The 10 Best Debt Consolidation Loans

If you have multiple high-interest debts, such as credit cards and payment plans, then debt consolidation could be a way to save money and make repayment easier. Debt consolidation allows you to refinance existing debt by taking out one personal loan with a lower interest rate and monthly payment to consolidate your existing debts and get rid of your outstanding balance more quickly.

Although the best personal loans have low rates and fees, interest rates will be higher for people with bad credit. Here's more information about how debt consolidation works.

1. LightStream: Best for Quick Funding

2. SoFi®: Best for Larger Loans

3. Upgrade: Best for Bad Credit

4. PersonalLoans.com: Best for Low APRs

5. LendingClub: Best for Peer-To-Peer Loans

6. Best Egg: Best for No Prepayment Fees

7. Discover: Best for No Interest for 30 Days

8. Happy Money (Payoff): Best for Credit Card Debt

9. Upstart: Best for Secured Loans

10. Avant: Best for Short Terms

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LightStream: Best for Quick Funding

LightStream is a division of Truist Bank and offers a host of benefits for debt consolidation loans, including $0 fees, same-day funding, loan terms up to 84 months and loan limits up to $100,000.

Rates are reasonable, starting at 6.49% for borrowers with excellent credit who sign up for autopay before their loan is funded to receive a 0.50% discount. The maximum rate with the autopay discount is $24.89%. The company also offers a Rate Beat Program that promises to beat any comparable rate from a competitor by 0.10%.

Details

• APR: 6.49% to 24.89% (6.99% to 25.39% without autopay)

• Loan Terms: 24 to 84 months

• Loan Amounts: $5,000 to $100,000

• Fees: None

• Funding Time: As soon as the same day as your application

Pros

• Satisfaction guarantee

• Rate Beat Program

• High loan limits of $100,000

• 24- to 84-month term loan range

• No fees

• Fast funding

Cons

• Excellent credit needed for lowest rates

• Loans required to be identical to qualify for Rate Beat Program

SoFi: Best for Larger Loans

SoFi offers many of the top features of LightStream, including $0 fees, possible same-day funding and and terms ranging from 24 to 84 months. But rates are higher — 8.74% to 35.49% annual percentage rate with a 0.25% autopay discount. Prequalifying for the loan won't affect your credit, and it only takes about a minute. You can apply with a co-applicant if you're not sure you'll qualify on your own.

Details:

• APR: 8.74% to 35.49% (8.99% to 35.74 without autopay)

• Loan Terms: 24 to 84 months

• Loan Amounts: $5,000 to $100,000

• Fees: None

• Funding Time: As soon as same day

Pros

• $0 fees

• Low debt consolidation rates

• High loan limits

• Long loan terms available

• Rapid funding

Cons

• Debt consolidation loans only offered for unsecured debts, like credit card debt.

• Must meet state eligibility qualifications for approval

Upgrade: Best for Bad Credit

Upgrade is a platform where you can compare rates from multiple loans offered by Upgrade's bank partners. It has a quick, one-page application you can complete online to check your rate and get a loan decision within seconds. Fixed-rate loans are offered between $1,000 and $50,000, with rates ranging from 9.99% to 35.99% plus an origination fee of 1.85% to 9.99%. You can pay it back over 24 to 84 months.

Although total funding time can be up to four business days, Upgrade sends your funds within one day of verifying your identity and your financial information. Loans have origination fees of 1.85% to 9.99%.

Details

• APR: 9.99% to 35.99%

• Loan Terms: 24 to 84 months

• Loan Amounts: $1,000 to $50,000

• Fees: Origination fee, 1.85% to 9.99%

• Funding Time: Within four business days

Pros

• Easy to apply

• Loans up to $50,000

• Rapid funding after verification

Cons

• Rates can go as high as 35.99%

• Origination fee of 1.85% to 9.99%

PersonalLoans.com: Best for Low APRs

PersonalLoans.com serves as a connector between borrowers and lenders. After you complete an online application, lenders in the PersonalLoans.com network will review your information and decide whether or not to extend credit.

You can receive funding in as little as one business day after your application for loans of $250 to $35,000, after which you'll have between 90 days and 72 months to pay off your loan in biweekly or monthly installments, at rates between 5.99% and 35.99%. Personal installment loans typically require a credit score of 580 or higher and at least $2000 in monthly income. For peer-to-peer loans, you should have a credit score of 600+ and an income of at least $2,000 per month.

Details

• APR: 5.99% to 35.99%

• Loan Terms: 90 days to 72 months

• Loan Amounts: $250 to $35,000

• Fees: Origination fee for peer-to-peer is between 1% and 5%

• Funding Time: As soon as the next business day after signing your loan agreement

Pros

• Network of lenders

• Rapid funding

• Lowest rates are competitive

• Wide range of loan terms

Cons

• Origination fee of 1% to 5% for peer-to-peer loans

• Relatively low maximum funding amount

LendingClub: Best for Peer-To-Peer Loans

LendingClub works somewhat like its competitor PersonalLoans.com in that it doesn't originate loans itself, but rather, connects investors and borrowers. LendingClub provides access to loans of between $1,000 and $40,000, with interest rates as low as 6.53%. Loan terms are 24 to 60 months and origination fees cost between 3% and 8%.

Details

• APR: 6.53% to 35.99%

• Loan Terms: 24 to 60 months

• Loan Amounts: $1,000 to $40,000

• Fees: Origination fee between 3% to 8%

• Funding Time: As few as 3 days

Pros

• Peer-to-peer lenders offering access to numerous funding sources

• High customer satisfaction

• Funds available in approximately three days

Cons

• Highest rates reach 35.99%

• High origination fees

Best Egg: Best for No Prepayment Fees

With Best Egg, you can apply online and have your funding in as little as one business day. The company offers either three- or five-year loans, which contain no hidden fees or prepayment penalties.

Rates as low as 6.99% make the lender competitive with peers, but you'll need at least a 700 credit score and $100,000 in income to qualify for that rate. Loan maximums reach as high as $50,000.

Details

• APR: 6.99% to 35.99%

• Loan Terms: 36 to 60 months

• Loan Amounts: $2,000 to $50,000

• Fees: Origination fee, 0.99% to 9.99%

• Funding Time: 1+ days

Pros

• Rates as low as 6.99%

• Quick access to funds

• No prepayment penalties

• High maximum funding level of $50,000

Cons

• Rates top out at 35.99%

• Potentially high origination fees

Discover: Best for No Interest for 30 Days

There are no fees to originate a loan via Discover, which offers funding of $2,500 to $40,000 in one or more business days. The firm's personal loan rates range from 7.99% to 24.99% and have terms of 36 to 84 months.

Details

• APR: 7.99% to 24.99%

• Loan Terms: 36 to 84 months

• Loan Amounts: $2,500 to $40,000

• Fees: None

• Funding Time: 1+ days

Pros

• No fees to originate loans

• Flexible terms of between three and seven years

• Midlevel interest rates

Cons

• Relatively low maximum of $40,000

• Relatively high minimum of $2,500

Happy Money: Best for Credit Card Debt

Happy Money, previously known as Payoff, is another platform that connects borrowers with lending partners.

The company offers loans from $5,000 to $40,000 for terms of two to five years, with rates ranging from 11.72% (12.45% for loans above $15,000) to 17.99%.

Details

• APR: 7.95% to 35.99%

• Loan Terms: 2 to 5 years

• Loan Amounts: $5,000 to $40,000

• Fees: Origination fee varies by lender

• Funding Time: 3-6 business days

Pros

• Clearly articulated minimum standards

• No late payment fees

• Fixed payments and interest

Cons

• High minimum loan requirement of $5,000

• Origination fees not disclosed up front

Upstart: Best for Secured Loans

Upstart can help you find a loan to fit nearly any need, from $1,000 to $50,000. It's more flexible than some platforms. Partner lenders might offer borrowers the option to secure their loans with their vehicles (which places liens on the titles) for example, and your education, area of study and job history can help you qualify you for a loan even if your credit score is low.

You can check your rate with an easy one-page online application. Rates vary from 4.6% to 35.99%, and you can receive your money in as little as one business day.

Details

• APR: 4.6% to 35.99%

• Loan Terms: 3 or 5 years

• Loan Amounts: $1,000 to $50,000

• Fees: Origination fee, up to 8.98%

• Funding Time: 1+ days

Pros

• Flexible funding levels available

• Secured loans sometimes available

• Easy application process

• Rapid funding

Cons

• Origination fees of nearly 9%

• Loan terms limited to either three or five years

Avant: Best for Short Terms

Flexible loan terms of 12 to 60 months are one of Avant's highlights. The company can also provide funding by the next business day. Loan amounts range from $2,000 to $35,000, with rates of 9.95% to 35.99%. Administration fees can cost up to 9.99%, but repaying the loan early can earn you a prorated refund of the amount above 5%.

Details

• APR: 9.95% to 35.99%

• Loan Terms: 24 to 60 months

• Loan Amounts: $2,000 to $35,000

• Fees: Administration fees: Up to 9.99%

• Funding Time: 1+ days

Pros

• Good range of loan maturities

• Rapid financing of loans

Cons

• Top rates of 35.99% are high

• Administration fees up to 9.99%

Final Take

Debt consolidation can be a useful tool for managing high-interest debts and simplifying your finances. However, make sure that your new loan has better terms than your existing debts. Shop around and compare different lenders, as terms, rates and fees can vary widely.

FAQs

What does "consolidation" mean for loans?

A consolidation loan provides the cash you need to pay off other debts. You consolidate those debts by replacing them with a single loan.

Do consolidation loans hurt your credit?

Applying for a debt consolidation loan can temporarily lower your credit score due to the hard inquiry that lenders make during the application process. However, if you're approved for the loan and make consistent, on-time payments, your credit score should recover and might even improve over time, especially if the loan helps you eliminate credit card debt,

How long does a consolidation loan affect your credit?

The initial hard inquiry from a loan application will stay on your credit report for two years. However, its impact on your credit score lessens over time. As long as you make your loan payments on time and in full, the overall effect on your credit should be positive in the long run.

What are the drawbacks of a debt consolidation loan?

One potential drawback of a debt consolidation loan is that you might be tempted to accumulate more debt once your credit cards are paid off. To avoid this, it's essential to have a plan in place for managing your money and avoiding additional debt. Also, some people may not qualify for a low enough interest rate to make consolidation worthwhile.

What loans are eligible for consolidation?

Most unsecured debts, like credit cards, personal loans, medical bills and some types of student loans, can be consolidated with a personal loan. However, it's less common to consolidate secured debt, like a home mortgage or auto loan, with a personal loan. Check with potential lenders to find out what types of debt they will consolidate.

Are consolidation loans hard to get?

They can be, but some lenders have options for borrowers with damaged credit.

What credit score do you need for a debt consolidation loan?

Minimum credit scores vary by lender, However, at least one included in this roundup has a low 580 minimum.

To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. Autopay is not required to receive a loan from SoFi.