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Online Lenders Are Scared
In an unprecedented move, online lenders focused on debt consolidation and personal loans have been pulling back and have instructed some publishing partners to “pause the volume.” Since the Federal Reserve cut rates to zero on March 15, there has been unprecedented interest rate volatility while demand for personal loan and mortgages have skyrocketed.
According to LendingTree, “Nearly two-thirds of Americans are feeling the financial impact of the coronavirus.”
On March 20, 2020, LendingTree posted its key findings:
- 63% of consumers agreed their personal finances have been impacted by the coronavirus in some way.
- More than a quarter (27%) lost money in the stock market, and about one in five (21%) are spending more money than they can afford on supplies.
- Many worry about their ability to pay bills (17%), and one in 10 lost money on nonrefundable travel plans.
Tendayi Kapfidze, the chief economist at LendingTree, predicted: “that stunted consumer spending due to the coronavirus will lead the country into a recession, which will further impact the performance of the stock market.
LendingTree also pointed out:
- Nearly two-thirds of Americans are feeling the financial impact of the coronavirus
- 1 in 5 overspent on supplies, 1 in 10 lost money due to canceled travel plans
- Americans lose money in the stock market as recession fears mount
- Looking ahead, Americans fear financial instability due to coronavirus
- 17% worry about the cost of health care should they contract the virus
- Of all bills, anxiety around paying for housing is highest
- Nearly half (44%) of Americans worry that they won’t be able to make rent or pay their mortgage during the coronavirus outbreak
- Consumers also worry they won’t be able to pay credit cards
One of the easiest ways to bail yourself out of crippling debt is with the help of debt consolidation loans. This is a great way to roll up your existing loans into one ‘consolidated’ loan with a single monthly interest that is easier to manage. In some cases, the interest rate may be really low. If done correctly, you can simplify bill payment and reduce your monthly payments.
The only problem is that interest rates on some of the best debt consolidation loans vary widely from one lender to another, ranging from as low as 5% to as high as 35%. It should be noted that debt consolidation only makes sense if you’re able to secure a low-interest loan that is at least half the rate that you’re currently being charged.
How to Choose Online Lenders with the Best Debt Consolidation Loans
Compare Three Factors:
- APR: APR, short for annual percentage rates includes all interest charges and fees. The APR will vary based on your credit score, debt-to-income ratio, and overall income. Your goal should be to secure a low APR for manageable monthly payments that fit your budget. The best debt consolidation loans will help you achieve this.
- Origination Fees: Some lenders will charge origination fees. This one-time fee will range from 1% to 8% of the loan and is usually deducted from your loan proceeds. For the most part, applicants should avoid loans that include this fee to keep their payments down, unless the APR is low.
- Lender Features: Some companies offer a slew of customer-friendly features like direct payments to creditors, where the lender directly pays off your debt once the loan closes, saving you from the ordeal. Other features include hardship programs that reduce monthly payments if you go through a financial setback such as a medical bill or a job loss.
So, there you have it, an in-depth guide on the best debt consolidation loans you can secure in 2020. If you feel we missed other great options, feel free to leave us suggestions.