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Published: May 19, 2022 25 min read
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From 5.73%-20.49% with Autopay discount

5.74%-21.78%% with Autopay discount

4.99%-17.99%

5.99%-24.99%

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No minimum credit score but they require: several years of credit history, variety of open accounts, good payment history with few delinquencies, ability to save, stable and sufficient income

680 FICO. Full credit history and income are also considered

Doesn’t disclose minimum credit score but they consider: debt-to-income ratio, credit score, bankruptcy score, and income verification

No minimum credit score required but they consider: application information, credit usage, credit history, payment history, and loan term selected

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No minimum credit score but they require: several years of credit history, variety of open accounts, good payment history with few delinquencies, ability to save, stable and sufficient income

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Debt consolidation can be an effective way to pay off large balances faster, especially if you have multiple monthly debt payments or your debts carry high interest rates.

Compare our picks for the best debt consolidation loans and read our guide to find out how consolidating can help reduce your debt, simplify your finances and save you money in the long run.

Our Top Picks for Best Debt Consolidation Loans

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Best Debt Consolidation Loans Review

Why we chose it: Lightstream is our top choice for borrowers with good or excellent credit (690 FICO or higher) who are looking for a large loan with competitive rates and zero fees.

Pros
  • No fees for loan application, origination or prepayment penalty
  • Rate beat program and satisfaction guarantee
  • 0.5 rate discount for setting up autopay
  • Full online application
Cons
  • Doesn't provide loan pre-approvals
  • Doesn't accept loan information via phone or fax
  • Requires several years of credit history and no direct payment to creditors
  • Autopay discount only available before loan disbursement

LightStream offers personal loans up to $100,000 annual percentage rates (APR) ranging from 5.73% to 19.99% with an autopay discount. This lender processes their completely online application seven days a week until 6 p.m. You can check Lightstream debt consolidation loan lowest rate and payment options just by entering your desired loan amount on their debt consolidation loan calculator. This calculator doesn’t require a soft credit pull, and it’s not a pre-approval. It provides a general calculation based on your desired loan amount. For a more precise rate, a full loan application is required.

With its Rate Beat Program, LightStream claims it will lower your rate by 0.10 percentage points if a competing lender approves you for an unsecured loan with the same terms. Borrowers can choose when to receive their loan funds, with disbursement available on the same day of approval.

Lightstream is a good option for those with excellent credit. Even though this lender doesn’t require a minimum FICO score, it requires an established credit history, various open accounts like credit cards and car loans, savings accounts or liquid assets, and a stable and sufficient income. This lender doesn’t charge any fees or prepayment penalties on their personal loans. If the customer is not satisfied with their experience with Lightstream, customer service will email a survey, and after completion, the borrower can receive $100 compensation.

One of the downsides to Lightstream is that their customer service is only available through email from Monday to Saturday.

Why we chose it: SoFi’s credit card consolidation loans have no fees, no late payment penalties and customers can make payments and check their loan status on the SoFi mobile app, available for iOS and Android.

Pros
  • Free financial advising
  • Employment protection
  • Pays lenders directly
  • Accepts co-applicants
  • Loan disbursement in one or two business days unless you sign up for Direct Pay
Cons
  • Loan terms start at three years up to seven years
  • Not open to Mississippi residents
  • The co-applicant has to live in the same residence as the primary applicant

SoFi’s personal loans offer interest rates starting at 6.49% APR with autopay and no extra fees or prepayment penalties. The company also provides online prequalification with a soft credit pull, fixed rates for the life of the loan, and a fixed payment schedule.

SoFi caps its competitive rates at 21.78% APR with an autopay discount. If the customer declines the autopay option, interest rates will be higher. This company funds most personal loans on the same day of approval unless the loan is more than $20,000 or if the borrower enrolls in Direct Pay, a service where SoFi pays lenders directly. Those who enroll in Direct Pay obtain a 0.25% APR discount on their loan rate. AutoPay and Direct Pay discounts can be combined, helping the borrower to save even more on loan costs.

With Unemployment Protection, SoFi provides support to borrowers who lose their jobs. This program offers temporary payment modification and job placement assistance. This benefit is offered in 3-month increments for up to 12 months. Interest rates will continue to accrue during the Unemployment Protection period. To qualify, borrowers have to also qualify for governmental unemployment compensation and actively participate in SoFi’s Career Advisory Group as part of their job search.

SoFi is a good option for a no fees debt consolidation loan because it doesn’t charge any origination, late payment, or prepayment fees. SoFi mobile app, available for iOS and Android, gives customers 24/7 access to loans, checking and savings accounts, investments, and other banking features like credit cards. Their customer service is available through phone and online chat.

Why we chose it: PedFed minimum loan amount is $600, making it the best lender for someone with debt obligations under $1000.

Pros
  • Apply and check application status online
  • Accepts co-borrowers
  • You don't need to be a credit union member to apply
  • The loan is funded 1-2 business days after approval
  • No origination fee or prepayment penalty
  • Terms up to 60 months
Cons
  • You need to be a member of the credit union for loan disbursement
  • No autopay discount

Pentagon Federal Credit Union, known as PenFed, offers fixed-interest rates starting at 4.99% APR and terms up to 60 months for their personal loans for debt consolidation. Borrowers looking for a small loan can get approval in as little as one business day. You don’t have to be a PenFed member to apply, but you need to become a member to receive loan funds. If you’re not a member at the time of loan disbursement, PenFed will open a savings account in your name preloaded with $5 to establish your credit union membership. After approval, the loan is disbursed within 1-2 business days.

Checking your rate with PenFed will not affect your credit score since it’s done with a soft credit pull. A full credit report inquiry is required when the loan application is submitted. Even though PenFed doesn't charge origination or early payment fees, a $29 late payment fee is charged to those submitting their payment more than five days late.

PenFed features a mobile application for iOS and Android where members can check their loan status, make loan payments and transfer money between accounts.

Why we chose it: The Fiona marketplace allows borrowers to browse and compare multiple online lenders at once and shop for loans according to different factors like credit score and location.

Pros
  • Works with any type of credit
  • Online application process and loan calculator
  • Partners with TransUnion to provide credit score
  • Some lenders offer personal loans up to $250,000
Cons
  • Credit requirements depend on the company selected
  • Some lenders will charge an origination fee of up to 6% of the loan amount

Fiona provides personal loans for debt consolidation in partnership with companies like LendingClub, SoFi, Avant and Marcus by Goldman Sachs.

Borrowers can enjoy a $0 application fee or prepayment penalty, a fully online application process and customer service by email or phone. Fiona claims they work with personal loan lenders who have options for any type of credit, including those with a low credit score.

Fiona offers secured personal loans for debt consolidation, unlike most lenders on this list. Secured loans require a property or assets to back up the loan. A car title, stock investments, equity from life insurance policies, real estate, and precious metals are some of the properties and assets that Fiona’s partners accept as collateral for a secured personal loan.

Fiona loan offers include refinancing for unsecured and secured loans, including auto, student loan, and mortgage refinance. The company also provides customers with a reference blog about debt repayment and other financial advice.

Why we chose it: Discover offers a wide variety of options for credit card debt consolidation. Customers can select a credit card balance transfer with a promotional interest rate, apply for a personal loan, or use their home equity to consolidate debt.

Pros
  • Pays lenders directly
  • Same-day approval
  • You can return loan funds within 30 days
  • Application assistance by loan specialists
  • Application can be completed online or via phone
  • Discover mobile application for iOS and Android
Cons
  • Eligibility requirement of a minimum household annual income of $25,000
  • Late payment fee of $39
  • Loan funds cannot be used to pay off secured loans or a Discover credit card
  • No autopay discount available

Discover doesn’t charge any origination fees, and its personal loan rates range between 5.99%-24.99% APR. This lender offers a debt consolidation loan calculator and pre-approval with a soft credit check. For approval, Discover doesn’t require a minimum FICO score. Still, it requires a minimum of $25,000 in annual income and considers debt-to-income ratio, credit history, application information, and selected term.

Discover features same-day approval in most cases, and loan funds are deposited into a savings or checking account within 1-2 business days after the loan offer is accepted. If a client is not satisfied with their experience with Discover, loan funds can be returned in their entirety within 30 days, and no interest will be charged.

Clients can access 24/7 customer service over the phone and through the Discover mobile app for iOS and Android. Customers can check their FICO score, access their bank account, make payments, and check balances through the app. Discover also has a resource center with strategies to payoff or lower credit card debt.

Why we chose it: Marcus by Goldman Sachs is our choice for those with a fair credit because it requires a minimum of 660 FICO score, no fees, and features a mobile app for iOS and Android.

Pros
  • Loan options within 5 minutes
  • 0.25% APR rate discount with AutoPay
  • On-time payment reward
  • Pays creditors directly
Cons
  • Loan disbursed within five days after approval
  • Not suitable for smaller debt

Marcus by Goldman Sachs offers loans from $3,500 to $40,000 with a fixed APR rate between 6.99% to 19.99%. Potential borrowers can obtain customized loan options and pre-approval in less than 10 minutes. Marcus doesn’t charge any fees on its personal loans, but a late, incomplete, or missed payment can result in a default under their Installment Loan Agreement. To qualify for a personal loan, this lender requires a minimum of 660 FICO score, employment and income verification, and personal bank statements. Applications can be completed online or via phone.

For its debt consolidation personal loans, Marcus features Direct Payment, On-Time Payment Reward, and Autopay with 0.25% APR discount. With Direct Payment, Marcus sends loan funds directly to up to 10 creditors without charging any fees, further supporting their customers in their debt consolidation journey. Their On-Time Payment Reward is a payment deferral option for those customers who have made at least 12 on-time consecutive payments. During that deferred month, the loan will not accrue any interest.

Marcus funds their personal loans within five business days after accepting the loan offer. Its customer service is available through the Marcus app and over the phone.

Other lenders we considered

For our top list, we analyzed several debt consolidation loan lenders and selected the ones with competitive interest rates, excellent customer service and a variety of loan terms. The following companies didn’t stand out in those categories, but they might be a good fit for your needs.

National Debt Relief

Pros
  • Offers debt management services
  • Free consultation
  • Negotiates with creditors to settle client's outstanding debt
  • Online quote
Cons
  • Not a loan originator
  • Only works with clients that have at least $7,500 in debt
  • Charges a fee of 15-25% of the debt amount

National Debt Relief didn’t make it to our main list because this company is not a loan originator but instead a debt management service. Their services include options for consolidation loans, credit counseling services, and bankruptcy referrals. To qualify, borrowers need to have at least $7,500 in high-interest debt. National Debt Relief also charges a fee of at least 15% of their client’s debt amount.

Happy Money

Pros
  • Payoff Loan with customizable terms, rate and monthly payment
  • Interest rates start at 5.99%
  • Direct Card Payoff pays directly to creditors
  • Minimum credit score of 550
Cons
  • Loans start at $5,000
  • Origination fee of 0%-5% of loan amount
  • Approval takes 5-7 business days

Happy Money partners with credit unions to provide low-interest rates and a low minimum credit score requirement. This company doesn’t charge any application, prepayment, or late fees. One of the downsides of Happy Money is their origination fee of up to 5% of the loan amount. Obtaining loan approval can take from 5 to 7 business days, and with their Direct Card Payoff option, funding can take up to two weeks. Customers can access their accounts, make payments, check their loan status, and access customer service through their online platform.

AM One

Pros
  • Works with any type of credit
  • Helps with credit improvement if a debt consolidation loan is denied due to poor credit
  • Loan specialists provide customer support for every application step
Cons
  • Credit requirements depend on the company selected
  • No information about fees on the website
  • Credit requirements and APR depend on the company selected

AM One offers debt consolidation loans, debt management and debt relief services. There is not enough information about interest rates and loan fees on AM One’s website to include this lender in our top list. A debt consolidation loan calculator and live customer support with financial loan specialists is available for potential borrowers. With AM One, interest rates and loan fees depend on the lender the borrower is matched with at the time of approval.

Upgrade

Pros
  • Funds within 24 hours after approval
  • No prepayment penalty
  • Personal loans from $1,000-$50,000
Cons
  • All personal loans have a 2.9% to 8% origination fee
  • Late payment fee
  • The lowest rates require autopay and paying off a portion of existing debt directly

Upgrade’s personal loans include credit card debt consolidation and debt consolidation loans. Upgrade is not part of our top picks because borrowers have to pay between 2.9%-8% origination fees and late payment fees. This lender offers personal loans for debt consolidation with APR rates ranging from 5.94%-35.97% with terms of 24 to 84 months. Upgrade pays lenders directly and offers customer service via email or phone.

Best Egg

Pros
  • Approval in minutes
  • APR from 5.99%-35.99%
  • Funds within 24 hours after approval
  • Personal loan calculator
Cons
  • Origination fee of 0.99-5.99% of the loan amount
  • Origination fee on a loan term 4-years or longer will be at least 4.99%

Best Egg offers personal loans from $2,000-$50,000 with an APR rate cap in the high 35%. It features a full online application, and options for debt consolidation and credit card refinancing. This company is not part of our main list because of its high origination fee, and lack of information on its website about terms, loan amount, and fees. To qualify for the lowest rate, Best Egg requires a minimum of 700 FICO score and an individual annual income of at least $100,000.

Lending Club

Pros
  • Customized loan options
  • Accepts co-borrowers
  • 15-days grace period after the due date to pay without penalties
  • Pays creditors directly
Cons
  • Origination fee of 2%-6% of the loan amount based on creditworthiness
  • Late payment fee

Lending Club, a marketplace for debt consolidation loans, features a full online application with no application fees or prepayment penalties. Lending Club offers personal loans ranging from $1,000-$40,000 with APR rates up to 35.89%. Its online Resource Center provides financial literacy for those interested in learning about credit, loans, and how to improve their finances. This company didn’t make it into our top selection because of its high origination fee, late payment fees and high-interest rates.

OneMain Financial

Pros
  • Debt consolidation calculator
  • Brick-and-mortar locations
  • Loan specialist counseling
Cons
  • APR from 18%-35.99%
  • Late payment fees from 1.5-15% of loan payment
  • Origination fees from 1-10% of the loan amount

OneMain Financial offers online and in-person banking, with branches in 44 states. It features secured and unsecured debt consolidation loans from $1,500-$20,000 and terms from 24-60 months. To obtain a lower interest rate on large loans, OneMain requires collateral. This lender is not part of our best personal loan list because of its high APR rates, origination fees, and late payment fees.

Avant

Pros
  • Funded one day after approval
  • No prepayment penalty
  • Avant mobile app for iOS and Android
Cons
  • Administration fee up to 4.75%
  • APR from 9.95%-35.99%
  • No autopay discount available

Avant offers personal loans with APR rates starting at 9.95%. To apply, this lender requires a FICO score of at least 600 and a personal checking or savings account with them. Avant features loan pre-approval, autopay, and a mobile app available where customers can manage their loans. Customer service is available online, via email, or by phone. Avant didn’t make it into our top list because of its high-interest rate and administration fee.

Upstart

Pros
  • Loans from $1,000-$50,000
  • No prepayment penalty
  • Check loan rate online
Cons
  • Only offers three and five years terms
  • FICO or Vantage Score of at least 600
  • Charges origination fees

Upstart debt consolidation loans range from $1,000-$5,000. Potential borrowers can obtain a pre-approval with a soft credit pull that won’t impact their credit score. Most loans are funded the next business day after approval. Upstart’s APR rates range from 5.35%-35.99% and are determined by credit, income, and additional application information. Upstart didn’t make it into our best debt consolidation loans list because of their limited-term offering and origination fees.

FreedomPlus

Pros
  • Online application
  • Same-day approval
  • Loan funding in one to three business days after approval
Cons
  • Not suitable for smaller loans
  • Origination fee of 1.99%-7.99%

Freedom Plus offers personal loans for debt consolidation featuring same-day approval and funding between one to three business days after accepting the loan offer. FreedomPlus isn’t part of our main list because of its high origination fee and limited-term offering of 2 to 5 years. FreedomPlus website lacks information about minimum credit scores and other requirements.

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Debt Consolidation Loans Guide

In this guide, you can find information about how debt consolidation loans work, step-by-step processes for applying, and other alternatives for debt management.

What is a debt consolidation loan?

A debt consolidation loan is an unsecured personal loan that combines several debts into one installment loan payment. An unsecured loan is a personal loan that doesn’t require any collateral, and it’s approved based on the borrower’s creditworthiness. Debt consolidation loans are designed to help borrowers manage credit card debt and unsecured debt with an outstanding balance and high APR rates.

There are different types of debt consolidation options:

  • Personal loan: an unsecured loan to pay for existing debt, finance a big purchase, pay medical bills, or cover home improvements or renovations
  • Balance transfer: when credit card debt is transferred to another credit card with a lower interest rate
  • Home equity loans and home equity lines of credit: lets the customer borrow money against its home equity. These are only tax-deductible when used for home improvements.

How do debt consolidation loans work?

A debt consolidation loan gathers several debts into a new loan. Before selecting a debt consolidation loan, potential borrowers should compare offers, terms, and fees. A debt consolidation loan is worth it if it allows the borrower to save in the long run. Suppose the interest rate and fees in a debt consolidation loan exceed what the potential borrower is currently paying for other loans and credit card debt. In that case, a debt consolidation loan might not be the best option.

A debt consolidation loan allows borrowers to lower their credit usage to one monthly payment. Some financial institutions pay the lenders directly instead of depositing the loan proceeds into a bank account.

How does a debt consolidation loan affect your credit?

Debt consolidation can have a negative or positive impact on your credit score. It all depends on the borrower making the right choices regarding loan selection. It’s important to know that debt consolidation is not a strategy to increase your credit score; however, it can prove to be beneficial in the long run if the borrowers make on-time payments and don’t incur any new debt.

How to choose the best debt consolidation loan

Selecting the right debt consolidation loan will depend on your financial goals and how much monthly payment the borrower can afford. Before selecting the best debt consolidation loan consider the following,

  • Interest rates: a debt consolidation loan should be considered if the APR rate islower than what the borrower is currently paying for their outstanding debt. Most lenders offer fixed and adjustable-rate loans. Your interest rate will depend on your credit score (FICO or VantageScore), current income and your debt-to-income ratio.
  • Fees: origination fees range from 0% to 7% of the loan amount. A late payment fee can be a fixed fee ranging from $25-$45, or it can be calculated based on the loan amount. A prepayment penalty or early payoff fee can be a fixed fee, a percentage of the loan balance, or the interest amount the lender is losing by the early payment. Not all lenders charge fees. When shopping for a personal loan, make sure you understand the terms fully.
  • Customer service: before selecting a debt consolidation loan, check with your local bank rates. If you’re not satisfied with what your current financial institution offers, check our selection and reviews of the best debt consolidation loans.
  • Perks and repayment options: select a lender that offers payment options using a mobile app, website, or phone. Many lenders offer their clients identity theft and credit score monitoring and the option of paying creditors on your behalf.

How to get a debt consolidation loan

  1. Do a credit check. This will help you obtain quotes without incurring in multiple hard credit inquiries. Equifax, Experian, and TransUnion are the three main credit bureaus.
  2. Make a list of all your debt and credit utilization.
  3. Check what interest rate you’re currently paying on your credit cards and other outstanding debt.
  4. Research lenders, their interest rates, loan terms, and fees.
  5. Use a loan or a debt-to-income ratio calculator to get an idea of the rate you can obtain with your credit score and what payment options are the best for you.
  6. Decide on a lender that offers a lower interest rate — and lower payment — than what you currently have.
  7. If the pre-approved loan has a higher interest rate than what you’re currently paying for in your accounts, ask a co-borrower with good credit to co-sign it.
  8. Apply for a loan.
  9. Analyze your offer and accept it.
  10. Obtain the loan funds and pay your debt.

If your loan application is denied because of poor or no credit, the next step should be to improve your credit score and credit history. To fix your credit, you can find a credit repair service or research and improve your credit report on your own.

Alternatives ways to consolidate your debt

Instead of applying for a personal loan to consolidate debt, lenders and credit card companies offer other options to their customers.

Home equity loans (HELOCs)

Home equity loans and home equity lines of credit let the customer borrow money against its home equity. Home equity is the difference between the value or amount your home could be sold for and what you owe to the mortgage lender. With a loan, the home equity is disbursed in one payment, with a line of credit you can draw from the funds as needed. HELOCs come as loans or lines of credit. Both are only tax-deductible when used for home improvements.

Balance transfer credit cards

Moving balances from a card with a high APR rate to another credit card with a lower APR rate is an option to consolidate credit card debt. Many credit card companies offer no interest rates on their cards for 12 months, allowing customers to pay or lower their debt.

Bankruptcy

Bankruptcy is a legal action taken by people or businesses unable to manage outstanding debt. It should be the last resource for dealing with creditors and debt issues. According to The United States Department of Justice, several repayment options are available when filing for bankruptcy.

The most common are:

  • Chapter 7: when a trustee takes control of your property to sell it or turn it into a profit to pay your creditors. Depending on the state you live in, and which federal laws apply to it, you’ll be able to keep some of your properties.
  • Chapter 13: A court approves a repayment plan where you agree to pay part of your wages to your creditors. A trustee will be appointed by the court to collect the money from you and make sure that the payment plan is completed.

Not all debt can be discharged by the court when you file for bankruptcy. Some of the debt that cannot be discharged is:

  • Child support
  • Student loans
  • Court fines
  • And most taxes

Bankruptcy will appear on your credit report for around ten years, making it more challenging to apply and be approved for credit in the future.

Avoid payday loans. Payday loans are small amount loans given at a very high-interest rate. This type of loan has paid back when the borrower receives their next paycheck.

Debt Consolidation Loans FAQ

How do debt consolidation companies work?

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Debt consolidation companies work with people to reduce their monthly debt by consolidating multiple debts into one. Some of these companies charge a fee of the debt amount to help their customers. Besides hiring a debt consolidation company, you can achieve debt consolidation through personal loans, balance credit cards, or home equity loans/lines of credit.

How do you get a debt consolidation loan with bad credit?

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There are companies, like Fiona, that work with customers with poor credit. For people with a bad or no credit history, APR rates are usually higher than those with excellent credit scores. Another option is to repair your credit and increase your credit score before applying for a personal loan.

Debt consolidation or bankruptcy, which is better?

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Bankruptcy should be the last resort to managing your debt. Debt consolidation is a better option than bankruptcy and, with time, can help increase your credit score and improve its history. Bankruptcy stays in your credit report for up to 10 years.

Where can I get a debt consolidation loan?

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You can apply for a debt consolidation loan online using one of our recommendations, or you can also apply for a loan at banks, credit unions, online marketplaces, or through a debt consolidation agency like National Debt Relief.

How to get approved for a debt consolidation loan?

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Banks, credit unions, and other financial institutions consider FICO or Vantage credit scores, income, debt-to-income ratio, delinquencies, loan amount, and term for personal loan approval. When applying for a debt consolidation loan, check your credit score and debt-to-income ratio before applying for a debt consolidation loan. Many borrowers require a minimum credit score of around 600 to qualify for a personal loan. Research lenders, check rates, and fees. Use debt consolidation calculators or pre-approvals. This can help you maintain your credit score and avoid hard inquiries.If your quotes come back with a high-interest rate, consider applying with a co-signer or co-borrower. It can improve your chances of getting a better interest rate and lower monthly payments.

How Do We Choose the Best Debt Consolidation Loans

To select the best debt consolidation loans we took into consideration,

  • Lenders offering low APR Rates
  • A variety of loan repayment terms
  • Access to loan specialists
  • Full online application and fast funding
  • No application fees, origination fees, or prepayment penalties
  • Companies with customer service available through phone, chat, or email

Summary of Money’s Best Debt Consolidation Loans of 2022