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Compare debt consolidation loans

Get one monthly payment — potentially with lower rates and better terms.

Compare debt consolidation loans

We reviewed nearly 100 lenders to help you find a personal loan to combine your current debt into one monthly repayment. If you're struggling with more debt than you make in a year or can't make changes to your spending habits, you might want to consider other debt relief options.

Name Product Filter Values APR Min. Credit Score Loan Amount
Credible personal loans
2.49% to 35.99%
Fair to excellent credit
$100,000
Get personalized rates in minutes and then choose an offer from a selection of top online lenders.
Best Egg personal loans
5.99% to 35.99%
600
$50,000
A prime online lending platform with multiple repayment methods.
Upstart personal loans
3.50% to 35.99%
580 or 600 depending on state of residence
$50,000
This service looks beyond your credit score to get you a competitive-rate personal loan.
SoFi personal loans
5.74 to 20.28%
680
$100,000
A highly-rated lender with competitive rates, high loan amounts and no fees.
Upgrade personal loans
5.94% to 35.97%
600
$50,000
Affordable loans with two simple repayment terms and no prepayment penalties.
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How get a debt consolidation loan in 6 steps

Following these steps can help you find and apply for the best debt consolidation loan provider available to you:

  1. Check the requirements and eliminate any providers with minimum credit score, income and other eligibility criteria you don't meet.
  2. Look at the minimum and maximum loan amounts available and rule out providers that don't offer the amount of funding you need.
  3. Compare the range of annual percentage rates (APRs) a lender offers to find a loan with the lowest overall cost.
  4. Look out for origination fees and prepayment penalties — and ideally, choose a lender with no fees. An origination fee gets added to your loan at closing. Prepayment penalties prevent you from saving on interest with extra payments.
  5. Compare repayment terms and select a lender that offers enough time to pay down your debt.
  6. Prequalify with your top choices to compare personalized rates, loan amounts and monthly payments each provider might offer. This won't affect your credit score in most cases.

After you've chosen a provider, follow its directions to complete your debt consolidation loan application. You may need to request a payoff amount from your current creditors — or the exact amount you owe when you close the loan.

How debt consolidation loans work

A debt consolidation loan works by moving your credit card balances and other unsecured debt under a new personal loan. It's a strategic way to pay down high-interest debt at a lower, fixed rate with one monthly payment.

Here are some highlights:

  • Generally you can consolidate between $2,000 and $50,000 of debt, though some lenders offer personal loans as high as $100,000.
  • The average APR is around 9% on a debt consolidation loan, according to the Federal Reserve. Typically, loan rates range from 4% to 36% APR — and are almost always fixed.
  • Loan terms usually range from two to seven years.
  • You can only consolidate unsecured debt. That is, debt that's not backed by collateral.
  • You can secure a debt consolidation loan to help you qualify for a lower interest rate. But unsecured loans are more common — and less risky.

The interest rate, loan amount and loan terms available to you depend on your creditworthiness. Since you have debt, you may not qualify for the lowest rates a lender offers.

When to use a debt consolidation loan

There are a few situations where a debt consolidation loan can be a great way to pay down your debt:

  • You need more than a year to pay down your debt — or you don't have credit card debt.
  • You have high-interest debt — or credit accounts with higher interest rates than a typical personal loan.
  • Your credit score is either the same or higher than when you first opened your credit accounts.
  • You have a regular source of income and can afford fixed monthly payments.

When to consider alternatives

Debt consolidation may not be the best solution in the following situations:

  • You have credit card debt that you can pay off within a year. A balance transfer credit card may be cheaper.
  • Your total debt is more than 50% of your annual income before taxes — including student loans, auto loans and other types of debt you aren't consolidating.
  • You have a credit score below 580 — your options will be limited, and your chances of qualifying for a low rate are slim.
  • You have inconsistent income or otherwise can't afford fixed monthly payments. Debt consolidation loan payments are less flexible than credit card payments.

Typical eligibility requirements

Most lenders require borrowers to meet the following criteria to qualify for a debt consolidation loan:

  • Good credit or excellent credit — that's a credit score of at least 670
  • Debt-to-income ratio (DTI) of no more than 50%
  • At least three years of credit history and a clean credit profile
  • Between $2,000 and $100,000 in unsecured debt
  • Active bank account
  • US citizen or permanent resident
  • Over 18

Your DTI reflects how much you make each month compared to your monthly debt obligations. Lenders that specialize in debt consolidation typically have slightly higher DTI cutoffs. Traditionally, banks and credit unions rarely accept borrowers with a DTI under 43%.

That's why you may struggle to qualify for a debt consolidation loan if you have student loans, auto loans or a mortgage. These raise your DTI — but traditionally aren't covered with a debt consolidation loan.

Debt consolidation is difficult with bad credit

Some lenders like Upstart specialize in debt consolidation loans for people with fair credit — or a credit score between 580 and 670. These providers are typically online lenders that factor in your education, career and other life experience when reviewing your loan application.

Online applications are typically faster than the applications available at most banks or credit unions — sometimes you can consolidate your debt soon as the next business day. But online lenders often charge higher interest rates.

With bad credit — or a credit score below 580 — your loan options are even more limited. You can increase their chances of loan approval by applying for a secured loan like a home equity loan. But home equity loans involve putting your home on the line and may not be worth the risk.

Calculate debt consolidation savings

Use our monthly payment calculator to estimate how much estimate your monthly payments and the total cost of a debt consolidation loan.

Cost of a debt consolidation loan

Calculate the total interest rate and monthly payment on a new debt consolidation loan.

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If you have credit card debt, use our credit card repayment calculator to compare it to the cost of paying down your credit cards without a debt consolidation loan.

Debt consolidation can help or hurt your credit score

Done right, consolidating debt has a net positive effect on your credit. But it's not guaranteed to add on points to your score. Here's how it can affect your credit rating, for better and for worse:

  • Getting a hard credit check — which lenders run when you apply for a loan — lowers your credit score by a few points.
  • Paying down your credit card debt with a debt consolidation loan increases your score by lowering your credit utilization ratio. This is also true for lines of credit.
  • Taking out a new loan adds an installment loan to your credit history, which can increase your credit score if you only have credit card debt.
  • Missing a payment on your debt consolidation loan will decrease your credit score and stay on your credit report for up to seven years.
  • Continuing to use a credit card after debt consolidation increases your credit utilization ratio, which lowers your credit score. This doesn't apply to personal loans.
  • Taking out another debt consolidation loan within the next five years can also lower your credit score.

4 ways to make debt consolidation a success

These steps help ensure your debt consolidation loan will save money and increase your credit score.

  1. Sign up for automatic payments to take advantage of your lender's autopay discount — usually around 0.25%. Autopay also helps you avoid late fees and stay on top of your due date.
  2. Learn how to budget to avoid racking up credit card debt or needing a second debt consolidation loan — both of which hurt your credit.
  3. Build an emergency fund so you're prepared for that next emergency expense like unexpected medical bills. Aim to have at least six months of expenses saved up.
  4. Refinance any car loans or student loans to save even more on interest — though you can't consolidate these with unsecured debt into a single loan.

Debt consolidation loan alternatives

A debt consolidation loan isn't the only debt repayment strategy out there — it's not even the only type of debt consolidation available. Some people can see more benefits from these alternatives.

  • Balance transfer credit cards offer a 0% APR for at least the first 12 months and can save you even more on small amounts of debt.
  • Crypto loans allow you access the value of your cryptocurrency without having to sell. These often have lower interest rates than personal loans and don't consider your credit. But if the value of your collateral taking a dive, which happens often, you could default on the loan. And the company holding your assets goes bankrupt, you could also lose your collateral.
  • DIY debt payoff methods, like the debt avalanche or snowball, help you strategically pay off debt without worrying about loan approval or a higher monthly payment.
  • Credit counseling offers free or low-cost advice on how to manage your debt when you don't know where to start. Look for a government-approved credit counselor on the Department of Justice's website.
  • Debt relief involves hiring professionals to negotiate with your creditors. They can ask for lower monthly payments or a reduced balance in exchange for a one-time payment.

Balance transfer credit cards vs. debt consolidation loans

Balance transfer credit cards aren't the main debt consolidation alternative to loans — if you have credit card debt. If you can pay it during the 0% APR promotional period, you won't pay any interest on your debt. But after that, the interest rate is much higher than a personal loan — the average credit card interest rate is around 14%.

Like a debt consolidation loan, balance transfer credit cards also come with a fee — usually a balance transfer fee around 3% to 5% of your debt. Debt consolidation loan origination fees may be easier to avoid than a balance transfer fee.

Monthly payments are more flexible with a balance transfer credit card. But you'll need to be more disciplined if you want to avoid high interest rates. Both of these options are also best for people with good credit.

Compare balance transfer credit cards

What type of debt do Americans stress about?

Finder published a paper in August 2020 analyzing which types of debt put stress on Americans, including which age and gender stress the most. Our paper includes original research and predictions from experts including Jennifer Tomko, LCSW and Owner of Clarity Health Solutions, Howard Dvorkin, CPA and Chairman of Debt.com and Timo Wilson, CEO of ASAP Credit Solutions.

Download your free copy

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Bottom line

A debt consolidation loan can be a great way to manage your debt by giving you one monthly repayment, lower rates and better terms.

Compare our picks for the best debt consolidation loans to narrow down your choices quickly. Or browse our debt consolidation guide to learn about other options.

Image source: Shutterstock

Editor's choice: SoFi personal loans

SoFi personal loans logo
  • Low starting APR at 5.99%
  • No fees
  • Unemployment protection available

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