What’s the use of getting multiple loan offers if you aren’t sure what you’re looking at? When reviewing your options, pay special attention to:
APR: Annual percentage rate — or APR — is your interest rate, plus any fees. The lower the APR, the cheaper the loan.
Loan term: This is the length of time you have to pay off your debt consolidation loan. A longer loan term usually results in lower monthly payments (since you’ll have more time to spread your balance across). However, the longer it takes to repay your loan, the more overall interest you may pay.
Loan amount: When consolidating debt, it’s important that the loan you take will cover all that you owe. If your debt consolidation loan comes up short, the only way to borrow more is to take another loan.
Fees: Debt consolidation loans can come with fees, the most common being an origination fee. Typically, the lender will deduct this fee from your loan funds before sending it to you (or your creditors).
Generally, lower-credit borrowers are more likely to see an origination fee. Origination fees can help offset some of the lender’s risk. But some lenders charge them no matter your score.
Funding timeline: A lender’s funding timeline is how long it takes to approve your loan and send you your funds. Although a lender might advertise same-day funding, that timeline might not apply to debt consolidation loans.
Loan disbursement: When a lender disburses your loan, that means it has sent it to you. You may have the option to have the lender pay your creditors directly. This might streamline the process, and some lenders (such as Achieve) may give you an APR discount for doing so, too.