Pros and cons for Best Egg credit card debt consolidation loan
Welcome back to The Yukon Project. We’ve analyzed millions of credit reports, hundreds of thousands of people’s financial information, and designed programs to help improve people’s financial lives. Today, we’re going to look closely at consolidating credit card debt with Best Egg credit card debt consolidation loan. Best Egg is a respected personal loan provider, but would one of their loans be good for someone who is consolidating credit card debt?
Best Egg offers APRs ranging from 8.99% to 35.99%
If you have a strong credit profile, you may be able to secure a rate on the lower end of that spectrum, which could save you money compared to high-interest credit cards. But, even if you only have fair or good credit, you could be approved. They lend to people with credit scores between 620 and 700, so you have a good chance of being approved if you only have fair credit. But being approved doesn’t mean that taking the loan would be a good idea. If you are at the low end of that credit spectrum, Best Egg may not offer you an interest rate that is good enough to justify consolidating. The rule of thumb that I use is that you should only consolidate if you can get an interest rate that is 2-3 percentage points lower than what you are currently paying on your credit cards.
Best Egg offers loans between $2,000 and $50,000
This wide range means they may be a good fit whether you have a lot or a little credit card debt. I will say, though, that if you have more than $50,000 in credit card debt, I would recommend consulting a certified debt counselor at a non-profit organization. They can help you think through your options.
Best Egg also charges an origination fee between 0.99% and 8.99%. The origination fee is paid when you take out the loan and it comes out of your loan proceeds. For example, if you borrow $10,000 with a 5% fee, you’ll only receive $9,500 while still owing $10,000. Origination fees are quite common, but not all companies charge them. If you are offered two loans with the same APR, the one with the lower origination fee is better, especially if you plan on paying the loan off early.
Best Egg also offers the convenience of directly paying off your credit cards with the proceeds of the loan. It streamlines the whole process. You don’t have to receive the funds and then pay off your other debts. This is convenient. But, there’s another reason it’s important. It shows that Best Egg understands that the loan will replace current debts instead of stack on top of them. This should make it easier to be approved compared with a lender who does not offer this service. Best Egg also suggests that you could get an additional APR discount if you use Direct Pay, although they are not clear when you qualify or what the discount is. It’s possible that it plays a role in the back-end algorithm even if you don’t see how.
Best Egg does provide secured loans
Securing a loan is when you put up collateral that the lender can take if you fail to repay the loan. The most common form of collateral is a title to your motor vehicle. Best Egg may or may not offer you that option when you are consolidating your credit card debt. The question is, would you even want to? That’s a tougher question. It’s often not a great idea to convert unsecured debt into secured debt. That puts your asset at risk and could just deepen the problems your debt causes. However, if securing the loan will allow you to be approved when you otherwise wouldn’t, land an APR that is significantly lower, or borrow the amount you need, it could be a good thing. Just approach with caution.
Another way to increases your chances of approval, get a better interest rate, or get more money is to add a cosigner. But Best Egg does not offer this option. If you think you need to add a spouse or a loved one to get what you will need, you will probably need to use another lender.
Shop around for the best loan
Some applicants are so grateful to find a lender who approves them, that they accept the loan immediately. It’s best to get 2-3 approvals in hand before you accept a loan. This way you can be sure you’re getting the best deal you can. At The Yukon Project, we’ve tried to make shopping around easy. If you go to our marketplace page, you can apply to any one of our featured lenders. Behind the scenes, we will check your rate with up to 40 other lenders. The application uses a soft credit pull so it won’t affect your credit score. We will present you with all the approvals, so you can pick the loan that’s best for you.
Best Egg Credit Card Debt Consolidation Loan Can Happen Quickly!
If you are in a hurry to get the money, Best Egg could accommodate you. While many companies boast of an automated system that will result in quick decisions, Best Egg claims that 50% of people who accept a loan receive their money the next day.
I have a final thought about consolidating your credit card debt. When companies promote their credit card debt consolidation loans, they usually lead with the benefit that it will “simplify your payments.” While consolidation will definitely do that, it is important to remember that this is not a good reason to consolidate in and of itself. The point of consolidation is not to simplify your life. The real point of consolidation is the pay off your debt. And THAT will simplify your life. So, don’t just consolidate so you have fewer bills to pay. Consolidate when it will help you pay less interest, make bigger principal payments, and pay off your loan sooner.
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