Debt Consolidation Loans for April 2024

Get a debt consolidation loan at one of the lenders verified by our specialists. On 12.04.2024 there are 3 options available to you. Increase your chances of getting a loan — fill out an application with a free credit rating check.
Offers: 3
Updated
04.04.2024
17:07
Best Quick Loan Today 12.04.2024*
Mr. Payday
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Rating by Finanso®
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Recommended FinScore™
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300
650
1000
up to $10.000
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Mogo
Personal Loan
Rating by Finanso®
i

The rating by Finanso® is determined by our editorial team. The scoring formula includes a financial product type as well as tariffs, fees, rewards and other options.

Recommended FinScore™
0
300
650
1000
$500-$15,000
Rate
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Effective interest rate on the product

up to 46.96%
Term
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Loan term for the financial product

up to 60 months
Coast Capital Savings
Personal Loan
Rating by Finanso®
i

The rating by Finanso® is determined by our editorial team. The scoring formula includes a financial product type as well as tariffs, fees, rewards and other options.

Recommended FinScore™
0
300
650
1000
$500-$50,000
Rate
i

Effective interest rate on the product

7.5%
Term
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Loan term for the financial product

60 months
Reviews
Royal Bank of Canada
2
Unfortunately, the loan terms offered to me by RBC turned out to be less favorable than those of other banks.
Review
Royal Bank of Canada
4.2
It's very convenient to use RBC's online services to manage my loan and make monthly payments.
Review
Royal Bank of Canada
4.2
I obtained my home loan with RBC, and they were very flexible in setting terms that suited my financial capabilities.
Review
Royal Bank of Canada
4.6
Great service and quick processing of my loan request.
Review
Royal Bank of Canada
1.8
I found the process of getting a loan with RBC to be quite slow and confusing.
Review
Royal Bank of Canada
4.4
RBC provided me with a loan at a very low interest rate, helping me save on loan payments.
Review

What is a Debt Consolidation Loan?

A debt consolidation loan is a strategic financial tool designed to streamline the process of repaying multiple debts. Upon approval from a bank, credit union, or finance company, individuals can utilize a debt consolidation loan to amalgamate various debts, such as credit cards and payday loans, into a single, unified debt. The borrower is then left with the convenience of making just one monthly payment, simplifying their financial management. The loan typically carries a set interest rate, providing predictability and stability to the borrower's repayment plan.

Most commonly, debt consolidation loans target unsecured, high-interest debts. While some lenders may include secured debts like mortgages or auto loans, it's often discouraged due to the comparatively lower interest rates associated with these types of debts. Therefore, the primary focus is on alleviating the burden of unsecured debts, offering borrowers an efficient way to handle their financial obligations through a consolidated approach.

Features

  1. One Single Monthly Payment. Consolidating debts simplifies financial management, reducing stress by consolidating multiple bills into a single monthly payment with a fixed interest rate.

  2. No Additional Fees. Reputable lenders often do not charge additional fees when providing debt consolidation loans, offering a transparent and straightforward borrowing solution.

  3. Credit Score Improvement. Consistently making on-time payments on a debt consolidation loan can contribute to the improvement of the borrower's credit score over time.

  4. Flexible Loan Amounts. Lenders vary in the amounts they can offer, so it's crucial to choose one that can approve a loan amount sufficient to cover all targeted debts.

  5. Secured vs. Unsecured Options. While unsecured debt consolidation loans are more common, some lenders may offer secured options. Understanding the pros and cons of each can guide borrowers in making informed decisions.

Pros and Cons

Pros

Lower Interest Rates. Debt consolidation loans often come with lower interest rates compared to individual unsecured debts, reducing the overall cost of borrowing and saving money on interest payments.

Faster Debt Repayment. With a lower interest rate, a higher portion of each payment goes toward the principal, allowing borrowers to pay off their debts more quickly and achieve financial freedom sooner.

Credit Score Improvement. Consistent, on-time payments on a debt consolidation loan can positively impact the borrower's credit score over time, contributing to improved financial health.

Cons

Difficulty in Approval. Debt consolidation loans can be challenging to obtain, especially for individuals with lower credit scores or limited income. Approval may also require collateral or a co-signer.

Potential Need for Collateral. Some lenders may require collateral, such as property or assets, which can be a barrier for individuals who don't own valuable assets or cannot find a co-signer.

Doesn't Eliminate Debt. Despite consolidating debts, borrowers are essentially shifting existing balances to a new loan, necessitating responsible financial behavior to avoid accumulating new debt.

How to Get a Debt Consolidation Loan

Apply for a Loan

  1. Assess Your Debts. Take stock of all your outstanding debts, including amounts, interest rates, and monthly payments. This assessment will help you determine the total amount you need to consolidate.

  2. Check Your Credit Score. Obtain a copy of your credit report and check your credit score. A higher credit score increases your chances of approval and may secure a lower interest rate.

  3. Research Lenders. Explore debt consolidation loan options from various lenders, including banks, credit unions, and online finance companies. Compare interest rates, fees, and terms to find the best fit for your financial situation.

  4. Prepare Necessary Documents. Gather documents such as government-issued ID (passport or driver’s license), proof of income (pay stubs, bank statements, tax returns), and information about your debts.

  5. Verify Eligibility. Ensure you meet the eligibility criteria set by potential lenders, which may include Canadian citizenship, being of the age of majority in your province (18 or 19 years old), and having a steady income.

  6. Submit the Loan Application. Complete the loan application provided by the chosen lender. Be truthful and accurate in providing information about your financial situation.

  7. Undergo Credit Check. Lenders typically conduct a credit check as part of the application process. A good credit score improves your chances of approval and may secure better loan terms.

  8. Wait for Approval. After submitting your application, wait for the lender's decision. Approval timelines vary, and some lenders may provide a decision within a few days.

  9. Review Loan Terms. If approved, carefully review the loan terms, including interest rates, fees, and repayment terms. Ensure you understand the total cost of the loan and the monthly payment amount.

  10. Accept the Loan Offer. If satisfied with the terms, accept the loan offer. This may involve signing a personal loan agreement and providing any additional required documentation.

Requirements

  1. Canadian Citizenship or Residency. Most lenders require borrowers to be Canadian citizens or permanent residents.

  2. Age of Majority. Borrowers must be of the age of majority in their province, which is typically 18 or 19 years old.

  3. Government-Issued ID. Provide a valid government-issued ID, such as a passport or driver's license, for identity verification.

  4. Steady Income. Demonstrate a steady income through pay stubs, bank statements, or tax returns. This ensures the borrower's ability to repay the loan.

  5. Minimum Credit Score. Lenders often set a minimum credit score requirement. While some lenders offer bad credit debt consolidation loans, a higher credit score improves the chances of approval and may secure better terms.

  6. Collateral (if Secured Loan). For secured debt consolidation loans, borrowers may need to provide collateral such as property or assets.

Conditions

  1. Loan Amounts. Lenders specify the minimum and maximum loan amounts they are willing to offer. Borrowers should choose a lender that can approve an amount sufficient to cover their outstanding debts.

  2. Interest Rates. Interest rates vary among lenders. Borrowers should compare rates to ensure the debt consolidation loan offers a lower rate than the average rates on their existing debts.

  3. Loan Terms. Lenders provide different loan terms, indicating the duration of the loan. Borrowers should find a balance between monthly payments and the shortest loan term they can afford.

  4. Fees. Check for any fees associated with the loan, such as origination or admin fees. Transparent lenders provide clear information on fees to avoid surprises.

  5. Repayment Schedule. The lender specifies the repayment schedule, including the frequency of payments (e.g., monthly) and the due dates. Understanding the schedule is crucial for timely payments.

  6. Credit Reporting. Some lenders report payments to credit bureaus. This can be advantageous for borrowers looking to improve their credit scores through responsible repayment.

Best Places to Get a Debt Consolidation Loan

  1. Lendful, affiliated with Peoples Group, offers unsecured debt consolidation loans tailored for individuals with credit scores over 600 (650 in Alberta and Quebec). Geared towards those who may face challenges obtaining loans from traditional banks or credit unions, Lendful provides competitive rates. The APR ranges from 10.78% to 22.48%, with loan amounts spanning from $5,000 to $35,000. The loan terms vary from 6 to 60 months. Lendful's eligibility criteria include a minimum credit score of 600, and it operates in all provinces.

  2. SkyCap Financial distinguishes itself as an online lender specializing in debt consolidation loans. Unlike focusing solely on credit scores, SkyCap takes a comprehensive approach, considering factors like credit history, employment, and income in its approval process. Suited for individuals with fair to bad credit seeking professional customer service, SkyCap offers unsecured debt consolidation loans with an APR ranging from 19.99% to 39.99%. Loan amounts range from $500 to $10,000, with terms spanning 9 to 60 months. SkyCap requires a minimum monthly income of $1,666.67 and full-time employment or pension. It operates in all provinces and territories, excluding Quebec and Nova Scotia.

  3. Fairstone, one of Canada's prominent alternative lenders owned by Fairstone Bank of Canada, provides both secured and unsecured personal loans suitable for debt consolidation. Targeting individuals with fair credit seeking quick quotes, Fairstone offers unsecured debt consolidation loans with an APR between 19.99% and 39.99%. Loan amounts vary from $500 to $50,000, and terms range from 6 to 120 months. Fairstone's eligibility criteria include a minimum credit score, and it does not accept bad credit. The lender operates nationwide.

  4. GoPeer distinguishes itself through peer-to-peer unsecured personal loans, catering to diverse financial needs such as home improvement, unexpected costs, and debt consolidation. Offering an alternative to traditional lending, goPeer facilitates the consolidation of various debts, including credit card and medical debt, often at lower rates than conventional options. The platform serves as a peer-to-peer lending marketplace, allowing individuals to achieve their financial goals through a collaborative borrowing and lending model.

Things to Pay Attention to

  1. Interest Rates. Compare the interest rates offered by different lenders. Ensure that the debt consolidation loan provides a lower interest rate than the average rates on your existing debts to save money over time.

  2. Fees. Be aware of any fees associated with the loan, such as origination or administrative fees. Transparent lenders provide clear information on fees to avoid unexpected costs.

  3. Loan Terms. Understand the duration of the loan (loan term) and the associated monthly payments. While longer terms may offer lower monthly payments, they may result in higher overall interest costs.

  4. Repayment Schedule. Review the repayment schedule, including the frequency and due dates of payments. Ensure that the schedule aligns with your financial situation to avoid missed payments.

  5. Total Cost of the Loan. Consider the total cost of the loan, including both principal and interest. Calculate how much you'll pay over the life of the loan compared to your existing debts.

  6. Eligibility Criteria. Check the eligibility criteria set by lenders. Ensure that you meet the requirements for Canadian citizenship, age, income, credit score, and any other conditions specified by the lender.

  7. Alternative Options. Explore alternative debt consolidation options, such as credit card balance transfers, home equity lines of credit (HELOC), or debt consolidation programs. Compare these options to find the most suitable solution for your needs.

  8. Customer Reviews and Reputation. Research customer reviews and the reputation of the lender. Choose a reputable lender with positive customer feedback and transparent practices.

How to Repay a Debt Consolidation Loan

  1. Understand the Loan Terms. Familiarize yourself with the terms of the debt consolidation loan, including the interest rate, loan term, monthly payment amount, and repayment schedule. This information is crucial for effective planning.

  2. Prioritize Loan Payments. Prioritize making the debt consolidation loan payment each month. Consider setting up automatic payments to ensure timely and consistent contributions towards repayment.

  3. Communication with Lender. Stay in communication with your lender. If you encounter financial difficulties or anticipate challenges in making payments, contact the lender promptly to discuss possible solutions or arrangements.

  4. Additional Payments. Consider making extra payments when possible. This can help reduce the principal amount faster, saving on interest costs and accelerating the debt payoff.

  5. Review Finances Periodically. Periodically review your financial situation and budget. Adjustments may be necessary based on changes in income, expenses, or financial goals.

  6. Financial Counseling. If you face challenges in managing your finances or repaying the loan, consider seeking advice from a financial counselor or a non-profit credit counseling agency. They can provide guidance and assistance.

Reasons for Getting Rejected for a Debt Consolidation Loan

  1. Bad Credit. One of the most prevalent reasons for rejection is a low credit score. Lenders view individuals with poor credit as higher-risk borrowers, and they may be hesitant to approve a loan or may offer one with unfavorable terms.

  2. Low or No Income. Lenders assess your ability to repay the loan, and a low or no income can be a significant red flag. Without a steady source of income, lenders may doubt your capacity to honor your commitment to repay the loan.

  3. High Debt-to-Income Ratio. A high debt-to-income ratio, which is the proportion of your income dedicated to debt repayment, can make lenders uneasy. If your existing debts are too high relative to your income, it may signal financial strain.

  4. Insufficient Collateral. For secured debt consolidation loans, lenders may require collateral such as property or assets. If you lack adequate collateral or are unable to find a co-signer, your application may be rejected.

  5. History of Missed Payments. If you have a history of missed payments on your existing debts, it signals financial instability. Lenders may be hesitant to approve a consolidation loan if they perceive a higher risk of missed payments in the future.

  6. High-Risk Borrower. Individuals categorized as high-risk borrowers, often due to a combination of factors like bad credit, low income, and high debt levels, may face rejection. Second-tier lenders may offer loans to high-risk borrowers, but at significantly higher interest rates.

  7. Previous Bankruptcy. A history of bankruptcy on your credit report can significantly impact your creditworthiness. Lenders may be reluctant to extend new credit to individuals with a recent bankruptcy.

  8. Applying for Too Much Credit. Multiple recent loan applications or credit inquiries within a short period can negatively affect your credit score and make lenders wary of your financial situation.

  9. Incomplete or Inaccurate Information. Providing inaccurate or incomplete information on your loan application may lead to rejection. It's essential to provide accurate details about your financial situation.

  10. Debt Load Too High. Lenders assess the total amount of debt you're looking to consolidate. If your debt load is deemed too high or exceeds the lender's limits, it may result in rejection.

Alternatives

  1. Debt settlement is a financial strategy in which individuals negotiate with creditors to settle their debts for less than the total amount owed. Typically employed by those facing financial hardship, this approach involves reaching an agreement with creditors to accept a lump-sum payment as full satisfaction of the debt. While debt settlement can provide relief by reducing the overall debt burden, it often comes with consequences such as a negative impact on credit scores, potential tax implications, and the risk of debt settlement scams.

  2. A credit card balance transfer involves moving the outstanding balances from one or multiple high-interest credit cards to another card with a lower interest rate. This strategy is employed to reduce interest costs and simplify debt repayment. Many credit card issuers offer promotional periods with low or 0% introductory interest rates on balance transfers. However, individuals should be aware of any associated fees, the duration of the promotional period, and the interest rate that will apply after the promotional period ends.

  3. A consumer proposal is a legal process available under the Bankruptcy and Insolvency Act in Canada. It allows individuals facing financial challenges to make a formal offer to creditors to settle their debts and arrange a more manageable repayment plan. If accepted by the majority of creditors, the consumer proposal becomes a legally binding agreement. This option provides debt relief while avoiding the more severe consequences of bankruptcy. It is administered by a licensed insolvency trustee, who works with the debtor to create a proposal that outlines the terms of debt repayment based on the individual's financial situation.

  4. Bankruptcy is a legal status that individuals or businesses can declare when they are unable to repay their debts. In Canada, bankruptcy is governed by the Bankruptcy and Insolvency Act. When an individual declares bankruptcy, their non-exempt assets may be liquidated to repay creditors, and the remaining eligible debts are discharged. While bankruptcy offers a fresh financial start, it comes with significant consequences, including a negative impact on credit scores, potential loss of assets, and restrictions on obtaining credit.

Editorial Opinion

Debt consolidation loans can be a viable financial tool for individuals seeking to streamline their multiple debts into a single, more manageable payment. The potential benefits include simplified financial management, lower interest rates, and the ability to pay off debt faster. However, the effectiveness of debt consolidation loans depends on individual financial circumstances, and careful consideration is essential. While they offer a structured approach to debt repayment, there are potential downsides, such as the risk of accumulating new debts and the requirement of a solid credit history for favorable terms.

Important

Keeping your Debt-to-Income (DTI) ratio below 30-40% of your monthly income is crucial. This will help you avoid potential financial problems in the future. Additionally, always assess the necessity and feasibility of taking a loan, ensuring you can comfortably manage its repayment.

How to Choose a Lender

  1. Make sure to confirm whether the lender is licensed to operate in your province. You can verify this information with your state regulator or attorney general.

  2. Check if the lender is a member of a reputable association, such as the Canadian Lenders Association (CLA). Membership in such organizations may provide an extra level of reliability.

  3. Carefully review all the terms and conditions of your payday loan contract.

  4. Thoroughly examine the interest rates on payday loans and ensure that your contract includes a detailed breakdown of the total cost of the loan.

  5. Take advantage of your right of rescission. Usually, you can rescind the loan within three days after signing the agreement. Alternatively, there is typically a "cooling-off" period, which allows you several days to thoroughly review the contract before making an informed decision to enter into a consumer loan agreement based on the terms specified by the lender.

  6. Choosing a payday lender is a significant decision that demands careful consideration and a good understanding of how such organizations operate.

Methodology

At Finanso, we've carried out a comprehensive analysis of over 70 lenders, assessing them based on 35 different parameters across six key categories: accessibility of loans, customer relations, quality of service, interest rates, and transparency of conditions.

In each category, we carefully considered the most critical factors in selecting a lender. These factors include the interest rates, available loan amounts, minimum credit score, minimum income, application fees, and the speed at which funds are transferred.

At Finanso, we highly value our users, which is why we also focus on the quality of customer service, user reviews, and additional features that can aid our users in making a well-informed decision.

Our ultimate goal is to provide insightful recommendations and expert advice to assist you in selecting a lender that best caters to your specific needs.

FAQ

Do debt consolidation loans hurt your credit?

Consolidating debt may have a temporary impact on your credit score. When you apply for a debt consolidation loan, the lender conducts a hard inquiry, which can lead to a slight decrease in your credit score. However, if you make timely payments on the new consolidated loan, your credit score can gradually improve over time. The positive effects of responsible debt management, such as lower credit utilization and on-time payments, may outweigh the initial impact of the inquiry.

Is it expensive to consolidate debt?

The cost of consolidating debt varies depending on the method chosen. Debt consolidation loans may involve fees, such as origination fees, but many reputable lenders offer loans with little to no additional charges. Balance transfer fees may apply when consolidating through credit cards. It's crucial to carefully review the terms and fees associated with the chosen method. While there might be some upfront costs, the potential savings from lower interest rates can make debt consolidation a cost-effective strategy for many individuals.

What is the best way to consolidate debt sooner?

The fastest way to consolidate debt is often through a balance transfer credit card.

This method involves transferring high-interest balances from multiple credit cards to a single card with a lower interest rate to consolidate credit card debt. However, it's essential to be mindful of any balance transfer fees and the duration of the promotional interest rate. Debt consolidation loans also provide a relatively quick solution, particularly if the application process is streamlined.

Regardless of the method chosen, prompt action, careful consideration of terms, and a commitment to responsible financial management contribute to the efficiency of the debt consolidation process and keep your cash flow.

Loan Terms