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Top debt consolidation loans of 2021

Get all your payments in a single place with one of these top lenders.

Debt consolidation involves taking out an unsecured personal loan to pay off credit cards and other unsecured debts. It can make it easier to manage your accounts and even save on interest if you qualify for a lower rate.

How we selected the top debt consolidation loans

Our roundup of top debt consolidation lenders is based on factors like its rates, terms, and fees. Every borrower is different. Our list include providers that would fit a range of needs, from borrowers with excellent credit to those on the verge of bankruptcy.

No single debt consolidation loan will be the best choice for everyone, so compare your options before applying.

Top debt consolidation loan providers

Best for no fees: Fairstone Personal Loan (Unsecured)

Min. Credit Score
Starting APR
Loan Amount
Fairstone offers unsecured personal loans that can be used to finance passion projects, debt consolidation or any other needs. You can take out a loan of anywhere from $500 to $25,000, without putting up any collateral, and without facing any application and origination fees and charges.
Min. Loan Amount $500
Max. Loan Amount $25,000
APR 26.99% - 39.99%
Interest Rate Type Fixed
Min. Credit Score 560
Minimum Loan Term 6 months
Maximum Loan Term 5 years
  • No early settlement, origination and application fees
  • No prepayment fees for paying off your loan early
  • Flexible loan amounts of up to $25,000
  • Repayment installment options, including fortnightly or monthly
  • 14-day cancellation period to cancel your loan without incurring any fees
  • Can come with high interest rates of up to 39.99%
  • In-branch application is involved in the loans approval process

Best for low interest rates: LoanConnect Personal Loan

Min. Credit Score
Starting APR
Loan Amount
LoanConnect is an online broker that matches borrowers to lenders offering loans in amounts from $500 to $50,000. Secured loans start at 1.90%, and you can expect to receive funds within as little as 24 hours of applying, provided you meet all of the eligibility requirements.
Min. Loan Amount $500
Max. Loan Amount $50,000
APR Secured from 1.90%, Unsecured from 5.75%-46.96%
Interest Rate Type Fixed
Min. Credit Score 300
Minimum Loan Term 3 months
Maximum Loan Term 120 months
  • Low interest rates starting at 1.90% for secured loans
  • Easy online application process
  • Quick deposits within 24 hours of applying
  • High loan amounts of up to $50,000 for secured loans
  • Lenders can provide bad credit loans
  • Limited options, with quotes solely from companies LoanConnect works with
  • Online only, so you won’t have access to in-person assistance

What is a debt consolidation loan?

A debt consolidation loan is really just an unsecured personal loan. After you take out the loan, either you or your lender use the funds to pay off other unsecured accounts. The result is that your debt is in one place, usually with better rates and terms.

The best lenders for debt consolidation are willing to work with borrowers that have a high debt-to-income ratio — think 50% or higher. And they’ll pay off your creditors directly so you don’t have to.

It’s a popular way to manage credit card debt, since it has a lower rate and fixed monthly repayments. And it moves all of your debt into one place.

How else can I consolidate debt?

What rates can I expect?

The average annual percentage rate (APR) on a personal loan can start around 10% and run as high as 46% although this varies depending on the lender and the terms of your loan.

How credit affects debt consolidation rates

Generally, the lowest rates go to borrowers with an excellent credit score of 760 or higher. If you have good credit, which starts at around 670, you can expect an average interest rate.

Fair credit borrowers with scores above 580 might qualify for rates as high as the 46% cutoff. If your credit score is below 580, you probably won’t qualify for a debt consolidation loan at all.

How does a debt consolidation loan work?

Typically, debt consolidation follows these steps:

1. Shop around

Compare rates, terms and requirements to find a lender that offers a better deal than your current creditors or makes your debt more manageable.

2. Prequalify

Many lenders let you fill out an online form to see what rates and terms you might qualify for — without affecting your credit score.

3. Apply for a loan

When you’ve decided on a lender, follow the directions to complete the application and submit necessary documents.

4. Prequalify

Many lenders let you fill out an online form to see what rates and terms you might qualify for — without affecting your credit score.

5. Repay your new loan

Pay off your debt according to the terms and conditions of your new loan. Payments are typically made monthly, and autopay may help avoid potential missed payments or late fees.

What types of debt can I consolidate?

Generally, you can consolidate any unsecured debts. Here are some of the most common types of debt to consolidate:

The one type of unsecured debt you generally shouldn’t consolidate with a personal loan is student loans.

Pros and cons of debt consolidation

Debt consolidation might help some borrowers get on track, but the drawbacks can outweigh the benefits in some cases.


  • One payment. Pulling together all of your balances into one place can relieve the hassle that comes with managing multiple monthly repayments.
  • Save on interest. Debt consolidation loans tend to have a lower APR than other types of debt, like credit cards. Consolidation alone can help you save on interest while you pay it off.
  • Fixed monthly cost. Typically debt consolidation loans come with fixed rates, which means you can predict your monthly bill and work it into your budget. Credit cards usually have variable rates, which can make it hard to make a debt payoff plan.
  • Can boost your credit. Paying off debt and switching from a credit card to a loan can help improve your credit.
  • Earlier payoff. Depending on your term and APR, you might find that you’re able to pay off your overall debt more quickly than by keeping them separate.
  • No collateral. These loans are unsecured, so you don’t risk losing any assets when you apply.


  • Does not eliminate debt. By consolidating your debt, you’re simply shifting existing balances to a new form — albeit one that can save you money and time.
  • Hurts your credit if you continue to spend. Debt consolidation won’t help if you don’t make changes to your spending habits. If you continue to accumulate debt, this can lower your credit score.
  • No intro period. Unlike balance transfer credit cards, these loans don’t offer low or 0% interest intro periods.
  • Potentially higher monthly cost. A loan might get you out of debt faster but repayments are often higher than the monthly minimum on your credit card.
  • Less flexibility. A credit card’s minimum monthly repayment means that you can choose to pay more, when you can. Sometimes structure is helpful. But if your income is inconsistent, you risk becoming delinquent on the loan, which hurts your credit.

What are the requirements to consolidate debt?

While requirements vary depending on the lender, you generally need to meet the following criteria to qualify for debt consolidation:

  • Credit score of 560 or higher
  • Guaranteed annual income
  • No bankruptcies or foreclosures
  • Chequing or savings account
  • Over 18 or the age of majority in your province
  • Canadian citizen or permanent resident

The rate you get also depends on factors like your income and the amount of debt you have. If your debt-to-income ratio (DTI) is more than 40%, you could have trouble qualifying for a loan at all. If that’s the case, consider other debt relief options.

What’s my DTI?

What to know before applying

Look up the following numbers to help you decide which lender to go with — or if debt consolidation is a good idea.

  • Payoff amount. Reach out to your creditors and ask about the payoff amount, or how much you will owe if you paid off your balance by a specific date. This tells you how much you need to borrow.
  • Total annual income. Include government benefits, income from investments, alimony and child support — lenders consider this when calculating
  • Credit score. Check your credit score based on a soft credit pull so you can find a lender that you can qualify with.
  • Current interest rates. If you don’t know if off hand, look up the interest rates you’re paying on your current accounts — and aim for a loan that’s less expensive.
  • Monthly budget. Calculate how much money you have coming in and how much you typically spend to see how much you can afford to repay each month.

Debt consolidation loan vs. balance transfer credit card

Debt consolidation loans are great for managing your repayments and taking several years to pay off debt. But balance transfer credit cards can be a better option if you have a plan to get out of debt in the next year or so and have excellent credit.

Balance transfer cards offer 0% promotional rates that run for up to 9 months, meaning you won’t have to pay interest during this time. But the interest rate that kicks in after is often higher than most debt consolidation loans.

Debt consolidation loans vs. balance transfer credit cards

When is debt consolidation a good idea?

A debt consolidation loan can be a good idea in following situations:

  • You want to pay off debt over several years. If your plan is to get out of debt right away, a balance transfer credit card could help you save the most.
  • You owe less than 50% of your income. If you owe more, you likely won’t qualify and might benefit from other solutions.
  • You have fair credit or higher. Your options are limited if you have a credit score below 560.
  • You have regular income. You need to prove you have the money to pay off the loan before you get approved.
  • You have a plan to stay out of debt. It could hurt your credit if you end up in more debt after consolidating. Make sure you have an emergency fund and budget to avoid this.

What if I’m denied a debt consolidation loan

How much can I save with a debt consolidation loan?

How much you personally could save with a debt consolidation loan depends on your current debt load and the interest rate and term you can qualify for with a new personal loan.

To help give you an idea, we put together an example of how much you could save by consolidating three debts with a fixed-rate personal loan.

Graphs showing how you could save over $15,000 with a debt consolidation loan.

Will a debt consolidation loan improve my credit score?

Yes, consolidating debt can often improve your credit. And the lower your score the more impactful it will be. A 2019 TransUnion study found that some 85% borrowers with poor credit saw a 20% increase or more after consolidating debt — only 15% of borrowers with the highest credit scores saw this kind of increase.

Generally, it won’t hurt your credit unless you continue to rack up debt.

9 alternatives to debt consolidation loans

Consider these alternatives if you’re not sure a debt consolidation loan is right for you:

  • Balance transfer credit cards. Save on interest with a 0% promotional rate — as long as you can pay off your debts during the first year or so.
  • Secured personal loans. Qualify for a lower interest rate and face more relaxed requirements by backing your loan with collateral.
  • Home equity loans and lines of credit (HELOCs). Back your loan with your home to qualify for lower rates — but you risk losing your house if you default.
  • Student loan refinancing. Student loans generally aren’t eligible for debt consolidation — instead, you have to take out a new loan with a refinancing provider.
  • Credit counseling. Set up a meeting with a professional credit counselor to go over making a budget and exploring your options.
  • Debt management. Hire a company to negotiate down your rates and adjust your repayment terms — for a fee.
  • Debt settlement. Hire a company to negotiate down your balance, which you’ll pay off with a one-time fixed fee — but watch out for scams.

Bottom line

Finding the right debt consolidation loan for you depends on your unique situation. The best lender for someone with excellent credit might not be the right fit for other borrowers close to declaring bankruptcy. You can learn more about how it all works by reading our guide to debt consolidation loans.

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