Avant Debt Consolidation Loans: An In-Depth Guide
Dealing with debt can be stressful. If you have multiple high-interest debts like credit cards or payday loans, it can feel like you’re barely keeping your head above water each month trying to make the minimum payments. This is where a debt consolidation loan from a lender like Avant can help.
What is Avant?
Avant is an online lending company that offers personal loans for things like debt consolidation, medical bills, major purchases, and more. They‘ve been around since 2012 and have lent over $5 billion to more than 600,000 customers.Avant uses big data and machine learning to analyze applicant‘s credit history and other details to determine eligibility and loan terms. This allows them to lend to borrowers with credit scores starting at 580, which is lower than many traditional banks.
How Does an Avant Debt Consolidation Loan Work?
The concept behind a debt consolidation loan is simple – instead of juggling multiple high interest debts each month, you take out one new loan at a lower interest rate to pay off those accounts. This simplifies your payments into one lower monthly payment.Some key things to know:
- Loan Amounts – Avant offers loans between $2,000 and $35,000. So they can consolidate quite a bit of debt.
- Rates – Interest rates currently range from 9.95% – 35.99% APR depending on your credit history and other qualifications.
- Terms – Loan terms are 2 to 5 years. Longer terms have lower monthly payments but higher interest costs over the life of the loan.
- Fees – Avant charges an administration fee of 4.75% of the loan amount. There are no early repayment penalties.
- Payment – You’ll make one monthly payment to Avant that covers principal, interest, and fees over the term of the loan.
As you can see, interest rates are much higher than something like a home equity loan. But for borrowers with average credit, Avant loans can still be much cheaper than credit card or payday loan debt.
What Debt Can You Consolidate with Avant?
An Avant personal loan can be used to consolidate all sorts of existing unsecured debts like:
- Credit cards
- Payday loans
- Medical bills
- Personal loans from other lenders
Basically any debt that isn‘t tied to an asset like a car or home can potentially be consolidated.Consolidating federal student loans with a personal loan usually isn’t advisable though since you lose access to income based repayment and forgiveness programs.
Avant Debt Consolidation Loan Pros and Cons
Here are some of the key advantages and potential disadvantages to weigh when considering an Avant debt consolidation loan:Pros
- Lower Interest Rate – The most common reason to consolidate debt with Avant is to save money each month by reducing interest rates. For example, consolidating credit card debt at 29% APR to an Avant loan at 20% APR results in big savings.
- Single Payment – Instead of tracking multiple payment dates and amounts, you’ll make one payment to Avant each month. This simplifies your budget.
- Fixed Payment – Avant loans have fixed interest rates and payments. This stability can help you budget and pay off debt faster without rate hikes.
- Could Improve Credit – Making on-time payments shows credit bureaus you can responsibly manage debt. Over time, this can improve your credit score.
- Closing Costs – You have to pay a 4.75% administration fee that gets tacked onto the loan amount. This covers Avant’s costs to process the application and distribute funds.
- Higher Monthly Payment – Even with a lower interest rate, consolidating debts into a 2-5 year loan usually increases the monthly payment amount. Make sure this fits your budget.
- Prepayment Penalties – Avant doesn’t charge early repayment fees. But paying extra can still indirectly raise the cost since you already paid closing costs based on the full original loan amount.
- Credit Inquiries – Applying for a new loan can result in hard credit inquiries that temporarily lower your credit score by a few points.
As with any major borrowing decision, be sure to run the numbers carefully and understand the short and long term tradeoffs.
What Credit Score is Needed?
As an online lender catering to borrowers turned away by big banks, Avant approves applicants starting at a 580 FICO score. But approval odds increase with higher scores:
- 580-599 – Minimum eligible score but highest rates
- 600-639 – Better approval chances and better rates
- 640-679 – Good approval odds with rates as low as 9.95% APR
- 680+ – Highest approval rates and lowest advertised rates
They also consider factors like your income, existing debts, and credit history patterns in making loan decisions.If your score is below 580, improving your credit or considering alternatives like credit counseling could be a smarter financial path.
How to Apply for an Avant Debt Consolidation Loan
Ready to move forward with Avant? Here are the steps to apply:
- Check Your Rates – Avant has a simple rate checker where you enter your estimated credit score, income, and desired loan amount to see estimated rates. This is a soft credit check that won’t impact your score. Review projected rates and fees to see if consolidation makes financial sense for your situation.
- Complete Application – If happy with projected terms, complete the full online application. This includes entering personal and employment details for proof of income and identity verification. Double check all inputs before submitting.
- Underwriting Review – Avant processes the application using automation and human underwriters to verify details and evaluate credit risk. This process only takes a few minutes.
- Loan Decision – If approved, you’ll receive loan terms including amount approved, interest rate, fees, and payment amount. Loan funds are usually distributed to your bank account within a couple days after accepting terms. You can then pay off existing debts.
From start to finish, the process only takes about 5-10 days for a decision and funding.
Alternatives to Consider
While an Avant debt consolidation loan has benefits, make sure to also consider alternatives like:
- Credit counseling – Non-profit credit counseling agencies can help negotiate lower interest rates on debts and set up affordable payment plans for free. If you have good credit but high payments, this is worth exploring first.
- 401k loan – If your employer plan allows it, borrowing against your 401k lets you pay yourself back with low interest. Just beware taxes and early withdrawal penalties.
- Personal loan – Online lenders like Lightstream offer loans for debt consolidation without origination fees or early repayment penalties. Useful if you have great credit.
- Balance transfer card – Cards like Chase Slate offer 0% interest for 12-18 months on balance transfers. This pause on interest accumulation can help accelerate payoff.
- Debt management plan – Similar to credit counseling but the agency makes fixed monthly payments to your creditors after you make one payment to them.
- Bank personal loan – If you have an established relationship with a bank or credit union, check if they offer personal loans that may have lower rates than Avant.
- Home equity loan – If you have sufficient home equity, a home equity loan or line of credit offers lower interest debt consolidation with tax deductible interest.
The Bottom Line
Juggling multiple high interest debts each month is stressful and expensive. If you have good credit, a debt consolidation loan from Avant could streamline this process through fixed payments at a lower interest rate. Just be sure to run the numbers accounting for fees, and compare alternatives like balance transfer cards or 401k loans before moving forward.Responsibly using an Avant loan to consolidate and pay off debt could save thousands in interest while accelerating your path to becoming debt free.
More Debt Consolidation Resources