Best Debt Consolidation Loans of March 2023
Debt consolidation loans help borrowers combine multiple high-interest debts into a single payment. Compare our picks for the best loan options for all credit scores.
Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money.
If you’re like many Americans with high credit card balances, you may be looking for ways to get your debt under control. Debt consolidation loans are one option that can reduce your debt and help you pay it off sooner.
When comparing debt consolidation loans, look for low rates, flexible terms and consumer-friendly features such as direct payment to creditors. NerdWallet has reviewed more than 35 financial institutions to find the best personal loans for consolidating debt.
Upgrade: Best overall.
SoFi: Best for no fees.
Happy Money: Best for paying off credit card debt.
LightStream: Best for low rates.
Universal Credit: Best for bad credit.
Best Egg: Best for secured loan option.
Discover: Best for fast funding.
Achieve: Best for rate discounts.
LendingClub: Best for joint loans.
If you’re like many Americans with high credit card balances, you may be looking for ways to get your debt under control. Debt consolidation loans are one option that can reduce your debt and help you pay it off sooner.
When comparing debt consolidation loans, look for low rates, flexible terms and consumer-friendly features such as direct payment to creditors. NerdWallet has reviewed more than 35 financial institutions to find the best personal loans for consolidating debt.
Upgrade: Best overall.
SoFi: Best for no fees.
Happy Money: Best for paying off credit card debt.
LightStream: Best for low rates.
Universal Credit: Best for bad credit.
Best Egg: Best for secured loan option.
Discover: Best for fast funding.
Achieve: Best for rate discounts.
LendingClub: Best for joint loans.
Best Debt Consolidation Loans From Our Partners
Lender | NerdWallet rating | Est. APR | Loan amount | Min. credit score | Learn more |
|---|---|---|---|---|---|
 Upgrade Get rate on Upgrade's website | Best for Best overall | 8.24- | $1,000- | 560 | Get rate on Upgrade's website |
 SoFi Get rate on SoFi's website | Best for No fees | 8.99- | $5,000- | None | Get rate on SoFi's website |
 LightStream Get rate on LightStream's website | Best for Low rates | 6.99- | $5,000- | 660 | Get rate on LightStream's website |
 Achieve Personal Loans Get rate on Achieve's website | Best for Rate discounts | 7.99- | $5,000- | 620 | Get rate on Achieve's website |
 Happy Money Get rate on Happy Money's website | Best for Paying off credit card debt | 10.50- | $5,000- | 640 | Get rate on Happy Money's website |
 Best Egg Get rate on Best Egg's website | Best for Secured loan option | 8.99- | $2,000- | 600 | Get rate on Best Egg's website |
 Universal Credit Get rate on Universal Credit's website | Best for Bad credit | 11.69- | $1,000- | 560 | Get rate on Universal Credit's website |
 LendingClub Get rate on LendingClub's website | Best for Joint loan option | 8.05- | $1,000- | 600 | Get rate on LendingClub's website |
 Discover® Personal Loans Get rate on Discover's website | Best for Fast funding | 6.99- | $2,500- | 660 | Get rate on Discover's website |
Our pick for
Best overall
Our pick for
No fees
Our pick for
Low rates
Our pick for
Rate discounts
Our pick for
Paying off credit card debt
Our pick for
Secured loan option
Our pick for
Bad credit
Our pick for
Joint loan option
Our pick for
Fast funding
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.
A debt consolidation loan is usually a good idea if the interest rate on the loan is lower than the combined rates on your existing debts. With this lower rate, you’ll save money on interest and potentially pay off your debt faster.
You can use a debt consolidation calculator to estimate your interest savings and new monthly payment, and to compare various loan options.
How to choose the best debt consolidation loan
When deciding between debt consolidation loans, compare these factors.
Annual percentage rates: The loan's APR represents its true annual cost, as it includes all fees and interest charges. Rates vary based on your credit score, income and debt-to-income ratio. Use APRs to compare multiple loans. Choose a low rate with monthly payments that fit your budget.
Origination fees: 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 either 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 in order 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 is lower than loans with no origination fee.
Lender 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.
How to qualify for a debt consolidation loan
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 (690 credit score or higher) have more loan options and may qualify for lower rates. If you have fair or bad credit (690 credit score or lower), it can pay to build your credit before seeking a consolidation loan.
» COMPARE: Best debt consolidation loans for bad credit
Apply for a joint or co-signed 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 due to 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.
Shop around and pre-qualify: Compare offers from multiple lenders before applying for a debt consolidation loan. One of the easiest ways is by pre-qualifying, which lets you view potential loan terms, including the interest rate, with no hit to your credit score. Most online lenders offer pre-qualification, and you can pre-qualify for free on NerdWallet to compare offers and find the lowest rate.
How to get a debt consolidation loan
Once you’ve pre-qualified and chosen a lender, you’ll want to submit your application to get a debt consolidation loan.
You can complete most loan applications online from the lender’s website. You’ll need to supply basic personal and contact information, such as your Social Security number, proof of identification, address, date of birth, email address and phone number, as well as proof of employment, income and information about any existing debts.
Once you submit your application, the lender will conduct a hard credit pull. Many lenders can approve you for a debt consolidation loan the same or next day, but if the lender requests additional documentation, like recent pay stubs or tax returns, it may delay the process.
Once approved, you’ll receive the loan agreement, which you can usually sign online. You’ll then receive the loan funds in your bank account, typically within a week, though often the same or next day depending on the lender. If the lender is sending the loan funds directly to your creditors, confirm your debts have been paid off.
» MORE: How to apply for a personal loan
Preparing for a debt consolidation loan
Plan ahead: Before your loan is funded, create a budget that allocates a percentage of your income toward debt repayment.
Curb spending: Avoid big expenditures on your credit cards as you pay off debt, but don’t close any of the cards. Canceling credit accounts can hurt your credit score.
Commit to the long-haul: 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.
Will debt consolidation hurt my credit score?
Consolidating your debt with a personal loan 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.
Other ways to tackle debt
A debt consolidation loan isn’t your only option for getting debt under control.
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.
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.
Last updated on March 3, 2023
Methodology
NerdWallet’s review process evaluates and rates personal loan products from more than 35 financial institutions. We collect over 45 data points from each lender, interview company representatives and compare the lender with others that seek the same customer or offer a similar personal loan product. 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. 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.
This methodology applies only to lenders that cap interest rates at 36%, the maximum rate most financial experts and consumer advocates agree is the acceptable limit for a loan to be affordable. 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 March 2023
- Upgrade: Best for Best overall
- SoFi: Best for No fees
- LightStream: Best for Low rates
- Achieve Personal Loans: Best for Rate discounts
- Happy Money: Best for Paying off credit card debt
- 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
Frequently asked questions
Aside from a hard credit pull when you apply, just getting a debt consolidation loan won't hurt your credit. Your credit score could be negatively impacted if you miss loan payments or pay late. Making on-time monthly payments and maintaining low balances on your credit cards will likely have a positive impact on your score.
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.
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). A debt consolidation calculator can help you understand if a loan is right for you.
