Best of

Best Debt Consolidation Loans of December 2023

Debt consolidation loans help borrowers combine multiple high-interest debts into a single payment. Compare our picks for the best debt consolidation loans for all credit scores.

By
Jackie Veling

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NerdWallet’s Best-Of Award Winner
Best Personal Loan For Debt Consolidation
Upgrade
Upgrade
5.0
Get rateon Upgrade's website
on Upgrade's website
WHY OUR NERDS LOVE ITUpgrade stands out for debt consolidation loans, offering direct payment to creditors and a rate discount if you choose that option.
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Best Debt Consolidation Loans

Lender
NerdWallet Rating
Est. APR
Loan amount
Min. credit score
Learn more
SoFi

SoFi Personal Loan

Top 3 most visited+ 11,700 recent visits
Go To Lender Siteon SoFi's website
on SoFi's website
Check Rateon NerdWallet
on NerdWallet
Top 3 most visited+ 11,700 recent visits
Best for No fees
Rate discount

8.99-25.81%

$5,000-$100,000

None

Upgrade

Upgrade

Top 3 most visited+ 11,500 recent visits
Top 3 most visited+ 11,500 recent visits
5.0
/5
Best for Best overall
Rate discount

8.49-35.99%

$1,000-$50,000

560

Discover

Discover® Personal Loans

5.0
/5
Best for Fast funding
Fast funding

7.99-24.99%

$2,500-$40,000

660

Lightstream

LightStream

4.5
/5
Best for Low rates
Rate discount

8.49-25.49%

$5,000-$100,000

660

Our pick for

No fees

SoFi
Go To Lender Siteon SoFi's website
on SoFi's website
SoFi

SoFi Personal Loan

5.0
Est. APR

8.99-25.81%

Loan amount

$5,000-$100,000

Min. credit score

None

Our pick for

Best overall

Upgrade
Upgrade

Upgrade

Est. APR

8.49-35.99%

Loan amount

$1,000-$50,000

Min. credit score

560

Our pick for

Low rates

Lightstream
Lightstream

LightStream

4.5
Est. APR

8.49-25.49%

Loan amount

$5,000-$100,000

Min. credit score

660

Our pick for

Paying off credit card debt

Happy Money
Happy Money

Happy Money

Est. APR

11.72-24.67%

Loan amount

$5,000-$40,000

Min. credit score

640

Our pick for

Rate discounts

Achieve
Achieve

Achieve Personal Loans

Est. APR

8.99-35.99%

Loan amount

$5,000-$50,000

Min. credit score

620

Our pick for

Secured loan option

BestEgg
BestEgg

Best Egg

Est. APR

8.99-35.99%

Loan amount

$2,000-$50,000

Min. credit score

600

Our pick for

Bad credit

Universal Credit
Universal Credit

Universal Credit

Est. APR

11.69-35.99%

Loan amount

$1,000-$50,000

Min. credit score

560

Our pick for

Joint loan option

Lending Club
Lending Club

LendingClub

Est. APR

9.57-35.99%

Loan amount

$1,000-$40,000

Min. credit score

600

Our pick for

Fast funding

Discover
Discover

Discover® Personal Loans

Est. APR

7.99-24.99%

Loan amount

$2,500-$40,000

Min. credit score

660

Our pick for

Bank loans

PNC Bank Personal Loan
PNC Bank Personal Loan

PNC Bank Personal Loan

Est. APR

7.49-30.49%

Loan amount

$1,000-$35,000

Min. credit score

None

Compare debt consolidation lenders

Upgrade: Best overall

Overview: Upgrade is a standout debt consolidation lender that offers direct payment to creditors and multiple rate discounts, which lower the amount of interest you pay on your loan. Upgrade loans are available to borrowers with a 560 credit score or higher.

  • Pros

    Cons

    • Multiple rate discounts.

    • Secured and joint loans.

    • Mobile app to manage loan payments.

    • Direct payment to creditors with debt consolidation loans.

    • Long repayment terms on home improvement loans.

    • Origination fee.

    • No option to choose initial payment date.

SoFi: Best for no fees

Overview: SoFi’s debt consolidation loans have no required fees, including no late fees. Its loans are available to borrowers with good or excellent credit (690 credit score or higher) and come with unique perks like unemployment protection and free financial advising.

  • Pros

    Cons

    • Joint loan option.

    • Multiple rate discounts.

    • Hardship program for borrowers in need.

    • Mobile app to manage loan.

    • No option to choose initial payment date.

    • High minimum loan amount.

Happy Money: Best for paying off credit card debt

Overview: Happy Money specializes in credit card consolidation, rolling multiple credit card debts into one monthly payment. It pays off your creditors for you, saving you that step, and is available to borrowers with a credit score of 640 or higher.

  • Pros

    Cons

    • Option to pre-qualify with a soft credit check.

    • Offers direct payment to creditors.

    • Fast funding.

    • No late fee.

    • Hardship program for borrowers in need.

    • Origination fee.

    • No rate discount.

    • No co-sign or joint loan option.

    • No option to choose initial payment date.

LightStream: Best for low rates

Overview: LightStream offers debt consolidation loans to borrowers with a minimum credit score of 660. Its combination of lower overall rates, no fees and a discount for setting up autopay makes it a particularly affordable option.

  • Pros

    Cons

    • No fees.

    • Rate discount for autopay.

    • Long repayment terms.

    • Rate Beat program and Experience Guarantee.

    • No option to pre-qualify on its website.

    • No direct payment to creditors with debt consolidation loans.

    • High minimum loan amount.

Universal Credit: Best for bad credit

Overview: Universal Credit offers debt consolidation loans with direct payment to creditors, multiple rate discounts and fast funding. Borrowers with bad credit can apply, thanks to a 560 minimum credit score requirement.

  • Pros

    Cons

    • Direct payment to creditors with debt consolidation loans.

    • Fast funding.

    • Offers multiple rate discounts.

    • Free credit score access.

    • Origination fee.

    • Two repayment term options.

Best Egg: Best for secured loan option

Overview: Best Egg borrowers can apply for a secured loan to consolidate their debts, using their home’s fixtures or a vehicle as collateral. Best Egg also pays off your creditors for you and has a 600 minimum credit score requirement.

  • Pros

    Cons

    • Option to pre-qualify with a soft credit check.

    • Wide range of loan amounts.

    • Secured loan options.

    • Direct payment to creditors with debt consolidation loans.

    • No late fees.

    • Origination fee.

    • No rate discounts.

    • No option to choose initial payment date.

    • No mobile app to manage loan.

Discover: Best for fast funding

Overview: Discover’s debt consolidation loans are a good fit for borrowers who want to move quickly on their debts. If you’re approved, Discover can send the loan funds directly to your creditors within one business day. Borrowers need a minimum credit score of 660 to apply.

  • Pros

    Cons

    • No origination fee.

    • Option to pre-qualify with a soft credit check.

    • Fast funding.

    • Mobile app to manage loan.

    • May charge late fee.

    • No co-sign or joint loan option.

    • No rate discount.

Achieve: Best for rate discounts

Overview: Achieve offers three ways to get a rate discount on its debt consolidation loan, including a direct pay discount if borrowers opt to have the loan funds sent directly to their creditors. Achieve has a minimum credit score requirement of 620.

  • Pros

    Cons

    • Multiple rate discounts.

    • Direct payment to creditors with debt consolidation loans.

    • Option to pre-qualify with a soft credit check.

    • Joint loan option.

    • Charges origination fee.

    • No mobile app to manage loan.

    • High minimum loan amount.

LendingClub: Best for joint loan option

Overview: LendingClub offers joint debt consolidation loans, meaning you can add a co-borrower to your application which may help you qualify for a larger loan amount or a lower interest rate. LendingClub has a 600 minimum credit score requirement.

  • Pros

    Cons

    • Joint loan option.

    • Direct payment to creditors with debt consolidation loans.

    • Option to pre-qualify with a soft credit check.

    • Option to change your payment date.

    • Origination fee.

    • No mobile app to manage loan.

PNC: Best for bank loans

Overview: PNC offers debt consolidation loans to good- and excellent-credit borrowers in all 50 states, and you don’t need to be a customer to apply. Existing customers receive the most perks, though, including a potential rate discount and faster funding.

  • Pros

    Cons

    • Rate discount for autopay.

    • Joint loan option.

    • Direct payment to creditors with debt consolidation loans.

    • Wide variety of repayment term options.

    • Product varies by location.

    • May require in-person visit.

    • No large loan amounts.

What is a debt consolidation loan?

A debt consolidation loan combines multiple unsecured debts — such as credit cards, medical bills and payday loans — into one fixed monthly payment.

As long as the interest rate on the debt consolidation loan is lower than the combined rates on your existing debts, you’ll save money on interest and potentially pay off your debt faster.

How do debt consolidation loans work?

Online lenders, banks and credit unions offer debt consolidation loans. If you qualify, the lender deposits the loan into your bank account, and you use that money to pay off your debts. Some lenders send loan proceeds directly to your creditors, saving you that step.

Once you pay off your other debts, you make monthly payments toward the debt consolidation loan. Payments are fixed for the life of the loan, typically two to seven years.

Are debt consolidation loans a good idea?

A debt consolidation loan is a good idea if you can get a lower annual percentage rate than what you're currently paying on your other debts. The best debt consolidation loan interest rates are reserved for borrowers with good or excellent credit (690 or higher credit score).

Like with all financial decisions, you should carefully weigh the pros and cons of consolidating your debts before you apply for a loan. Here are the main benefits and drawbacks of debt consolidation loans to help you make an informed decision.

Pros of debt consolidation

Cons of debt consolidation

  • You pay less in interest.

  • You may get out of debt faster.

  • You have only one payment.

  • You have a clear finish line.

  • You may not qualify for a low enough rate.

  • You still have debt you need to manage.

  • Consolidation won’t fix core spending issues.

Pros of debt consolidation loans

  • You pay less in interest: By getting a debt consolidation loan at a lower rate than your current debts, you’ll save money on interest, which can make your debt more manageable.

  • You may get out of debt faster: Because you’re saving money on interest, you can use that savings to make larger payments on your loan and get out of debt even faster.

  • You have only one payment: Unlike juggling multiple credit card bills, you’ll have only one monthly payment if you combine your debts under a consolidation loan.

  • You have a clear finish line: A debt consolidation loan gives you an exact date you’ll be debt-free, which can help you stay motivated as you make the payments.

Cons of debt consolidation loans

  • You may not qualify for a low enough rate: Not all consolidation loans come with low interest rates, and if you have bad credit (a score below 630), you may not get a rate that’s lower than your current debts.

  • You still have debt you need to manage: Consolidating debt is a smart choice for many, but it’s important to remember the debt doesn’t disappear — it goes somewhere else. Most debt consolidation loans offer terms of two to seven years, so be prepared to stick to your monthly payments over that time period.

  • Consolidation won’t fix core spending issues: If you’re in debt because you struggle to stick to your monthly budget, a debt consolidation loan won’t fix that. It may even make things worse if you use your newly freed credit cards to rack up additional debt.

How to compare debt consolidation loans

1. Look for an annual percentage rate lower than your existing debts

The loan's annual percentage rate, or APR, represents its true annual cost and includes interest and any fees. Rates vary based on your credit score, income and debt-to-income ratio. Use APRs to compare costs between multiple loans. Choose a low rate with monthly payments that fit your budget.

2. Avoid origination fees if you can

Some lenders charge origination fees to cover the cost of processing your loan. This one-time fee typically ranges from 1% to 10% of the loan amount and is deducted from your loan proceeds or added to the loan balance. If the fee is deducted from your loan proceeds, you’ll need to request more than the sum of your debts to cover the fee and still have enough to pay your creditors.

Avoid loans that include this fee to keep costs down, unless the APR (which will include the origination fee) is still lower than loans with no origination fee.

3. Check that the available loan amounts and terms match your debt

Debt consolidation loans come in a wide range of loan amounts ($1,000 to $50,000) and repayments terms (two to seven years). Look for a lender whose loan product meets your debt payoff needs. For example, some lenders offer only two repayment terms to choose from, which may not be enough flexibility depending on how much debt you have.

4. Look for special debt consolidation features

Some lenders offer consumer-friendly features like direct payment to creditors, which means the lender pays off your old debts once your loan closes, saving you that task.

Other features to shop for include free credit score monitoring and hardship programs that temporarily reduce or suspend monthly payments if you face a financial setback, such as a job loss.

Do debt consolidation loans hurt your credit?

Debt consolidation loans can help — and hurt — your credit score. When you use the loan to pay off your credit cards, you lower your credit utilization, which measures how much of your credit limit is tied up. Lowering your credit utilization can help your credit.

On the other hand, applying for a loan requires a hard credit check, which can temporarily ding your credit score. And if you turn around and rack up new credit card debt, your credit score will suffer.

Making late payments on your new loan can also hurt your credit score, while on-time payments can help.

Ultimately, if you use the debt consolidation loan to pay off your debts and then pay off the new loan on time, the overall effect on your credit should be positive.

How to qualify for a debt consolidation loan

1. Build your credit

Loan approval is based mainly on your credit score and ability to repay. It may be possible to get a debt consolidation loan with bad credit, but borrowers with good to excellent credit have more loan options and may qualify for lower rates.

If you have fair or bad credit (689 credit score or lower), it can pay to build your credit before seeking a consolidation loan.

2. Apply for a joint, co-signed or secured loan

Adding a co-borrower or co-signer to your application can help you qualify for a debt consolidation loan that you wouldn’t be able to on your own because of poor credit or low income. In a joint loan, both borrowers have equal access to the funds, unlike a co-signed loan, in which only the main applicant does. Co-borrowers and co-signers are on the hook for missed payments.

Some lenders may also offer a secured loan, which means you can back it with collateral, like your car or an investment account, to boost your chances of approval or get a better loan offer. But you risk losing the asset if you fail to repay the loan.

3. Consider different types of lenders

Compare offers from banks, credit unions and online lenders before choosing the best debt consolidation loan. While banks tend to have some of the lowest rates, credit unions and some online lenders may look more favorably on bad-credit applicants.

How to get a debt consolidation loan with bad credit

You can still get a debt consolidation loan if you have bad credit (a 629 credit score or lower).

Look specifically for lenders that let you pre-qualify with a soft credit check — that way you can check if you meet the lender’s requirements without taking a hit to your credit score. This will also help you check if the rate you qualify for is lower than your existing debts.

Some online lenders specifically offer debt consolidation loans for borrowers with bad credit. If you’re not sure where to begin, your local credit union is also a good first stop.

How to get a debt consolidation loan

1. Add up current debts and calculate the combined interest rate

The first step in getting a debt consolidation loan is having a clear picture of your current debt. You can use NerdWallet’s debt consolidation calculator to see your total balance, total monthly payment and combined interest rate across all debts.

You’ll want to keep two numbers in mind moving forward: Your total debt, because this is the loan amount you need to apply for, and your combined interest rate, because you’ll want a lower interest rate on your consolidation loan.

2. Pre-qualify and compare loan options

One of the best ways to compare loan offers is to pre-qualify with multiple lenders, which lets you see your potential loan terms, including APR, without any effect on your credit score. Though not all banks or credit unions offer pre-qualification, most online lenders do.

3. Apply for a debt consolidation loan

Once you’ve decided on a lender, it’s time to apply for the loan.

Most loan applications are online and ask you to supply personal information like your Social Security number, address and other contact details. You also may be asked to provide proof of identity, employment and income.

Once you’ve submitted your application, the lender will make an approval decision. If you’re approved, you’ll sign the loan agreement and receive the funds. Funding time varies among lenders, but some lenders can fund the same day you’re approved.

4. Pay off creditors

Here’s the most important step: Use the loan proceeds to pay off your existing debts. Some lenders send the funds to your creditors for you, so you’ll need to provide account information about your existing debts — and check the accounts to make sure they’re paid off.

If a lender doesn’t offer direct payment, they’ll deposit the funds in an account of your choosing or mail a check, if you prefer. It’ll be up to you to make sure the right amount goes to each debt.

5. Begin making payments on your new loan

Once your existing debts are paid, you’re left with your new loan. Personal loan payments are monthly, though there’s usually no fee for paying off a loan early. Make a plan now to manage your personal loan payments.

As you make progress on paying off your loan, try to keep your credit card balances at or near zero until you’re debt-free. But avoid closing the accounts, which can lower your credit score.

Alternatives to debt consolidation loans

A debt consolidation loan isn’t your only option for paying off debt.

0% balance transfer credit card: For borrowers with good to excellent credit, transferring debts to a 0% balance transfer card may be a good option — as long as you can pay it off during the introductory period, which can range from 15 to 21 months.

Credit counseling: Nonprofit organizations offer credit counseling, which includes helping you create a debt management plan. Similar to other consolidation products, these plans roll your debts into one manageable payment at a reduced interest rate.

Debt payoff strategies: If you’re not sure how to tackle debt, you may not need to consolidate. The debt snowball and debt avalanche methods are two common strategies for paying off debt. The snowball method focuses on paying off your smallest debt first, building momentum as you go. The avalanche focuses on paying off the debt with the highest interest rate first, then applying the savings elsewhere. Both can boost your payoff speed.

How we chose the best debt consolidation loans

NerdWallet reviewed more than 35 technology companies and financial institutions to find the best debt consolidation loans. We assessed these loans across five major categories, detailed below. If you’d like to know more about our rating process, see our personal loans methodology.

  • Affordability

    An affordable loan has low rates and fees compared to other similar loans and may offer rate discounts.

    Underwriting and eligibility

    The lender reviews borrowers credit reports and credit history, and tries to understand their ability to repay a loan, before making a final application decision.

    Loan flexibility

    A flexible loan is one that lets users customize terms and payments. That means offering a wide range of repayment term options, allowing the borrower to change their payment date, offering loans in most states and funding it quickly.

    Customer experience

    A good customer experience can include a fully online application process, financial education on the lender’s website and a customer service team that’s available most of the time and can be reached multiple ways.

    Transparency

    A transparent lender makes information about the loan easy to find on its website, including rates, terms and loan amounts. Transparency also means allowing users to pre-qualify online to preview potential loan offers and reporting payment information with the major credit bureaus.

Last updated on December 1, 2023

Methodology

NerdWallet’s review process evaluates and rates personal loan products from more than 35 technology companies and financial institutions. We collect over 50 data points from each lender and cross-check company websites, earnings reports and other public documents to confirm product details. We may also go through a lender’s pre-qualification flow and follow up with company representatives. NerdWallet writers and editors conduct a full fact check and update annually, but also make updates throughout the year as necessary.

Our star ratings award points to lenders that offer consumer-friendly features, including: soft credit checks to pre-qualify, competitive interest rates and no fees, transparency of rates and terms, flexible payment options, fast funding times, accessible customer service, reporting of payments to credit bureaus and financial education. Our ratings award fewer points to lenders with practices that may make a loan difficult to repay on time, such as charging high annual percentage rates (above 36%), underwriting that does not adequately assess consumers’ ability to repay and lack of credit-building help. We also consider regulatory actions filed by agencies like the Consumer Financial Protection Bureau. We weigh these factors based on our assessment of which are the most important to consumers and how meaningfully they impact consumers’ experiences.

NerdWallet does not receive compensation for our star ratings. Read more about our ratings methodologies for personal loans and our editorial guidelines.

To recap our selections...

NerdWallet's Best Debt Consolidation Loans of December 2023

  • SoFi Personal Loan: Best for No fees
  • Upgrade: Best for Best overall
  • LightStream: Best for Low rates
  • Happy Money: Best for Paying off credit card debt
  • Achieve Personal Loans: Best for Rate discounts
  • Best Egg: Best for Secured loan option
  • Universal Credit: Best for Bad credit
  • LendingClub: Best for Joint loan option
  • Discover® Personal Loans: Best for Fast funding
  • PNC Bank Personal Loan: Best for Bank loans

Frequently asked questions

  • Debt consolidation loan interest rates vary by lender. The annual percentage rate, which is the interest rate plus any fees a lender charges, can range from 6% to 36%. Factors like your credit score, income and debt-to-income ratio help determine what interest rate you'll get on a loan.

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