Simplify your bills with a debt consolidation loan

Debt consolidation loan FAQs

• What is a debt consolidation loan?

  A debt consolidation loan is a type of personal loan that you can use to combine several high-interest debts into a single loan with a fixed monthly payment.

• Which types of debt can I consolidate?

  Debt consolidation loans are useful for managing revolving lines of credit and high-cost loans that have high interest fees. Some of these debt types include credit cards, retail credit cards, gas cards, payday loans, and title loans.

• What are the advantages of loans for consolidating debt?

  With a debt consolidation loan, you can take back control of your financial future.
  - Convenient single monthly payment: Once you combine several of your debt payments into one, you can free yourself from revolving debt and the need to keep track of multiple payments.
  - Savings possibilities: With the right loan terms, you can pay off your debt faster and save money on interest if you qualify for a lower interest rate.
  - Predictable payment amount: Many debt consolidation loans come with a fixed interest rate, which means that the interest rate will stay the same over the life of your loan. Since you’ll know how much you owe each month, you can determine when your debt will be paid off.

• What are the risks of debt consolidation?

  Consolidating debt may be a tool you can use to help pay off your debt, but it may not be the right tool for everyone. Before you decide, it’s essential to consider all the potential risks of getting a debt consolidation loan. Keep in mind that the risks will vary from lender to lender.
  - Fees. Lenders may charge closing fees, loan origination fees, and balance transfer fees, which can add up.
  - Collateral. Some lenders may require you to put down collateral you own, like a car or home, to back up the loan. If you default on the loan, the lender may take the collateral to compensate for your missed payments.
  - No guarantee of a lower interest rate. Consolidating a loan doesn’t automatically mean you’ll qualify for a lower interest rate. The rate you get will depend on the state of the market and details you provide to your lender.

• How do I qualify for a consolidation loan?

  To qualify for a debt consolidation loan, you’ll need to provide some personal and financial information about yourself, which varies by lender. Typically, lenders will check your credit score, income, credit history, and debt to qualify you for a debt consolidation loan.
  
  At Upstart, we know that you’re more than your credit score. That’s why our model considers other factors including your education³, employment, and credit history when you apply.

• Does debt consolidation affect my credit score?

  When you check your rate, we’ll do a preliminary soft credit inquiry. This will have no impact on your credit score. If you accept your rate and decide to complete an application for a debt consolidation loan, we’ll do a hard credit inquiry.
  
  The hard credit inquiry may cause your credit score to temporarily lower, but it should not be cause for alarm. This is a normal part of the process. As long as you make your monthly loan payments on time, your credit score will bounce back and may even improve.

• How much debt do I need to consolidate?

  The amount of debt you consolidate is entirely up to you. However, it’ll likely make more financial sense for you to consolidate if you have a large amount of debt. Why? New loans, like a consolidation loan, could come with fees and a credit check. If you have a small amount of debt that can be paid off in a year, it might not be worth the hassle.

• After I'm approved, how long does it take to get the money?

  Customers who have accepted a debt consolidation loan through Upstart have received funding as soon as 1 business day.²