Income tax debt under three years old

• Taxes other than income tax (i.e., payroll or sales tax)

• Federal tax liens

• Unpaid child support or alimony

• Debts to government agencies for fines and penalties

• Student loans

• Debts for personal injury caused by driving while intoxicated

• Debts owed to certain tax-advantaged retirement plans

• Court fines and penalties, including criminal restitution

• Attorney fees in child custody and support cases

• Homeowner’s association (HOA) fees

Some of the above debts can be discharged by filing Chapter 13. These include non-criminal government fines and penalties, non-support marital debts pursuant to a divorce or settlement agreement, debts incurred to pay a non-dischargeable tax debt, HOA fees, and loans owed to a retirement plan.

How Many Types of Bankruptcy Are There?

For personal bankruptcy, there are two primary types, which we’ve already discussed briefly. Those are Chapters 7 and 13. Chapter 11 is the bankruptcy of a business entity.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy is probably the “TV version” of bankruptcy. That’s where nearly all your debts are discharged but where you may also be required to liquidate assets.

That doesn’t mean you’ll lose every possession you own. Each state sets a limit on Chapter 7 bankruptcy exemptions. This extends to both the type of asset and the dollar limits that will be exempt. The amount will be different in each state.

A number of states give you a choice between the state’s bankruptcy exemption and the federal bankruptcy exemption. You can choose whichever is more beneficial to you.

Examples of property that can be exempt under federal law include:

• Homestead exemption of up to $25,150 (primary residence only)

• Benefit and support, including alimony, child support, life insurance paid to a dependent, Social Security benefits, unemployment compensation, VA benefits, and other government benefits

• $25,150 for personal injury recovery, exclusive of pain and suffering

• Compensation for loss of future earnings necessary for support

• Payments received in connection with the wrongful death of a person you depended on necessary for support

• Compensation as a crime victim

• The value of an employer-sponsored retirement plan

• Up to $1,362,800 for traditional and Roth IRA accounts

• $4,000 for motor vehicle

• $1,700 for jewelry

• $13,400 total for household goods, limited to $625 per item

• $2,525 for professional books, implements, or tools of the trade

• Professionally prescribed health aides

• $13,400 in accrued interest, dividend, or loan value life insurance contract

• A wildcard exemption for any type of property for $1,325, plus $12,575 of any unused portion of your homestead exemption

Individual state bankruptcy exemptions can be more or less generous than any of the amounts above.

Chapter 13 Bankruptcy

The advantage of Chapter 13 is that you typically won’t be required to liquidate personal property to settle your obligations. The disadvantage is that you will be required to pay some or all your outstanding debt.

Under Chapter 13, an installment payment plan will be established for as long as five years. During that time, you’ll be required to make payments toward any debts included in the plan.

Once the payment plan has been completed, the bankruptcy will be discharged. But if you fail to make payments during the plan, the bankruptcy will be dismissed.

Nearly 70% of all bankruptcies are filed under Chapter 7, with most of the rest filed under Chapter 13.

When you file for bankruptcy, one of the forms that will be completed is Form 122A-2, Chapter 7 Means Test Calculation. The form will be used to determine whether you are eligible to file for Chapter 7 or 13. Basically, anyone who can repay at least a substantial portion of their debt will be required to do so by filing Chapter 13.

The debtor’s income – for the previous six months – is matched against the median income level for his or her state of residence based on the number of people in the household. If it’s below, the debtor will qualify for Chapter 7. If it’s above, Chapter 13 will be considered.

Even so, Chapter 7 may still be an option if the information you disclose on Form 122A-2 indicates your necessary living expenses consume all or nearly all of your income. Necessary living expenses include housing, utilities, medical costs, food, and other obligations.

Chapter 11 Bankruptcy

If you own a business that has debt obligations you’ll be unlikely to meet, you can file for Chapter 11 bankruptcy. This is considered “reorganization bankruptcy” because it’s designed to enable the business to continue to operate while working out a debt settlement with creditors. Unlike personal bankruptcy, no means test is required.

If the plan is approved by creditors, the debtor will get an automatic stay, which will prevent further collection activities, as well as judgments, foreclosures, and repossessions. But unlike Chapter 13, which generally limits repayment to five years, Chapter 11 plans may go on for many years.

Ways to Recover Credit After Bankruptcy

A Chapter 7 bankruptcy will remain on your credit report for up to 10 years. Chapter 13 will remain for seven years after the filing date.

Either timeline creates obvious limits on your ability to borrow, qualify for a mortgage, rent an apartment, or even land certain jobs. But the good news is that bankruptcy, like all other types of derogatory credit, does get better with time.

For example, a bankruptcy entry that’s five years old will have a less negative impact than one filed six months ago. As each year passes, the impact will decline a little bit until, finally, the entry will be removed from your credit report entirely.

That doesn’t mean you should completely avoid debt until the bankruptcy falls off your credit report. A better strategy is to begin gradually applying for credit, starting about a year or so after filing.

The best way to do this is by obtaining a secured loan. Sometimes referred to as credit builder loans, these are loans made available by banks and credit unions, specifically for people looking to rebuild their credit.

The institution will make the loan because the debt will be secured by the loan proceeds, which are deposited into a savings account.

For example, let’s say you take a secured loan for $2,000 at your local credit union. Despite your bankruptcy, the credit union approves the loan, deposits the $2,000 in loan proceeds into a savings account, and sets you up with a regular monthly payment. It may be for a term of between 12 and 24 months.

While you’re making repayments on the loan, you will not have access to the funds in the savings account. Instead, you will either have the credit union deduct monthly payments from the savings account, or you’ll make the payments out of your income.

The credit union will report your on-time monthly payments to all three major credit bureaus, giving you good credit to offset your bad credit. You may be able to take several of these loans, helping you to rebuild your credit faster.

Ways to Avoid Bankruptcy 

It may be possible to avoid bankruptcy completely, and that’s a strategy you should employ if it’s possible.

Credit Repair

Though credit repair is most often associated with helping debtors rebuild their credit, it can also be an effective way to work out a debt settlement. Many creditors will cooperate, knowing they’re likely to recover more money through a settlement than they will be if the debtor pursues bankruptcy.

In some cases, the credit repair company may be successful in getting several creditors to reduce the amount of principal you owe.

Credit repair companies like Credit Saint and Lexington Law specialize in exactly this type of settlement. Both companies are well-regarded in the credit repair space and can start the process with a free consultation.

Debt Consolidation Loans

If the factors that might cause you to file for bankruptcy owe mostly to an uncomfortable level of debt, you may want to consider the debt consolidation loan route instead.

As the name implies, a debt consolidation loan is where you take a large loan that will pay off several smaller loans. It doesn’t remove the debt from your life, but it does roll several debts into one, with one monthly payment. In many cases, that single monthly payment will be lower than the total of the multiple payments you’re carrying right now.

Two good sources for debt consolidation loans include AmOne Debt Consolidation and Monevo Debt Consolidation.

Both are online loan marketplaces offering several types of financing. The advantage is that you’ll complete a single online application and get loan offers from several lenders. You can then choose the one that offers the best rate and terms for you.

Debt consolidation loans will typically be handled by a personal loan. These are unsecured loans for up to $100,000 and terms of 3 to 5 years, though they can be longer. They generally accept applicants with credit levels ranging between fair and excellent, though rates will be higher for lower credit profiles.

If you do go the debt consolidation route, be sure to avoid any new debt until the consolidation has been paid. The ultimate goal of a consolidation loan is to lower your debt level, thus avoiding bankruptcy.

Bottom Line

Bankruptcy is a pivotal decision that carries both relief and consequences. For some, it offers a respite from unmanageable debt and creditor harassment, granting a fresh start. However, the restrictions on future financial endeavors and credit implications can be severe.

Different types of bankruptcy suit various needs, from personal to business. While Chapters 7 and 13 are more common for individuals, Chapter 11 is designed for businesses.

Recovery post-bankruptcy is a gradual process, often beginning with credit-building strategies.

Yet, before diving into bankruptcy, exploring alternatives like credit repair and debt consolidation loans can provide paths to avoid such a drastic measure. It’s essential to weigh all options and consult experts before deciding.

The post Should I File for Bankruptcy? appeared first on Good Financial Cents®.

We had roughly $450,000 in our home, but we only had around $250,000 left to pay it off.  We were already ahead of the curve compared to most, but to have it completely paid off BEFORE my oldest son started high school was hard to accept as a possibility.  

In our case, it wasn’t just a possibility.  It was becoming a reality…

Well, that is until God gave us the nudge to sell our dream home, uproot our family and move out of state. 

And that’s exactly what we did; we sold our home to start a new life in Nashville, Tennessee.

But, the road to get there wasn’t easy, and we hit a lot of bumps along the way. When we started thinking about a move to Nashville, we quickly discovered buying a similar home in such a booming area would easily cost us 3x or 4x more.

That seems crazy when I think about it — the fact we walked away from a cozy financial situation into a new reality with nearly a million dollars in mortgage debt.

The thing is, our move to Tennessee actually makes so much sense to me now. We were happy where we were, but something needed to change so we could grow and become the family we were meant to be.

5 Reasons We Went From Almost Debt-Free to Almost $1 Million in Debt

Why did we move? And why did we willingly take on so much debt? There are actually quite a few reasons, and only a few of them have to do with money at all. 

Reason #1: We Were 2.5 Hours From the Closest Airport

The first reason we started considering a move has to do with convenience. Our home in Illinois was wonderful for sure, and it was great living close to where my wife grew up, but we were so far from an airport that going anywhere became an enormous hassle — especially with kids.

Imagine wanting to go on vacation and having to drive 2.5 hours to get to the airport before you could depart. Since you have to be at the airport two hours early, that would mean we’re packing up the kids and the car nearly 5 hours before a flight leaves.

Early morning flights were practically impossible for this reason, and the entire process just became a stressful mess.

We also started to think about the future. Would our kids want to visit us if getting to our home was such a pain? 

We wanted to live in a place our kids could easily access no matter where they wind up living as adults. In the middle of Illinois is not that place, and that has become increasingly apparent over the years.

It’s funny; I still remember the first time I went to the airport from our new home in Tennessee. It took me around 45 minutes to get from my driveway to TSA security at the Nashville International Airport, and I was ecstatic! 

Reason #2: We Lived in a Dying Area

While our finances were great when we lived in Illinois, that didn’t change the fact we were living in an area with diminishing opportunities. The job market in Illinois seemed like it was getting worse every year we lived there, and taxes were starting to get crazy.

In fact, the property taxes we paid in Illinois were twice as much as what we pay in Tennessee for a home that costs 4x as much!

That doesn’t even make any sense, but that’s just one example of Illinois making decisions that stunt economic growth. 

We also worried about how the job market would be for our kids in the future, and what kind of opportunities they would have if we stayed in the area. When we started looking at places to move, it didn’t hurt at all that Tennessee doesn’t have a state income tax, either.

At the end of the day, we were living in a place that seemed like it was moving backward. We wanted more than that, and we knew sticking around wouldn’t make the situation in Illinois any better.

Reason #3: We Needed Access to Healthcare Specialists

Another reason we left Illinois has to do with health and the kind of access to healthcare we desperately needed at the time. I’ve talked about this quite a bit in the past, but my youngest son has an attachment disorder that has made our family life challenging to say the least. 

In Illinois, we tried working with quite a few healthcare providers before we realized they didn’t really have the kind of specialists we required. To get our family the right help, we needed to live close to a bigger hospital system with a lot more resources.

Our move gave us access to so many professionals who had experience with the kind of issue we were dealing with, and that alone made the money we spent well worth it. 

Reason #4: I Was Ready to Transition My Business

Around the time of our move, I was also trying to figure out who I was — at least in a business sense. I had always been a financial advisor, and I had built a successful financial planning practice in Illinois.

In the meantime, I had been blogging and growing an online business, and I was starting to earn a lot more online than I was as a financial planner.

For a while, I tried to have the best of both worlds. I hired financial planners who could be in the office every day, which gave me the option to work on my practice from a distance — at least, that’s how it was supposed to work.

The thing is, being that close to the financial practice left me constantly putting out fires or being asked to meet with clients who didn’t want to speak with my employees.

I very clearly remember when, one day, a longtime client insisted on meeting with me on a day I wasn’t feeling it, and it wrecked my whole day. 

I was frustrated because I didn’t want to be a financial planner anymore, yet I couldn’t seem to get away.

I remember venting to my wife that day when she said something that caught me by surprise.

“Then why don’t you sell it?” she said.

I actually had no idea she would even consider selling the practice, and that was exactly what I needed to hear at the moment. Her words gave me the freedom to let go, and that’s exactly what I did after we moved.

Until then though, I just felt like I needed some distance from the practice and that old part of my life. I was ready to move on, both physically and mentally, and moving let me do both.

Reason #5: We Wanted to Give Our Kids More Opportunities

The final reason we moved ties back to the fact our Illinois town was basically dying. As most people know, where we live now is the exact opposite of that. In fact, Nashville, Tennessee is absolutely booming!

We have access to so many more opportunities than we would have if we stayed in Illinois — some little and some big.

For example, one of my sons was able to join the golf team in 6th grade, which would be unheard of when we lived in Illinois since no team existed.

He loves golf and it has been such a blessing for him to work on his game and get involved in a school sport, and I am so grateful I was able to give him that opportunity.

We have also been able to connect with more entrepreneurs we have things in common with, and sometimes in the craziest ways. For example, I have a really good friend named David Molnar who is a photographer.

I met him through a personal finance blogger friend I already had and I also knew that David was friends with Josh Axe, the founder of DoctorAxe.com and the co-founder of Ancient Nutrition.

Josh was someone I wanted to meet because he had a similar career trajectory I did. While he was originally a chiropractor, he eventually quit his practice to work on his online business.

I figured I would meet him eventually since he also lived in Nashville, but lo and behold, we discovered our new next-door neighbor was the COO of Ancient Nutrition — one of his companies!

It’s just crazy how many more entrepreneurs live in this area. There are so many people I can connect with and learn from, and that’s something I was definitely missing.

Basically, none of these things could have happened in Illinois. 

The Bottom Line

If you think taking on almost $1 million in debt for a big move sounds crazy, I totally get that. But when I add up all the blessings we got in return, I feel confident moving was one of the smartest decisions we have ever made.

We listened to the nudge God gave us, and we put our fears aside to move toward something new — something better. Along the way, we learned that sometimes you have to get out of your comfort zone to get what you really want.

And time and time again, I’ve learned you often have to give up something good to get something great!

When I look around at our Nashville home and our kids who are truly thriving, I wouldn’t change a thing.

I may have a house payment now, but I have so much more. 

The post Almost Debt-Free to Nearly $1 Million in Debt: Why We Moved to Nashville appeared first on Good Financial Cents®.

The survey, which included 1,057 undergraduate students, found that these students and their families use a variety of resources to pay for college. This includes federal student loans (51%), student income and savings (45%), private student loans (13%), and the work-study program (12%).

If that all sounds like a lot, you should know there are ways you can help your dependent cover the cost of tuition and fees, or even spend less to begin with. Parents can also help their kids minimize the amount of student loans they have to take out, which can make a huge difference once they graduate from college and begin their adult lives.

If you’re a parent who is hoping to get through the college years with your finances intact, consider these tips.

Create a Spending Plan for College

Also, make sure to sit down with your college-bound kid to come up with a budget or spending plan for school. Not having any sort of plan is the best way to make sure you fail, yet having a budget and some sort of agreement on what college spending might look like can be a big help.

For example, you might have a talk with your dependent about how much “spending money” they’ll be able to have on a weekly or monthly basis. You can also sit down and write out all the regular expenses they’ll have that you’ll need to cover, including tuition, books, housing, a smartphone, technology expenses, transportation expenses, and other bills.

It might also help to ask family and friends who have recently had a kid in college what some of their expenses were so you can plan accordingly. 

Help in the Search for Financial Aid

Also, make sure you’re helping your child qualify for all the financial aid they may be eligible for. This process always starts with filling out the Free Application for Federal Financial Aid, or FAFSA form. This form can help you determine whether your dependent is eligible for grants or work-study programs as well as other aid. Meanwhile, filling out the FAFSA is how you’ll find out your Expected Family Contribution (EFC), which can help you figure out what your out-of-pocket costs for college will look like.

In the meantime, you can also help your child search for scholarships that may be available, including ones from local organizations or industries in their field of study.

Teach Kids How to Borrow Smart

Chances are good your child will have to borrow some money for college even if you provide financial assistance, but you can still help them make good decisions. Filling out the FAFSA form will help your family determine how much you can borrow with federal student loans, which you should use first. From there, you can also look at student loans from private lenders like College Ave Student Loans, which can help you fill in the gaps after federal loans are maxed out.

Either way, make sure your dependent is not taking on too much debt for their degree. A general rule of thumb says that, if your total student loan debt at graduation is less than your starting salary, you can afford to repay your student loan debt over the standard ten-year timeline. 

Teach the Value of Payments During School

Parents can also help their children by teaching them how and why to make payments on their student loans while they’re still in college. The reality is, that doing so can help them make a dent in their balances all along, or even keep ballooning interest at bay.

That all depends on the type of federal student loans your child has. While the government covers accruing interest on Direct Subsidized Loans, there is no such benefit on Direct Unsubsidized Loans. This means that not making any payments on Direct Unsubsidized Loans during college could mean you wind up owing a lot more than was borrowed due to capitalized interest. 

If students want to keep interest on Direct Unsubsidized Loans from adding to their loan balances, making interest payments during college can help. 

Choose the Right Repayment Plan

Finally, you should make sure your dependents are on the best repayment plan for their needs. This could be standard ten-year repayment on federal student loans if they can afford the monthly payment and want to get out of debt as soon as possible. However, you can also look at extended or graduated repayment plans for federal loans that let borrowers repay a smaller monthly amount over a longer period of time. Just keep in mind that extending your loan term may lead to paying more interest over the entire repayment timeline, even if the monthly payment is smaller. 

Income-driven repayment plans like Pay As You Earn (PAYE), Revised Pay As You Earn (REPAYE), Income-Based Repayment (IBR), and Income Contingent Repayment (ICR) are also popular for borrowers since they let them repay federal loans over 20 to 25 years before ultimately forgiving remaining loan balances. You can also look into Public Service Loan Forgiveness (PSLF), which lets borrowers repay loans on an income-driven plan for 10 years before the remaining loan balances are forgiven. Just keep in mind that PSLF applicants are required to repay their loans while working in an eligible public service position.

If you can afford it, encourage your student to pay down student loans while in school. Any amount, as little as $25 a month, can help your child save money on the total cost of their loan. 

Finally, you could even consider helping your dependent refinance their student loans (federal or private) to get a better deal. Just remember that refinancing federal loans with a private lender means giving up benefits like income-driven plans and deferment or forbearance. 

You should also make sure refinancing makes financial sense before you move forward. A student loan calculator can show you how much you could save if you refinance your loans at today’s low rates.

The Bottom Line

Parents may not be able to cover the entire cost of higher education, but that doesn’t mean they can’t help in other ways. For example, parents can make sure their kids are considering all potential forms of aid they may be eligible for, including ones they may not have thought about. Plus, any advice that helps kids borrow less for college can go a long way toward helping them have more choices once they graduate. 

No matter what, your best bet is planning ahead and thinking about college before it gets here. If you wait to plan or decide you’re going to figure it out as you go, you could live to regret it.

The post 5 Ways Parents Can Help Kids Get the Most Out of Student Loans appeared first on Good Financial Cents®.