Best Debt Consolidation Loans in December 2024

You could save up to $3,000 by consolidating $10,000 of debt

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Best for:
Quick funding
Best for:
Excellent credit
Best for:
Bad credit
Best for:
Competitive rates
Best for:
Borrowing experience
Best for:
Credit card consolidation
Best for:
Less interest with short terms
Best for:
Interest rate discounts
Best for:
Financial planning
Best for:
Fair credit
Best for:
Banking and borrowing
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More Options

Reach Financial: Best for quick funding

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5.99% - 35.99%

$3,500 - $40,000

24 to 60 months

0.00% - 8.00%

Not specified

Pros
  • Free monthly credit score
  • Will send your loan directly to who you owe
  • Can change loan payment due date
Cons
  • Reach Financial might keep some of your loan for itself as an origination fee
  • Customer service not available on weekends
  • No mobile app

What to know

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If you’re looking for a fast turnaround time, check out Reach Financial. This lender specializes in quick funding for debt consolidation and credit card refinancing. After Reach Financial approves you, your loan may be available to your creditors in as little as 24 hours.

Reach Financial could save you a lot of money if you consolidate and have excellent credit. It has an ultra-low minimum rate. But if your borrowing history is rocky, you may have to pay an origination fee. This is a fee that Reach Financial will deduct from your loan before sending it to you.

Read our expert Reach Financial personal loan review.

How to qualify

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Reach Financial doesn’t specify a minimum credit score, income or debt-to-income ratio. Learn more about personal loan requirements and how lenders like Reach Financial evaluate loan applications.

Best Egg: Best for borrowers with excellent credit

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6.99% - 35.99%

$2,000 - $50,000

36 to 60 months

0.99% - 9.99%

580

Pros
  • Loans available in as little as 24 hours
  • Can change your due date
  • Can set up your loan payments to be deducted bi-weekly
Cons
  • All loans have an origination fee
  • Must have a high income and excellent credit to get best rates
  • Mobile app only works for Best Egg credit cards

What to know

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You don’t have to have stellar credit to get a Best Egg loan. Still, you’ll only qualify for its best rates if you make at least $100,000 a year and have a credit score of at least 700. If you tick those boxes, you could get a debt consolidation loan with an APR as low as 6.99%.

Unlike some lenders, Best Egg charges an origination fee on all of its borrowers, not just those with troubled credit.

Read our expert Best Egg personal loan review.

How to qualify

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You must meet the requirements below to qualify for a Best Egg loan:

  • Citizenship: Be a U.S. citizen or permanent resident living in the U.S.
  • Administrative: Have a personal checking account, email address and physical address
  • Residency: Not live in the District of Columbia, Iowa, Vermont, West Virginia or U.S. territories
  • Credit score: 580+

Upstart: Best for borrowers with bad credit

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7.40% - 35.99%

$1,000 - $50,000

36 or 60 months

0.00% - 12.00%

300

Pros
  • Don’t always need credit to qualify
  • 15-day grace period for late payments
  • Most applicants don’t need to send in paperwork to get an instant approval decision
Cons
  • Doesn't let you apply with another person
  • Only two repayment terms to choose from
  • Hefty origination fee possible

What to know

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It can be hard to get a debt consolidation loan when you have bad credit. With a credit score minimum of just 300, online lending platform Upstart has one of the lowest score requirements around. You might even qualify if you have no credit (but you must have a college degree or be currently enrolled).

Still, between possible fees and a high maximum APR, getting a bad credit debt consolidation loan won’t come cheap. You also can’t get a lower rate by adding a second person to your loan (also called a joint loan).

Read our expert Upstart personal loan review.

How to qualify

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Upstart has transparent eligibility requirements, including:

  • Age: Be 18 or older
  • Administrative: Have a U.S. address, personal banking account, email address and Social Security number
  • Employment: Have a job or job offer that starts within six months, or have regular income
  • Credit-related factors: Debt-to-income (DTI) ratio no higher than 50% (45% in Connecticut, Maryland, New York and Vermont), no bankruptcies within the last year, fewer than six inquiries on your credit report in the last six months and no current delinquencies
  • Credit score: 300+

LightStream: Best for beating competitors' rates

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7.99% - 24.29% (with autopay)

$5,000 - $100,000

24 to 84 months

Loan Term Disclosure

Your loan terms, including APR, may differ based on loan purpose, amount, term length, and your credit profile. Excellent credit is required to qualify for lowest rates. Rate is quoted with AutoPay discount. AutoPay discount is only available prior to loan funding. Rates without AutoPay are 0.50% points higher. Subject to credit approval. Conditions and limitations apply. Advertised rates and terms are subject to change without notice. Payment example: Monthly payments for a $25,000 loan at 7.49% APR with a term of 3 years would result in 36 monthly payments of $777.54. © 2024 Truist Financial Corporation. Truist, LightStream and the LightStream logo are service marks of Truist Financial Corporation. All other trademarks are the property of their respective owners. Lending services provided by Truist Bank.

None

Not specified

Pros
  • No fees
  • May beat competitors’ rates
  • If you sign your documents by 2:30 p.m. EST on a business day, you might get your loan the same day that you apply
Cons
  • Won’t know if you qualify unless you take a hard credit hit
  • Must borrow at least $5,000
  • Must have good-to-excellent credit

What to know

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A debt consolidation loan might save you money on interest, but fees can add up. Luckily, LightStream is a zero-fee company. Also, if another lender offers you a lower APR, LightStream might beat it by .10 percentage points through its Rate Beat Program.

On the downside, LightStream doesn’t disclose its minimum credit score requirements and it doesn’t offer prequalification. You have to take a hard credit hit to check rates and eligibility, which could drop your score by a few points.

Read our expert LightStream personal loan review.

How to qualify

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First, you must have good-to-excellent credit to qualify. It tends to approve those with:

  • At least five years of credit history with a mix of accounts
  • Assets such as savings, retirement and investment accounts
  • An acceptable debt-to-income ratio
  • A positive payment history with no delinquencies

Discover: Best for easy borrowing experience

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7.99% - 24.99%

$2,500 - $40,000

36 to 84 months

None

720

Pros
  • Can manage your loan with Discover's mobile app
  • Discover will pay your creditors directly
  • Customer service available seven days a week
Cons
  • Won’t qualify if you have bad credit
  • Doesn't let you apply with another person
  • Charges a $39 late payment fee (high for a personal loan)

What to know

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Instead of using your debt consolidation loan to pay your creditors one by one, Discover can pay them for you. You can also forget about application fees, origination fee or prepayment penalties with this lender.

In addition to having a mobile app to manage your loan, Discover accepts loan payments online, over the phone, by mail, via wire transfer or through electronic bill pay. If you run into trouble, loan specialists are available by phone every day of the week.

Read our expert Discover Bank personal loan review.

How to qualify

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You’ll need to meet these eligibility criteria to get a Discover loan:

  • Age: Be at least 18
  • Citizenship: Have a Social Security number
  • Administrative: Have a physical address, email address and internet access
  • Income: Minimum income of $40,000 (individually or as a household)
  • Credit score: 720+

Happy Money: Best for credit card consolidation

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8.95% - 17.48%

$5,000 - $40,000

24 to 60 months

1.50% - 5.50%

640

Pros
  • Clear eligibility requirements
  • No late payment fees
  • Works with credit unions, which typically have lower APRs
Cons
  • Can take 30 days for your loan to reach your creditors
  • All loans have an origination fee
  • Can't apply with another person

What to know

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Happy Money loans can only be used to consolidate credit card debt. This lending platform works with credit unions to fund some of its loans. The upside to this is that, by law, the highest APR a federal credit union can charge is 18.00%. You’ll see that reflected in Happy Money’s low maximum APR of 17.48%.

Happy Money’s funding timeline is pretty slow. It can take 30 days for your debt consolidation loan to post to your credit card accounts. You can opt to get your loan deposited into your account instead, but you’ll still need three to six days to get your money.

Read our expert Happy Money personal loan review.

How to qualify

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Happy Money provides clear eligibility requirements as to how you can qualify for a loan:

  • Age: Must be 18 years or older
  • Administrative: Must have a valid Social Security number and checking account
  • Residency: Not live in Iowa, Massachusetts or Nevada
  • Credit score: 640+
  • Payment history: Zero current delinquencies on your credit profile

PenFed Credit Union: Best for less interest with a short repayment term

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8.99% - 17.99%

$600 - $50,000

12 to 60 months

None

Not specified

Pros
  • Can save on overall interest with a 12-month repayment term
  • Will get access to member discounts on things like car insurance, home insurance and tax software
  • Rates are capped at 17.99%
Cons
  • Must join credit union to borrow
  • No customer service on Sundays

What to know

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If you’re ready to knock out your debt in as little time as possible, check out PenFed. It offers a 12-month repayment term, which is much shorter than most lenders. The quicker you pay off your loan, the less time interest has to accrue. And in general, debt consolidation loans with shorter terms tend to have lower rates.

Since it’s a credit union, you’ll have to become a PenFed member to borrow. However, PenFed makes this easy. You can apply for your loan and for membership in one fell swoop.

Membership is open to everyone. You can also check your eligibility before joining, with no impact to your credit score.

Read our expert PenFed personal loan review.

How to qualify

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To qualify for a PenFed loan, you must meet the following requirements:

  • Membership requirements: PenFed membership (anyone can join)
  • Administrative: Open up PenFed savings account with $5 deposit; may need to submit documents to verify your identity and income

SoFi: Best for free financial planning

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8.99% - 29.99% (with discounts)

Pricing Disclosure

Fixed rates from 8.99% APR to 29.99% APR reflect the 0.25% autopay interest rate discount and a 0.25% direct deposit interest rate discount. SoFi rate ranges are current as of 02/06/2024 and are subject to change without notice. The average of SoFi Personal Loans funded in 2022 was around $30K. Not all applicants qualify for the lowest rate. Lowest rates reserved for the most creditworthy borrowers. Your actual rate will be within the range of rates listed and will depend on the term you select, evaluation of your creditworthiness, income, and a variety of other factors. Loan amounts range from $5,000– $100,000. The APR is the cost of credit as a yearly rate and reflects both your interest rate and an origination fee of 0%-7%, which will be deducted from any loan proceeds you receive. Autopay: 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. Direct Deposit Discount: To be eligible to potentially receive an additional (0.25%) interest rate reduction for setting up direct deposit with a SoFi Checking and Savings account offered by SoFi Bank, N.A. or eligible cash management account offered by SoFi Securities, LLC (“Direct Deposit Account”), you must have an open Direct Deposit Account within 30 days of the funding of your Loan. Once eligible, you will receive this discount during periods in which you have enabled payroll direct deposits of at least $1,000/month to a Direct Deposit Account in accordance with SoFi’s reasonable procedures and requirements to be determined at SoFi’s sole discretion. This discount will be lost during periods in which SoFi determines you have turned off direct deposits to your Direct Deposit Account. You are not required to enroll in direct deposits to receive a Loan.

$5,000 - $100,000

24 to 84 months

0.00% - 7.00% (optional)

680

Pros
  • Free consultations with a professional financial planner
  • No late payment fees
  • Can apply with another person
  • 0.25% APR discount if SoFi pays your debt directly
Cons
  • Must borrow at least $5,000
  • Need at least good credit to qualify
  • Lowest rates require an optional origination fee

What to know

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Debt consolidation can make it easier to pay off what you owe, but it shouldn’t be the only tool in your kit. SoFi offers no-cost financial planning to its borrowers. Here, a professional can help you with your budget, debt strategies, investments and more. Best of all — no upselling, just advice.

SoFi is also unique in that its origination fee is optional. If you pay it, you could qualify for a lower rate. Be sure to ask for offers that include and don’t include this fee to see which option makes the most sense for you.

Read our expert SoFi personal loans review.

How to qualify

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You must meet the requirements below in order to get a loan from SoFi:

  • Age: Be the age of majority in your state (typically 18)
  • Citizenship: Be a U.S. citizen, an eligible permanent resident or a non-permanent resident (a DACA recipient or asylum-seeker, for instance)
  • Employment: Have a job or job offer with a start date within 90 days, or have regular income from another source
  • Credit score: 680+

Prosper: Best for borrowers with fair credit

(3,651)
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(3,651)
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8.99% - 35.99%

$2,000 - $50,000

24 to 60 months

1.00% - 9.99%

560

Pros
  • Don’t need perfect credit to qualify
  • Free monthly FICO credit score
  • Can add a second person to your loan to boost your approval odds
Cons
  • Can take up to 14 days to get your loan (although one to five days is average)
  • All loans have an origination fee
  • Does not pay your creditors directly

What to know

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Prosper, a peer-to-peer lender, connects borrowers with investors. Peer-to-peer is often easier to qualify for compared to banks and some online loans.

Prosper’s free FICO scores could also motivate you to improve your credit. According to a LendingTree study, improving your credit from fair to very good could save you $22,000 in interest over time.

However, it can take up to 14 days for an investor to pick up your loan. It’s also possible that all available investors pass on your application, even if Prosper has approved you. In that case, Prosper will cancel your loan request.

Read our expert Prosper personal loan review.

How to qualify

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To get a loan with Prosper, you must meet the following requirements:

  • Age: Be 18 or older
  • Citizenship: Be a U.S. citizen
  • Administrative: Have a U.S. bank account and Social Security number
  • Residency: Not live in Iowa or West Virginia
  • Credit score: 560+

Achieve: Best for interest rate discounts

(5,424)
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(5,424)
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8.99% - 29.99%

$5,000 - $50,000

24 to 60 months

1.99% - 6.99%

620

Pros
  • Three ways to earn APR discounts
  • Assigned a dedicated loan consultant for assistance
  • Will send your loan directly to your creditors
Cons
  • Loans are not offered in all 50 states
  • All loans have an origination fee
  • Need to have at least $5,000 of debt to consolidate

What to know

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Achieve offers three interest rate discounts, including one designed specifically for debt consolidation loans. If you let Achieve use at least 85% of your loan to pay your creditors directly, you could get a discount of up to 4.50%. You can also get a discount if you take out a joint loan and by having a sufficiently-funded retirement account.

However, if you only have a small amount of debt to consolidate, Achieve might not work — its loans start at $5,000.

Read our expert Achieve personal loan review.

How to qualify

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Other than a credit score of at least 620, Achieve will typically ask you to provide the following documents and information:

  • Proof of income
  • Social Security number
  • Government-issued ID
  • Employment status

Upgrade: Best for banking and borrowing

(2,270)
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(2,270)
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9.99% - 35.99% (with discounts)

$1,000 - $50,000

24 to 84 months

1.85% - 9.99%

580

Pros
  • Can get a rate discount if you also open up an Upgrade-branded checking account
  • Cash back when you use your Upgrade debit card
  • APR discount for allowing Upgrade to pay your creditors for you
Cons
  • All loans have an origination fee
  • Might find lower rates with another lender if you have excellent credit
  • Won’t qualify if you have bad credit

What to know

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If you’re in the market for a new bank and a consolidation loan, Upgrade could be for you. Its Rewards Checking Plus checking account (through Cross River Bank) unlocks special benefits on your debt consolidation loan.

As long as you get at least $1,000 in monthly direct deposits, you can get a lower debt consolidation rate. You can also earn up to 2% cash back on everyday purchases using your debit card.

Still, Upgrade makes more sense if you have so-so credit. Its minimum APR is a bit steep. It also charges an origination fee on every loan, no matter your score.

Read our expert Upgrade personal loan review.

How to qualify

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To qualify for a loan through Upgrade, you must meet the requirements below:

  • Age: Be at least 18 years old (19 in some states)
  • Citizenship: Be a U.S. citizen, permanent resident or live in the U.S. with a valid visa
  • Administrative: Have a valid bank account and email address
  • Credit score: 580+

What is a debt consolidation loan?

A debt consolidation loan is a type of personal loan that you use to pay off multiple, existing debts (such as credit cards or medical bills). A debt consolidation loan doesn’t get rid of your debt. Instead, think of it as trading in many smaller debt bills for one big debt bill.

Other than streamlining your monthly budget, consolidating will help you save money on interest if your consolidation loan has a lower APR than what you’re paying on your current debt.

Of all the products available on the LendingTree marketplace, debt consolidation loans are the most popular. In the second quarter of 2024, 51.3% of LendingTree users took out a personal loan to consolidate debt or refinance their credit cards.

How does a debt consolidation loan work?

You save money with debt consolidation by qualifying for a lower rate on a debt consolidation loan than you’re paying on your current debt. A LendingTree study showed that taking out a debt consolidation loan on $10,000 of credit card debt can help you save $3,000 in interest payments and pay off debt 10 months faster.

Here’s how we did the math.

Credit card vs. personal loan debt: $10,000 balance with a 760+ credit score

Credit cardPersonal loanDifference
Total payoff time (months)463610
Total interest paid$4,436$1,436$3,000
Total paid$14,436$11,436$3,000
Monthly payment$318$318Same

Note: We assumed borrowers had a 20.40% APR on their credit card and an 8.93% APR on their personal loan.

Debt consolidation loans come with fixed interest rates (unlike credit cards, which usually have a variable rate). That means the APR on your debt consolidation loan will not go up due to inflation.

Note that credit card debt isn’t the only type of debt you can consolidate. Many lenders (including most on this list) allow you to consolidate personal loans, too.

Calculate your potential monthly savings

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When is a debt consolidation loan a good idea?

There’s no one-size-fits-all debt management strategy. To determine that, you’ll need to take a close look at your finances.

Debt consolidation is a good idea when…

  • You have debt with high (or variable) interest rates
  • You can qualify for a lower APR than what you’re currently paying on your debts
  • You’re struggling to manage credit card bills and loan payments
  • You want to pay off debt faster on a set schedule

Debt consolidation is a bad idea when…

  • You can’t qualify for a lower APR than what you’re currently paying on your debts
  • You still won’t be able to afford your payments after consolidation
  • You don’t have much debt to consolidate
  • You aren’t ready to stop (or slow down) using your credit cards

Should I consolidate now? Will rates go up or down?

Expert insights from Jacob Channel, LendingTree senior economist

Is now a good time to consolidate debt?

“Right now could be a good time to get a debt consolidation loan, especially if you’re dealing with a lot of high-interest debt, like credit card debt.

That said, a debt consolidation loan isn’t for everyone, and you shouldn’t rush to get one until you’ve thoroughly researched all the pros and cons.”

Will debt consolidation rates go down?

“The Fed’s rate cut in November 2024 combined with potential additional cuts should put downward pressure on interest rates.

While we probably aren’t going to see rates anywhere near as low as they were during the height of the pandemic, the remaining months of 2024 could see loan rates fall. Of course, rates on debt consolidation loans may not fall by the same amount the Fed has cut its target rate.”

How to find a debt consolidation loan with LendingTree

  1. Check your credit score. Get your free credit score with LendingTree Spring. Compared to cards, debt consolidation loans typically come with lower interest rates if you have good to excellent credit. If your score is below 680, work on improving it before trying to consolidate. Knowing where you stand now can help you save time later.
  2. Figure out how much you need to borrow. You can use a debt consolidation loan to pay off credit cards, payday loans and other high-interest debt. Add up all that you want to consolidate, and that will represent how big of a debt consolidation loan you should apply for.
  3. Determine your average APR across what you currently owe. To get your average APR, add up the APRs for each debt you want to consolidate. Then, divide that number by the amount of debts you have. Take below, for example.
     
    Card one: 28% APR
    Card two: 29% APR
    Card three: 27% APR
     
    28 + 29 + 27 = 84, and 84 divided by 3 is 28. That means your debt consolidation loan must have an APR below 28% for you to save money.
  4. Compare and win. Compare rates (for free) from America’s top lenders on the LendingTree marketplace. With one form, you could have offers in minutes. We’ve got the nation’s largest network, and checking rates doesn’t impact your credit score.
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3 major benefits of debt consolidation

1. Simplifies your budget
Managing multiple due dates and accounts can add stress to your life and budget. Debt consolidation combines some, if not all, of your debt into one payment. You’ll only have to track a single account instead of multiple accounts and debt payments.

2. Saves you money on interest
If you can secure a lower APR, you could save yourself hundreds (if not thousands) of dollars over the life of your loan. In fact, you could save up to $3,000 in interest by paying off $10,000 in credit card debt (or similar debt with a comparable APR) with a debt consolidation loan.

3. Improves your credit score
A recent LendingTree study found that using a personal loan to pay off debt could boost your credit score by 80-plus points after only one month. If your lender reports your on-time payments to the credit bureaus, your score can continue to increase.

Debt consolidation vs. debt relief: What’s the difference?

Debt relief seeks to reduce the amount of debt you owe through negotiation or legal means. Debt consolidation involves taking out a new loan or credit card to repay debt on better terms. Debt relief comes in many forms, such as credit counseling, debt settlement and bankruptcy.

Debt consolidation vs. credit counseling

Credit counseling is a nonprofit service to help you manage expenses and debt payments more effectively. A credit counselor may set you up on a debt management plan and even negotiate debts and monthly payments on your behalf.

Learn more about debt consolidation versus credit counseling.

Debt consolidation vs. debt settlement

Debt settlement involves negotiating with your creditors to lower the amount of debt you owe and reduce fees charged to your account. Some companies offer this service, but these programs may come with high fees and can severely damage your credit.

Learn more about debt consolidation versus debt settlement.

Debt consolidation vs. bankruptcy

Bankruptcy is a legal process offering debt relief for an individual or business. When you file for bankruptcy, your assets may be sold to repay your creditors, or you may be enrolled in a court-ordered debt repayment plan.

Learn more about debt consolidation versus bankruptcy.

How your credit score impacts loan rates

When it comes to obtaining credit, including personal loans, the higher your credit score, the better the interest rates you are likely to be offered by lenders.

In the eyes of lenders, your credit score indicates how likely you are to repay a loan on time and in full. Every time a lender offers someone a loan, they are taking a risk; the higher the credit score, the lower the perceived risk.

However, even borrowers looking for a personal loan with bad credit can find lenders that are willing to work with them. If you have bad credit, pay attention to maximum APRs, as these are the ones most likely to apply to you.

Average APR and loan amounts by credit score

Credit score rangeAverage APRAverage loan amount
720+18.68%$17,691
680-71931.21%$14,335
660-67944.70%$10,279
640-65956.94%$7,998
620-63977.41%$6,094
580-619118.66%$4,338
560-579165.39%$3,012
Less than 560184.89%$2,463

Source: LendingTree user data on personal loans that were approved and funded in the second quarter of 2024.

Alternatives to debt consolidation loans

Debt consolidation loans may be the right choice for some borrowers, but there are other options out there that might be better suited to others. Here are a few alternative strategies to consider:

Balance transfer credit card with 0% APR

How it works: A 0% APR balance transfer credit card consolidates credit card debt with an introductory no-interest period.
ProsCons

  No interest as long as you pay off your balance transfer card during the introductory period (which could last as long as 21 months)

  Non-introductory APR may still be lower than your current cards

  Variable APR that goes up and down based on the economy

  Only works for credit card debt

  Usually requires good-to-excellent credit

  May pay a 3% to 5% balance transfer fee to move the debt from your existing cards to the balance transfer card

Home equity loan

How it works: Tap into your home’s equity to pay off debt by using your home as collateral.
ProsCons

  Fixed interest rates, in most cases

  Payments are the same each month

  Typically lower rates than a loan that doesn’t require collateral

  May be able to consolidate a lot of debt, depending on your equity, credit score and property value

  Must be a homeowner with equity

  Can lose your home if you don't pay

  May go underwater, which means you owe more on your home than it’s worth

  May require closing costs (2% to 5% of your loan amount)

401(k) loan

How it works: A 401(k) loan involves borrowing money from your retirement savings plan.
ProsCons

  No credit check

  You pay the interest back to yourself instead of losing it to a lender

  Won’t hurt your credit if you can’t pay back your 401(k) loan

  Not all 401(k) plans allow loans

  Won’t earn money on investments on the money you borrow (at least until you pay it back)

  May need to pay back your loan in a lump sum if you leave your job

  If you can’t pay back your loan, you’ll have to pay income tax on what you borrowed

  10% penalty if you don’t pay back what you borrowed (unless you’re older than 59.5 years old)

Debt management plan

How it works: With the help of a certified credit counselor, create a debt management plan to repay your debt within five years.
ProsCons

  Free or low cost

  Credit counselor may be able to negotiate to bring down fees and interest rates

  Can consolidate many types of debt

  Promotes healthy financial habits


  Can only be used for debts that don’t require collateral

  Will probably have to stop using or close your credit cards

  Can’t open up new credit while working through the plan (which can take five years)

Frequently asked questions

There might be a small drop in your credit score after consolidating debt, since you are taking out a new credit product or loan. You might also see a dip in your credit score if you settle a debt or work with a debt management service.

 

Some borrowers see their credit score increase by consolidating debt, particularly credit card balances. Paying off credit card balances lowers your credit utilization ratio, which can give your credit score a boost.

 

Whatever the initial effect on your credit score, debt consolidation can help you increase your credit score over the long term. If you choose an option with affordable payments, you can build up a healthy payment history, which is central to a good credit score.

Applicants with good credit will have more debt consolidation options. They can get approved more easily for balance transfer credit cards with introductory 0% APR periods and personal loans with lower APRs.

 

Still, there may be options for consolidating debt if you have bad credit. You could try a secured loan, such as a home equity loan, which may come with a lower APR. There are also 401(k) loans, which let you borrow money from your own retirement fund without a credit check.

That will depend on your financial situation. There are a few primary methods of debt consolidation, including personal loans, balance transfer credit cards and home equity loans. You could also consider a 401(k) loan or debt management plan to consolidate debt. To learn about your credit card refinancing options, talk to a credit counselor who can provide free or low-cost guidance on your debt relief options.

It always costs money to borrow money, which is why you want to find the debt consolidation option with the lowest APR to save yourself the most money in the long run.

 

Different debt consolidation options come with their own set of interest rates and fees. For example, some personal loan lenders charge origination fees (upfront, administrative charges) or prepayment penalty fees (for paying off a loan before the term ends). If you go with a balance transfer card, it can come with a balance transfer fee.

Debt consolidation can save you money, but it’s not guaranteed. To save money, you’ll have to consolidate your debt into another form of financing that has a lower APR than what you’re currently paying on your debts. Before you consolidate debt, take a look at your current credit card and loan agreements to determine the APR you’re paying, so you can shop around for financial products that will save you money.

If your goal is to get out of debt faster, consolidating your debts can be a smart move. Consolidating with a personal loan, for example, can give you the option to choose a short loan term, so your debt will be paid off sooner. And if you get a lower APR than what you’re currently paying on your debts, then you can pay off your debt faster even if you pay the same amount of money toward your debt each month.

When it comes to debt consolidation loans, the higher your credit score, the lower the APR you’ll likely receive on your loan. This is because your credit score indicates to lenders how likely you are to repay a loan. A high credit score indicates a lower risk to lenders, especially since debt consolidation loans are typically unsecured.

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How we chose the best debt consolidation loans

We reviewed more than 30 lenders that offer debt consolidation loans to determine the overall best 11 lenders. To make our list, lenders must offer competitive annual percentage rates (APRs). From there, we prioritize lenders based on the following factors:

  • Accessibility: Lenders are ranked higher if their personal loans are available to more people and require fewer conditions. This may include lower credit requirements, wider geographic availability, faster funding and easier and more transparent prequalification and application processes.
  • Rates and terms: We prioritize lenders with more competitive fixed rates, fewer fees and greater options for repayment terms, loan amounts and APR discounts.
  • Repayment experience: For starters, we consider each lender’s reputation and business practices. We also favor lenders that report to all major credit bureaus, offer reliable customer service and provide any unique perks to customers, like free wealth coaching.

LendingTree reviews and fact-checks our top lender picks on a monthly basis.