Navy Federal Credit Union Debt Consolidation Review 2024
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The Navy Federal Credit Union, or NFCU, began operations in 1933 and offers memberships to all active duty men and women of all branches of the military, veterans, Department of Defense employees, and their family members. The NFCU offers multiple financial products and financial services, and this Navy Federal debt consolidation review highlights one of its many loan options.
Why would someone be interested in a debt consolidation loan? According to Experian data, Americans carried an average credit card debt of $6,501 in 2023, up 10% year over year.
Millions of people have credit card debt, store credit cards, or debt from other sources such as personal loans. This means we are potentially paying thousands of dollars in interest over the years. When consumers have to start juggling multiple debt repayment plans, many consider a debt consolidation plan.
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What is Navy Federal debt consolidation loan?
In general, debt consolidation combines several debts and re-financed them into one payment. You are essentially taking out one loan to pay off multiple other debts. This is a popular choice for people who don’t want the hassle of juggling multiple payments to numerous lenders; it could save money in interest payments in the long run.
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The Navy Federal Credit Union offers its members an option in this situation. It offers a debt consolidation loan, a lump sum you apply for, and once it is funded, you use the amount to pay off other debts.
How does Navy Federal debt consolidation loan work?
NFCU offers personal or debt consolidation loans, which can be used to pay off other debts. Once you apply and accept the terms and conditions, the money you requested may be deposited into your account within the same day, although it will most likely take a few business days. The website does not mention the minimum credit score needed for qualifying, but reviewing your credit history will be a part of the loan application process.
The debt consolidation process means you use the funding from the loan to pay off any debts you would like. It could be credit cards, another personal loan, or your Peloton bike - if there is any interest charge, it can be paid off. Then, with monthly payments, you will begin paying back the consolidation loan as agreed. You will choose the repayment terms and the loan amount you need.
Essentially, the debt consolidation loan appears to be the same as a personal loan option with NFCU. Both are unsecured loan options, which means you do not have collateral as you do with secured loans for mortgages or vehicles.
While personal loans can be used for almost anything you choose, such as home improvements, the debt consolidation loan funds would be earmarked to pay off other debts.
Related: Navy Federal Credit Union Review
How much does Navy Federal debt consolidation loan cost?
The interest rate is a major cost factor when comparing costs for debt consolidation loans or personal loans you take out to use for debt consolidation.
In addition to interest rates, application and origination fees, prepayment penalties, and late fees must be considered. NFCU does not charge application or origination fees or prepayment penalties. However, there is a $29 late fee if you are late on a payment.
Features of Navy Federal's Debt Consolidation
Single and convenient monthly payment
One of the most attractive aspects of a debt consolidation loan is rolling all debt payments into a single monthly payment. Not only does this potentially reduce the amount you pay in interest and fees over the long run, but it also makes it easier to pay the bill each month when you only have one to deal with.
Flexible loan terms
The debt consolidation loan has two options: a term of up to 36 months or 37 to 60 months.
Competitive interest rates
Although the rates are not the lowest, borrowers may find the interest rates available through NFCU attractive for debt consolidation. For loans up to 36 months, the interest rate will range from a fixed rate of 8.99% to an 18.00% annual percentage rate (APR). The rates for loans with a 37- to 60-month term length are currently 15.29% to 18.00% APR.
Depending on the amount of interest you are paying on other high-interest loans and credit cards, this could be potential savings for you in interest. The exact interest rate of your quote depends on your creditworthiness.
Wide range of loan amounts
Another feature of the NFCU debt consolidation option is the range of the amount you can borrow. Currently, you can borrow from $250 up to $50,000.
No origination or prepayment fees
When you apply and close on your loan, you will not be charged origination fees, which some lenders charge. There are no prepayment fees for paying your loan off early either - which gives you more of an incentive to pay the debt off as soon as possible.
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Who is the Navy Federal debt consolidation option best for?
First, you must be a current Navy Federal Credit Union member to use this debt consolidation option.
This may be an option if you are a current member or planning to become one soon and have multiple debts you’d like to consolidate. If you are paying a higher interest rate on your debts, it may make sense to consolidate everything into a single payment.
Other borrowers who may benefit from the consolidation struggle to keep up with multiple payments for various credit cards. If you have ever been assessed a late fee simply because you can’t keep up with the various due dates, then you may benefit from only having one payment to keep track of.
Who shouldn’t use the Navy Federal debt consolidation option?
You may think twice about this option if the interest rate you are quoted for the loan isn’t lower than what you currently pay for interest rates for your other debts.
Also, if you prefer to handle this type of paperwork online instead of calling the customer service number or visiting a local branch, this option may not be for you. There is no online option for getting a quote, and the loan process started strictly for the debt consolidation loan.
One thing to note is if you decide you would instead choose a personal loan option, then you do have the ability to apply online for it.
Pros and cons
Pros
- Flexible repayment terms and loan amounts.
- No origination fees or prepayment penalties.
- Could earn a potentially lower rate of interest versus other high-interest options.
Cons
- Eligibility is limited to military members and their families who are also members of NFCU.
- Must call customer service or visit a local branch to initiate the debt consolidation, no online option.
Navy Federal Credit Union versus other competitors
Consolidation loan option | Term length | APR | Loan amount | Prepayment penalties or origination fees |
Navy Federal Credit Union | Up to 36 months, or a 37- to 60-month option | 8.99% to 18.00% | $250 to $50,000 | None |
Discover | 36 to 84 months | 7.99% to 24.99% | $2,500 to $40,000 | None |
Lending Club | 24 months to 60 months | 8.98% to 35.99% APR | $1,000 to $40,000 | 3.00% to 8.00% origination fee, no prepayment penalty |
Discover
Discover offers a debt consolidation option to anyone who meets the application requirements. You can use the funds for various debts, including medical bills, credit cards, store cards, or auto loans. Discover provides a longer-term length of up to 84 months, and the interest rate may be more competitive versus NFCU. However, the loan amount is higher with a $2,500 requirement, up to $40,000 maximum.
LendingClub
This online-only option offers personal loans which can be used to pay off debt. One advantage to LendingClub is it will provide funding to people with lower credit scores of at least 660. Although more people may qualify, the hefty origination fee makes this loan less attractive. You can choose a loan amount from $1,000 up to $40,000, a wider range than the Discover loan consolidation option.
FAQs
How does taking out a loan affect my credit score?
Borrowing money, either as a debt consolidation loan or a personal expense loan, will impact your credit score in two ways. First, when you submit your application, you give NFCU permission to pull your credit report. This results in a hard inquiry on your report and can decrease your score temporarily. Secondly, you are taking on debt, even if you are “paying off” other debts. This will still show in your report as credit utilization. On the positive side, each month you make an on-time payment, it will be reported as such and could help raise your credit score since payment history is a large factor in scoring.
What information is used for my loan application with NFCU?
In addition to pulling your credit and reviewing your credit report, your income, debts, and your current membership to NFCU will all be evaluated.
Is a debt consolidation loan a good idea?
If you can find a consolidation loan that offers a lower interest rate than your current debt obligations, has very little fees associated with it, and will make it possible for you to pay off your debt sooner versus later, then it may be a smart idea. While it may add greater convenience to your personal finances, keep in mind, you are still responsible for repayment, and it is still a debt that will show on your credit report.
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The bottom line
The NFCU debt consolidation loan is basically a personal loan used to pay off other debts. The interest rates are not as low as what you mind finding with other loan products, but the loan amount range and flexible monthly payment amounts may be enough to sway your decision. Whether you are reviewing this particular option or other loan offers, be sure to calculate and compare interest rates and the loan terms to see if it’s worth the effort and will actually save you money in the long run.
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Sara Coleman is a former corporate gal turned creative entrepreneur. She began writing professionally several years ago and now contributes to multiple websites, blogs, and magazines. She’s also an avid reader and can’t resist a great historical fiction novel. Sara holds a BA in journalism from the University of Georgia and can be found supporting her Bulldogs every chance she has. She resides in Charlotte, North Carolina, with her wonderfully supportive husband and three children. When she’s not ushering her kids to sports and dance lessons, she can be found creating content for her own website, TheProperPen.com.
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