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7 Best Debt Consolidation Loans of June 2020

Steve NicastroJune 2, 2020

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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.

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.

Debt consolidation is the process of combining multiple debts — such as credit cards, medical bills and payday loans — into one debt with a fixed monthly payment. Consolidating debt with a personal loan works best if the rate on the loan is lower than the combined interest rate on your existing debt.

When comparing debt consolidation loans, look for low rates, flexible terms and consumer-friendly features such as direct payment to creditors.

Summary of Best Debt Consolidation Loans of June 2020

LenderNerdWallet Rating Est. APRMin. Credit ScoreLearn More
Payoff

Payoff

on Payoff's website

Best for: Fair credit and paying off credit card debt

5.99 - 24.99%

640

on Payoff's website

Marcus by Goldman Sachs

Marcus by Goldman Sachs

on Goldman Sachs's website

Best for: Good credit and no fees

6.99 - 19.99%

660

on Goldman Sachs's website

Lightstream

LightStream

on LightStream's website

Best for: Good credit and low rates

5.49 - 20.49%

660

on LightStream's website

Upgrade

Upgrade

on Upgrade's website

Best for: Fair credit and direct payment to creditors

7.99 - 35.97%

600

on Upgrade's website

Avant

Avant

on Avant's website

Best for: Bad credit and fast funding

9.95 - 35.99%

580

on Avant's website

Lending Club

LendingClub

See my rates

on NerdWallet's secure website

Best for: Fair credit and joint loan option

10.68 - 35.89%

600

See my rates

on NerdWallet's secure website

Discover

Discover® Personal Loans

See my rates

on NerdWallet's secure website

Best for: Good credit and flexible payment options

6.99 - 24.99%

660

See my rates

on NerdWallet's secure website

Our pick for

Fair credit and paying off credit card debt

Payoff

on Payoff's website

Payoff

Min. Credit Score

640

Est. APR

5.99 - 24.99%

Loan Amount

$5,000 - $35,000

on Payoff's website


Min. Credit Score

640

Key facts

Payoff, which lends only to people consolidating credit card debt, requires a minimum credit score of 640 and two years of credit history. It offers financial guidance to help you stay on top of loan payments.

Pros

  • Low starting rates.

  • Competitive rates among similar lenders.

  • Offers direct payment to creditors with debt consolidation loans.

  • Offers online educational resources.

Cons

  • No co-sign or secured loan option.

  • Charges origination fee.

Qualifications

  • Minimum credit score of 640.

  • Minimum credit history: 2 years.

  • Minimum annual income: $40,000.

  • Debt-to-income ratio: less than 50%.

Available Term Lengths

2 to 5 years

Fees

  • Origination fee: 0% - 5%.

Disclaimer

This does not constitute an actual commitment to lend or an offer to extend credit. Upon submitting a loan application, you may be asked to provide additional documents to enable us to verify your income, assets, and financial condition. Your interest rate and terms for which you are approved will be shown to you as part of the online application process. Most applicants will receive a variety of loan offerings to choose from, with varying loan amounts and interest rates. Borrower subject to a loan origination fee, which is deducted from the loan proceeds. Refer to full borrower agreement for all terms, conditions and requirements.

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Our pick for

Good credit and no fees

Marcus by Goldman Sachs

on Goldman Sachs's website

Marcus by Goldman Sachs

Marcus by Goldman Sachs

Min. Credit Score

660

Est. APR

6.99 - 19.99%

Loan Amount

$3,500 - $40,000

on Goldman Sachs's website


Min. Credit Score

660

Key facts

Online lender Marcus is an option for borrowers with good to excellent credit (a FICO score of at least 690). Its starting rates are lower than the average rate on credit cards, and it offers direct payment to creditors and flexible repayment options.

Pros

  • No fees.

  • Flexible payment options.

  • Directly pays creditors for debt consolidation loans.

  • Rate discount with autopay.

Cons

  • Requires good credit.

  • No co-sign option.

Qualifications

  • At least 18 years old (19 in Alabama; 21 in Mississippi and Puerto Rico).

  • Valid U.S. bank account, Social Security number or tax ID.

  • 660+ credit score.

  • For debt consolidation loans, you may be required to send part of the loan directly to your creditors.

Available Term Lengths

3 to 6 years

Fees

  • Origination fee: None.

  • Late fee: None.

Disclaimer

Your loan terms are not guaranteed and are subject to our verification of your identity and credit information. To obtain a loan, you must submit additional documentation including an application that may affect your credit score. The availability of a loan offer and the terms of your actual offer will vary due to a number of factors, including your loan purpose and our evaluation of your creditworthiness. Rates will vary based on many factors, such as your creditworthiness (for example, credit score and credit history) and the length of your loan (for example, rates for 36 month loans are generally lower than rates for 72 month loans Your maximum loan amount may vary depending on your loan purpose, income and creditworthiness. Your verifiable income must support your ability to repay your loan. Marcus by Goldman Sachs is a brand of Goldman Sachs Bank USA and all loans are issued by Goldman Sachs Bank USA, Salt Lake City Branch. Applications are subject to additional terms and conditions.

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Our pick for

Good credit and low rates

Lightstream

on LightStream's website

LightStream

Lightstream

Min. Credit Score

660

Est. APR

5.49 - 20.49%

Loan Amount

$5,000 - $100,000

on LightStream's website


Min. Credit Score

660

Key facts

LightStream offers no fees and low rates for borrowers with good credit. The lender also allows joint applications, which can increase your chances of qualifying for a debt consolidation loan or get you a lower rate.

Pros

  • No fees.

  • Co-sign option.

  • Low starting rates.

Cons

  • Does not offer pre-qualification on its website.

  • Requires several years of credit history.

Qualifications

  • Minimum credit score of 660.

  • No minimum income specified.

  • Maximum debt-to-income ratio varies depending on loan purpose.

Available Term Lengths

2 to 7 years

Fees

  • Origination fee: None.

  • Late fee: None.

Disclaimer

Your loan terms are not guaranteed and may vary based on loan purpose, length of loan, loan amount, credit history and payment method (AutoPay or Invoice). Rate quote includes AutoPay discount. AutoPay discount is only available when selected prior to loan funding. To obtain a loan, you must complete an application on LightStream.com, which may affect your credit score. You may be required to verify income, identity and other stated application information. Payment example: Monthly payments for a $5,000 loan at 12.8% APR with a term of 3 years would result in 36 monthly payments of $168. Some additional conditions and limitations apply. Advertised rates and terms are subject to change without notice. SunTrust now Truist is an Equal Housing Lender. © 2020 Truist Financial Corporation. SunTrust®, Truist, LightStream®, the LightStream logo, and the SunTrust logo are service marks of Truist Financial Corporation. All rights reserved. All other trademarks are the property of their respective owners. Lending services provided by SunTrust now Truist Bank.

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Our pick for

Fair credit and direct payment to creditors

Upgrade

on Upgrade's website

Upgrade

Upgrade

Min. Credit Score

600

Est. APR

7.99 - 35.97%

Loan Amount

$1,000 - $35,000

on Upgrade's website


Min. Credit Score

600

Key facts

Upgrade requires a minimum credit score of 620, and some borrowers with high debt-to-income ratios may qualify. It also offers direct payment to creditors, which means it sends your loan proceeds directly to creditors, saving you the effort of paying off each debt.

Pros

  • Credit health tools.

  • Hardship plans.

  • Directly pays creditors for debt consolidation loans used to pay off credit cards.

Cons

  • Origination and late fees.

Qualifications

  • Minimum credit score: 600.

  • Minimum annual income: None, but most applicants earn more than $30,000.

  • Minimum monthly free cash flow: $800.

  • Maximum debt-to-income ratio: 60%.

  • Unavailable to borrowers in: Iowa or West Virginia.

Available Term Lengths

3 to 5 years

Fees

  • Origination fee: 2.9% to 8%

Disclaimer

Personal loans made through Upgrade feature APRs of 7.99%-35.97%. All personal loans have a 2.9% to 8% origination fee, which is deducted from the loan proceeds. Lowest rates require Autopay and paying off a portion of existing debt directly. For example, if you receive a $10,000 loan with a 36-month term and a 17.98% APR (which includes a 14.32% yearly interest rate and a 5% one-time origination fee), you would receive $9,500 in your account and would have a required monthly payment of $343.33. Over the life of the loan, your payments would total $12,359.97. The APR on your loan may be higher or lower and your loan offers may not have multiple term lengths available. Actual rate depends on credit score, credit usage history, loan term, and other factors. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. There is no fee or penalty for repaying a loan early. Personal loans issued by Upgrade's lending partners. Information on Upgrade's lending partners can be found at https://www.upgrade.com/lending-partners/.

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Our pick for

Bad credit and fast funding

Avant

on Avant's website

Avant

Min. Credit Score

580

Est. APR

9.95 - 35.99%

Loan Amount

$2,000 - $35,000

on Avant's website


Min. Credit Score

580

Key facts

Consider Avant if you’re consolidating high-interest debts, such as payday loans. It has a low minimum credit score requirement, and you may receive your funds the next day. About half of Avant customers use their loans to consolidate debt.

Pros

  • Low minimum credit score.

  • Refinancing option.

  • No prepayment fee.

Cons

  • No co-sign or secured loan option.

  • Does not offer direct payment to creditors for debt consolidation loans.

Qualifications

  • Minimum credit score of 580.

  • At least $20,000 in gross annual income.

Available Term Lengths

2 to 5 years

Fees

  • Administrative fee: 4.75%.

  • Late fee: $25 (most states).

  • Unsuccessful payment fee: $15 (most states).

Disclaimer

A $5,700 loan with an administration fee of 4.75% and an amount financed of $5,429.25, repayable in 36 monthly installments, would have an APR of 29.95% and monthly payments of $230.33. Minimum loan amounts may vary by state. If approved, the actual rate and loan amount that a customer qualifies for may vary based on credit determination and other factors. An administration fee of up to 4.75% will be deducted from the loan proceeds. Avant branded credit products are issued by Webbank, member FDIC

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Our pick for

Fair credit and joint loan option

Lending Club
See my rates

on NerdWallet's secure website

LendingClub

Lending Club

Min. Credit Score

600

Est. APR

10.68 - 35.89%

Loan Amount

$1,000 - $40,000

See my rates

on NerdWallet's secure website


Min. Credit Score

600

Key facts

LendingClub is a pioneer of peer-to-peer lending and a good option if you want to consolidate your debt.

Pros

  • Offers direct payment to creditors with debt consolidation loans.

  • Joint loan option.

  • Soft credit check with pre-qualification.

Cons

  • Charges origination fee and late fees.

  • Does not offer mobile app to manage your loan.

Qualifications

  • Minimum credit score of 600. LendingClub uses FICO 8 credit scoring model.

  • Minimum credit history of three years.

  • Debt-to-income ratio of less than 40% for single applications, 35% combined for joint applicants.

Available Term Lengths

3 to 5 years

Fees

  • Origination fee: 2% to 6%

  • Late fee: Greater of $15 or 5% of payment after 15-day grace period.

Disclaimer

*All loans made by WebBank, Member FDIC. Your actual rate depends upon credit score, loan amount, loan term, and credit usage and history. The APR ranges from 10.68% to 35.89%. The origination fee ranges from 1% to 6% of the original principal balance and is deducted from your loan proceeds. For example, you could receive a loan of $6,000 with an interest rate of 7.99% and a 5.00% origination fee of $300 for an APR of 11.51%. In this example, you will receive $5,700 and will make 36 monthly payments of $187.99. The total amount repayable will be $6,767.64. Your APR will be determined based on your credit at the time of application. The average origination fee is 5.49% as of Q1 2017. In Georgia, the minimum loan amount is $3,025. In Massachusetts, the minimum loan amount is $6,025 if your APR is greater than 12%. There is no down payment and there is never a prepayment penalty. Closing of your loan is contingent upon your agreement of all the required agreements and disclosures on the www.lendingclub.com website. All loans via LendingClub have a minimum repayment term of 36 months. Borrower must be a U.S. citizen, permanent resident or be in the United States on a valid long-term visa and at least 18 years old. Valid bank account and Social Security number are required. Equal Housing Lender. All loans are subject to credit approval. LendingClub’s physical address is: 595 Market St suite 200 San Francisco Ca 94105. **Based on approximately 60% of borrowers who received offers through LendingClub’s marketing partners between Jan. 1, 2018, and July 20, 2018. The time it will take to fund your loan may vary.

Read Full Review

Our pick for

Good credit and flexible payment options

Discover
See my rates

on NerdWallet's secure website

Discover® Personal Loans

Discover

Min. Credit Score

660

Est. APR

6.99 - 24.99%

Loan Amount

$2,500 - $35,000

See my rates

on NerdWallet's secure website


Min. Credit Score

660

Key facts

Discover offers direct payment to creditors and flexible payment options; borrowers can change payment due dates or defer payments. Discover also offers a free credit scorecard with your FICO score, number of recent inquiries and more.

Pros

  • No origination fee.

  • Option to directly pay creditors.

  • Flexible payment options.

Cons

  • Charges late fees.

  • No refinancing option.

Qualifications

  • Minimum credit score required: 660; borrowers' average score is about 750.

  • Minimum gross income required: $25,000, but typically much higher.

  • Minimum credit history: Not provided.

  • Maximum debt-to-income ratio: Not provided.

Available Term Lengths

3 to 7 years

Fees

  • Origination fee: None.

  • Late fee: $39.

Disclaimer

This is not a commitment to lend from Discover Personal Loans. Your approval for a loan is determined once you apply and is based on your application information and credit history. Your APR will be between 6.99-24.99% based upon creditworthiness at time of application. Not all applications will be approved.

Read Full Review

Best debt consolidation loans: Factors to compare

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 scores, 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. The one-time fee typically ranges from 1% to 8% of the loan amount and is either deducted from your loan proceeds or added to the loan balance. Avoid loans that include this fee to keep costs down, unless the APR is lower than other no-fee loans.

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.

» MORE: Best credit card consolidation loans

Get the most with a debt consolidation loan

Build your credit: Loan approval is based mainly on your credit score and ability to repay. Borrowers with excellent credit (720 to 850 FICO) have more loan options and may qualify for lower rates, so it can pay to build your credit before seeking a consolidation loan.

Add a co-signer: While co-signing carries some risks, it 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.

Estimate your savings: Use a debt consolidation calculator to estimate your interest savings and new monthly payment, and to compare various loan options.

Shop around: Compare rates and terms at multiple lenders before applying for a debt consolidation loan. Most online lenders let you pre-qualify with a soft credit inquiry, which has no impact on your credit scores.

Plan ahead: Before your loan is funded, create a budget that allocates a percentage of your income toward debt repayment and track your repayment progress with a budgeting and saving app.

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.

» MORE: 4 keys to successful debt consolidation

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 bump 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.

» MORE: Details on debt consolidation and credit score

How to pre-qualify for a debt consolidation loan

Pre-qualifying for an online loan can get you access to potential loan terms, including the loan’s interest rate. You can pre-qualify with multiple lenders on NerdWallet to compare offers and find the lowest rate.

Last updated on June 3, 2020

Methodology

NerdWallet's ratings for personal loans award points to lenders that offer consumer-friendly features, including soft credit checks, no fees, transparency of loan rates and terms, flexible payment options, accessible customer service, reporting of payments to credit bureaus and financial education. We also consider the number of complaints filed with agencies like the Consumer Financial Protection Bureau. This methodology applies only to lenders that cap interest rates at 36%, the maximum rate financial experts and consumer advocates agree is the acceptable limit for a loan to be affordable. NerdWallet does not receive compensation of any sort for our reviews.

To recap our selections...

NerdWallet's Best Debt Consolidation Loans of June 2020

Frequently asked questions