• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

Prosper Blog

Personal Loans Home Equity Line of Credit (HELOC)
  • Blog Home
  • Financial Literacy
    • Credit Score Information
    • Establishing Credit
    • Financial Trends
    • Interest and APR Information
  • Credit Management
    • Budgeting
    • Debt Consolidation
    • Managing Debt
  • Financial Wellness
    • Best Practices
    • Financial Habits
    • Financial Lifestyle
    • Saving and Investments
  • Finance for Homeowners
    • Home Equity
  • Investor Center
    • Investor Updates
    • Performance Updates
    • Quarterly Investor Updates
    • Tax Guides
  • Prosper News
    • Company News
    • Press Releases
    • Product Announcements

How to Get a Personal Loan for Debt Consolidation

February 20, 2020 by Elizabeth Dyer

personal loan for debt, Prosper Blog

If your bills are piling up and you find yourself struggling to catch up on your monthly payments, you may consider getting a personal loan for debt consolidation. This type of loan is designed to help borrowers pay off multiple high-interest debts by combining them into one lump sum that you can pay back over time, often at a lower rate. Let’s take a closer look at what a personal loan for debt consolidation is and what you need to qualify.

In This Article

  • What You Need to Know About Debt Consolidation Loans
  • Getting a Personal Loan for Debt Consolidation
  • Is a Personal Loan for Debt Consolidation Worth It?

What You Need to Know About Debt Consolidation Loans

A personal loan for debt consolidation is, essentially, a refinance loan that extends the length of time for repayment for your existing obligations. It lets you combine multiple debts into a new, separate loan that consolidates all of your outstanding balances in one monthly payment. Debt consolidation is appealing to many not only because it simplifies your monthly payment process, but it often comes with lower interest rates. If you’d like to learn more about the debt consolidation process, check out our step-by-step guide.

Debt consolidation can be used to tackle both secured and unsecured debt. Credit cards, payday loans, medical bills, and personal loans are all examples of unsecured debt. A HELOC, or Home Equity Line of Credit, is a type of secured debt, with your home or property serving as collateral.

Be aware that because debt consolidation extends your repayment terms, you may be in debt longer under that one new loan. Whatever your financial situation is, weigh the pros and cons of paying a little less over a longer period of time with a debt consolidation loan. 

Getting a Personal Loan for Debt Consolidation

To get a personal loan for debt consolidation, you need to start by applying with a traditional or online lender, who will review your creditworthiness to determine whether you qualify for the loan. If you do qualify, the lender will set your monthly interest rate, which is typically based on your credit score.

If your FICO score is 670 or higher, you’re in the good-to-excellent range, which means you’ll likely be approved at a lower rate. If your credit score is 669 or lower, you’re in the fair-to-poor range and may want to hold off on getting this loan to avoid a high monthly interest rate. See what your options are for improving your credit score and consider applying again when your score has improved.

“Lenders often see people in ‘poor’ credit ranges as risky, and as a result, might not issue a new loan to someone in that range,” according to the consumer credit reporting agency Experian. If your FICO score is in that fair-to-poor credit range and you’re approved to consolidate your debt, “the interest rate on your new loan could, in some cases, be higher than the APR on your existing debt.” Be sure to talk to your lender about your options so you can make the best financial decision for your situation. 

Is a Personal Loan for Debt Consolidation Worth It?

If your FICO score is good and you’re prudent about your spending, then using a personal loan for debt consolidation could help you save money on interest and settle your outstanding balances without the chaos of multiple monthly bills.

Improving your relationship with money and getting educated about creating a healthy financial life is a slow and steady process. If you’re interested in a debt consolidation loan, get a good grasp of your current financial state and talk to your lender about which options are best for you. After all, a personal loan for debt consolidation is meant to help you simplify your financial plan – not complicate it.

You can learn more about personal loans here.

Read more: 6 Ways to Improve Your Credit Score


Share this post:

Share on Facebook Share on Twitter Share on Reddit Share on Pinterest Share on LinkedIn Share on Email

Credit Management, Debt Consolidation, Prosper Blog

Primary Sidebar

Connect with us

Facebook Twitter LinkedIn

For press releases and media inquiries: Prosper in the News or [email protected]

Categories

  • Blog Home
  • Financial Literacy
    • Credit Score Information
    • Establishing Credit
    • Financial Trends
    • Interest and APR Information
  • Credit Management
    • Budgeting
    • Debt Consolidation
    • Managing Debt
  • Financial Wellness
    • Best Practices
    • Financial Habits
    • Financial Lifestyle
    • Saving and Investments
  • Finance for Homeowners
    • Home Equity
  • Investor Center
    • Investor Updates
    • Performance Updates
    • Quarterly Investor Updates
    • Tax Guides
  • Prosper News
    • Company News
    • Press Releases
    • Product Announcements

Recent Posts

  • Prosper Performance Update – March 2021
  • What the Extended Tax Deadline Means for You
  • Paying for Childcare and Receiving Childcare Assistance — What to Know
  • How to Apply for a HELOC Online, Plus 5 Benefits of an Online HELOC
  • Saving vs. Investing: What’s the Difference?

Prosper LoansFollow

Prosper Loans
ProsperLoansProsper Loans@ProsperLoans·
4h

Are you attending @LendIt's #USA2021 next week? Our very own Haiyan Huang will sit on the panel that takes a deep dive into loan performance during the pandemic. Join this discussion on Tuesday, April 27. https://www.lendit.com/usa/2021/register/

Reply on Twitter 1384520997735370754Retweet on Twitter 1384520997735370754Like on Twitter 13845209977353707542Twitter 1384520997735370754
Load More...
  • Best Practices, Financial Wellness, Prosper Blog
    Medical Bill Debt: What Happens If You Don’t Pay Medical Bills?

    Even before COVID, expensive healthcare costs had many Americans wondering...

  • Finance for Homeowners, Home Equity, Prosper Blog
    Using a HELOC to Pay Off Your Mortgage

    Taking out a HELOC to pay off your mortgage is a common practice among many...

  • Credit Management, Managing Debt, Prosper Blog
    Emergency Loans With No Job: Options for the Unemployed

    While the unemployment rate in June showed a decline to 11.1%, that ra...

  • Financial Wellness, Prosper Blog, Saving and Investments
    Saving vs. Investing: What’s the Difference?

    Commonly confused, both as words and concepts, saving and investing are no...

  • Finance for Homeowners, Home Equity, Prosper Blog
    The Struggle to Access Home Equity: How to get a HELOC During COVID-19

    COVID-19 has drastically changed our lives in many ways — from jobs to...

Footer

  • Borrow
  • Invest
  • About Us
  • Press
  • Blog
  • Careers
  • Help Center
  • Contact Us
  • Legal
  • Prospectus
  • Financial Professionals
  • Developers

Prosper and WebBank take your privacy seriously. Please see Prosper's Privacy Policy and WebBank's Privacy Policy for more details. Prosper makes no representations as to the accuracy or completeness of any information provided on this Blog, which is intended for discussion purposes only. Opinions expressed in articles posted to this blog are the author’s own and may not reflect the opinions of Prosper. All personal loans made by WebBank, Member FDIC.

Prosper’s Notes are offered by Prospectus filed with the SEC. Notes are dependent for payment on unsecured loans made to individual borrowers. Notes are not guaranteed or FDIC insured, and investors may lose some or all of the principal invested. Prosper does not verify all information provided by borrowers in listings. Investors should review the Prospectus and carefully consider these and other risks and uncertainties before investing. None of the information provided on this Blog is intended to be investment advice.

Prosper Marketplace, Inc. NMLS#111473 (http://www.nmlsconsumeraccess.org)
All HELOCs are underwritten and issued by our banking partners. Refer to www.prosper.com/heloc for more information. Links to third party sites are provided for your convenience and do not constitute an endorsement.

Equal Housing Lender

© 2005-2021 Prosper Funding LLC. All rights reserved.

Copyright © 2021 · Genesis Sample on Genesis Framework · WordPress · Log in

Go to mobile version