Consolidating multiple debts into a single loan may be a smart move in today's high-interest environment. Over the past decade, the average interest rate on credit cards has nearly doubled, from 12.90% in 2013 to a record-breaking 21.51% in 2024.
With a debt consolidation loan, you may be eligible for a lower fixed rate. This can allow you to streamline your debt repayment and save some money in the process. While there are many loan options to choose from when it comes to consolidating debt, we'll focus on personal loans. These tend to come with fixed rates, flexible loan amounts and repayment terms up to seven years.
Best debt consolidation loans
The following are all Credible partners lenders.
SoFi: Best overall
Personal loans for excellent credit
SoFi
4.9
Buy Side rating
on Credible’s website
Pros and cons
Pros
No fees required
Large loan amounts available
Autopay and direct pay discounts
Same day funding
Long loan terms available
Cons
Good credit required
5,000 minimum loan amount
More details
Overview
SoFi stands out for offering no-fee personal loans with competitive rates, high loan amounts, long loan terms, discounts for autopay and direct pay, and funding as soon as the same day. Plus, SoFi prioritizes convenience for existing and potential customers with features like live chat and an easy prequalification process that doesn't require your Social Security number.
The main catch is that you need to qualify for a loan with SoFi, which can be hard to do if you don't have good credit. You also won't be able to apply with a cosigner, since SoFi doesn't accept cosigners; nor does it offer secured personal loans.
Loan Amount
$5,000 to $100,000
Repayment terms
2 - 7 years
Fees
Option to pay an origination fee in exchange for a lower rate
Discounts
Autopay, direct pay
Eligibility
Available in all states
Min. income
Does not disclose
Customer service
Phone, email, live chat
Soft credit check
Yes
Time to get funds
Typically within a few days, given approval and bank account verification, but sometimes within the same day
Loan uses
Solely for personal, family, or household uses
Upgrade: Best for fair credit
Fair credit
Upgrade
4.5
Buy Side rating
on Credible’s website
Est. APR
Loan Amount
$1000 to $50000
Min. Credit Score
600
Pros and cons
Pros
Fair credit borrowers eligible
Autopay and direct pay discounts
Can fund in as little as 1 business day
Mobile app
Secured loans available
Cons
High maximum origination fee
Cosigners not accepted on home improvement loans
Low J.D. Power ranking
More details
Overview
Upgrade has a suite of features that make it a very attractive lender: competitive interest rates, discounts for direct pay and autopay, as soon as same-day funding, up to seven-year repayment terms, and nationwide availability. Plus, loans are available to fair-credit borrowers, and you don't need to input your Social Security number to prequalify on the website. Upgrade even offers secured personal loans, which is not common among lenders.
However, Upgrade does charge an origination fee of 1.85% to 9.99%. You must have a FICO score of at least 600 and a minimum income of $25,000 annually to qualify.
Loan amount
$1,000 to $50,000 ($3,005 minimum in GA; $6,600 minimum in MA)
Repayment terms
2 to 7 years
Fees
Origination fee
Discounts
Autopay and direct pay
Eligibility
Available in all states
Min. income
Does not disclose
Customer service
Soft credit check
Yes
Time to get funds
1 business day
Loan uses
Credit card refinancing, debt consolidation, home improvement, major purchase, other
Discover Personal Loans: Best for no origination fees (and low rates)
No origination fees (and low rates)
Discover Personal Loans
4.4
Buy Side rating
on Credible’s website
Est. APR
Loan Amount
$2500 to $40000
Min. Credit Score
660
Pros and cons
Pros
Low minimum APR
May fund the next business day
Long loan terms available
Direct pay to creditors
No origination fee
Cons
No discounts offered
Secured loans not available
More details
Overview
Discover Personal Loans offers low APRs, repayment terms up to seven years, no origination fees, nationwide availability, and doesn't require your Social Security number to prequalify on its site. You'll need to have an annual income of at least $40,000, and a FICO score 660 or higher, to be eligible. If your credit score is fair or poor, you'll need to go elsewhere, as Discover doesn't allow cosigners.
Funds are available as soon as the next business day after loan approval.
Loan amount
$2,500 - $40,000
Repayment terms
3 - 7 years
Fees
Late fee
Discounts
None
Eligibility
Available in all 50 states
Min. income
$40,000
Customer service
Phone
Soft credit check
Yes
Time to get funds
Funds can be sent as soon as the next business day after acceptance
Loan uses
Auto repair, credit card refinancing, debt consolidation, home remodel or repair, major purchase, medical expenses, taxes, vacation, and wedding
Universal: Best debt consolidation loans for bad credit
Debt consolidation loans for bad credit
Universal Credit
4.3
Buy Side rating
on Credible’s website
Est. APR
Loan Amount
$1000 to $50000
Min. Credit Score
560
Pros and cons
Pros
Borrowers with bad credit considered
No minimum income requirement
Autopay and direct pay discounts available
Can fund in one business day
Cons
High APRs
Potentially high origination fees
Not available in Iowa
More details
Overview
Universal Credit is one of a handful of lenders that offers personal loans for bad credit. If your FICO credit score is at least 560, you may be eligible for a Universal Credit personal loan. It offers loan amounts up to $50,000, repayment terms up to seven years, and discounts for direct pay and autopay. Funds are available as soon as the next business day after loan approval.
Note that rates and fees can be relatively high — you may pay an origination fee from 5.25% to 9.99%, and APRs start at 11.69%. If you get a loan with a high interest rate, consider refinancing your personal loan at a lower rate once you've improved your credit score.
Loan amount
$1,000 - $50,000
Repayment terms
3, 5, or 7 years
Fees
Origination fee
Discounts
Autopay and direct pay
Eligibility
A U.S. citizen or permanent resident; not available in DC, IA, SC, WV
Min. income
None
Customer service
Phone, email
Soft credit check
Yes
Time to get funds
As soon as 1 business day after acceptance
Loan uses
Debt consolidation, pay off credit cards, home improvements, unexpected expenses, home and auto repairs, weddings, and other major purchases
Best Egg: Most ikely to qualify if pre-approved
High Close Rates if Pre-approved
Best Egg
Buy Side rating
on Credible’s website
Est. APR
Loan Amount
$2000 to $50000
Min. Credit Score
600
Pros and cons
Pros
Secured loans available
Low minimum income requirement
Scored second in J.D. Power's Consumer Lending Satisfaction Study
Funds in 1-3 business days
High close rate on loans through Credible platform
Cons
Origination fees
No discounts
Not available in DC, IA, VT, or WV
More details
Overview
Best Egg is a solid lender for a wide range of borrowers and, notably, scored second for personal loan satisfaction in J.D. Power's Consumer Lending Study. It offers competitive rates, reasonable loan terms and amounts, and personal loans for fair credit. You'll need a FICO score of at least 600 to qualify, but the lower your score, the higher your APR may be. The APR includes the interest rate and origination fees, which range from 0.99% to 9.99% with Best Egg.
Note that if you successfully prequalify with Best Egg, you may be more likely to be approved for the loan relative to other lenders you prequalify with. Based on Credible data, borrowers who chose to apply for a loan with Best Egg were more than twice as likely to be approved (relative to most other Credible partners).
Loan amount
$2,000 to $50,000
Fees
Origination fee, late fee, unsuccessful payment fee, check processing fee
Discounts
None
Eligibility
Available in all states except DC, IA, VT, and WV
Min. income
None
Customer service
Phone, email
Soft credit check
Yes
Time to get funds
As soon as 1 to 3 business days after successful verification
Loan uses
Credit card refinancing, debt consolidation, home improvement, and other purposes
LendingClub: Best online experience
Online experience
LendingClub
4
Buy Side rating
on Credible’s website
Est. APR
Loan Amount
$1000 to $40000
Min. Credit Score
660
Pros and cons
Pros
Mobile app
Low minimum income requirement
High close rate on loans made through Credible
Available in all states
Cons
Origination fee
No discounts
Funding not as fast as some competitors
More details
Overview
LendingClub is a solid lender for good credit borrowers and some fair credit borrowers that apply directly on its website. It's easy to prequalify with LendingClub, especially if you're uncomfortable providing your Social Security number, as the company doesn't require it at the prequalification stage. (You will need to provide it if you move forward with a full application.)
While prequalification is not a guarantee that you'll be approved for a loan, LendingClub does a better job than most other Credible partner lenders at approving applicants that have successfully prequalified. In other words, you're less likely to have your application declined once you apply (if you've already prequalified). LendingClub may charge an origination fee between 3% and 8%.
Loan amount
$1,000 to $40,000
Fees
Origination fee
Discounts
None
Eligibility
Available in all 50 states
Min. income
None
Customer service
Phone, email
Soft credit check
Yes
Time to get funds
Within 3 days
Loan uses
Debt consolidation, paying off credit cards
Upstart: Best fast personal loans for all credit types
Fast personal loans for all credit types
Upstart
3.9
Buy Side rating
on Credible’s website
Est. APR
Loan Amount
$1000 to $50000
Min. Credit Score
620
Pros and cons
Pros
May fund in 1 business day
No minimum credit score requirement on lender site
Low minimum APR
Trustpilot score of 4.9/5 stars
Cons
May charge a high origination fee
No discounts offered
More details
Overview
Upstart has one of the lowest available APRs of Credible partner lenders and of all non-partners we reviewed, making it a good choice for well-qualified applicants. However, it's also is one of few lenders that doesn't have a minimum credit score requirement (if you apply on the lender's website), which makes it an option if you have bad credit or no credit history. Upstart may charge an origination fee as high as 12%, but good-credit borrowers may not be charged one at all.
Trustpilot gives Upstart 4.9 stars, which is the highest of all lenders we reviewed.
Loan amount
$1,000 to $50,000
Fees
Origination fee
Discounts
None
Eligibility
Available nationwide
Min. income
$12,000
Customer service
Phone, email
Soft credit check
Yes
Time to get funds
As soon as 1 to 3 business days
Loan uses
Pay off credit cards, consolidate debt, relocate, make a large purchase, and other purposes
Zable: Best for short-term loans and same day funding
Short-term loans and same day funding
Zable
3.2
Buy Side rating
on Credible’s website
Est. APR
Loan Amount
$1000 to $35000
Min. Credit Score
600
Pros and cons
Pros
Funding as soon as the same day
Low minimum income required
100% digital process
Cons
No discounts
Maximum loan amount is lower than most other lenders
Origination fee
Not available in CO, CT, IN, KS, LA, ME, ND, NE, NH, NJ, NV, OK, OR, PA, RI, SC, SD, VT, WV, WI, or WY
More details
Overview
Zable offers relatively small loan amounts — ranging from $1,000 to $35,000 — that can be deposited in your account as soon as the same day you are approved, if it is by the lender's deadline. It’s an option for fair-credit borrowers, with a minimum credit score of 600, as well as those with lower incomes.
Its origination fees range from 5% to 9%, however, and it does not offer discounts, secured loans, nor the option to add a cosigner to your application. Zable also currently does not offer loans in 21 states.
Loan amount
$1,000 to $35,000
Repayment terms
1 to 5 years
Fees
Origination fees (5% to 9%)
Discounts
None
Eligibility
Not available in CO, CT, IN, KS, LA, ME, ND, NE, NH, NJ, NV, OK, OR, PA, RI, SC, SD, VT, WV, WI, or WY
Min. income
$1,000 per month
Customer service
Email, phone
Soft credit check
Yes
Time to get funds
As soon as the same day
Loan uses
Debt consolidation, credit card refinancing, home improvement, major purchase, car financing
Methodology
Buy Side from WSJ evaluated the best loans for debt consolidation based on customer experience, minimum fixed rates, maximum loan amounts, funding times, loan terms, fees, discounts, loan uses, and other factors. Our team of experts gathered information from each lender's website, customer service department, directly from our partners, and via email support. Each data point was verified by a separate party to make sure it was accurate and up to date.
What is a debt consolidation loan?
A debt consolidation loan is a type of loan you can use to pay off one or more outstanding debts. The benefit is twofold: consolidation of multiple debts into one and/or trading a high interest rate for a lower one.
For example, if you have a $10,000 medical bill and $10,000 in credit card debt, you could pay both off with a $20,000 debt consolidation loan with a potentially lower interest rate, thereby saving money and simplifying your finances with one payment instead of two.
Types of debt consolidation loans
There are multiple types of loans you can use for debt consolidation. Personal loans are perhaps the most common type of debt consolidation loan, but home equity loans and credit card balance transfers are two others.
- Personal loans: Unsecured personal loans typically have fixed interest rates and much lower APRs on average than credit cards-11.92% compared to 21.51%. Plus, your application and approval could be processed the same day you apply (with some lenders), making them a convenient way to refinance credit card debt. Loan terms typically range from two to seven years and loan amounts may be available up to $50,000 or more, depending on the lender and your credit profile.
- Home equity loans: If you have a home with sufficient equity, you may be able to borrow against it to pay off your existing debts. Rates tend to be lower relative to both credit cards and personal loans, but your home serves as collateral for the loan. This means that if you default, you could face foreclosure. Loan terms can extend up to 30 years, which means you could have a very low monthly payment, but pay more in interest relative to a loan with a higher rate. The closing process can take up to a month or more.
- 0% APR balance transfer credit card: A 0% introductory rate on a balance transfer can be a low-cost way to consolidate debt if you can pay it off before the promotion expires. Many 0% APR offers last a year, but some may be available for 21 months or longer. Note that most cards charge 3% to 5% to transfer a balance which will be added onto your balance. If you can't repay the transferred amount before the 0% APR expires, you'll be charged the card's standard rate, which could be around 30% APR.
How do debt consolidation loans work?
Once you're approved for and agree to the terms of a debt consolidation loan, the lender will either send funds to you, to then send to your creditors or will pay your creditors directly. Some lenders like SoFi and Upgrade even offer rate discounts for direct pay. You then repay the loaned amount, plus interest and possibly fees, through fixed payments over a set term.
For example, let's say you get a $25,000 debt consolidation loan with a three-year term, a 1% origination fee, and a 15% interest rate. You would receive $24,750 after the lender deducts the origination fee of $250 (1%) upfront. Then, you'd repay the full $25,000, plus interest, through 36 monthly payments of $867. By the end of the loan term, you'll have paid $6,199 in interest plus the $250 origination fee for a total of $6,449.
Pros and cons of debt consolidation
Pros
- Simplify debt management
- Potentially save money
- Gain predictability
- Improve credit
- Reduce monthly payments
Cons
- Could cost more
- Potential for more debt
- Eligibility issues
Pros
- Simplify debt management: Consolidate multiple debts so you only have to worry about one loan and one payment.
- Potentially save money: You may reduce the costs in interest and fees.
- Gain predictability: Unlike revolving credit lines, debt consolidation loans give you a set payoff date and a fixed monthly payment amount that doesn't fluctuate.
- Improve credit: If you're paying off or refinancing credit card debt, you could reduce your credit utilization ratio, thereby improving your credit. Lowering monthly payments could also enable you to more easily make them on time.
- Reduce monthly payments: Even if you can't get a lower interest rate, consolidating debt can sometimes make sense to lower payments via a longer repayment term. Note that you could pay more in interest over the life of the loan.
Cons
- Could cost more: The loan could increase your costs if you can't get a lower APR, monthly and/or overall, and may have upfront costs, like an origination fee.
- Potential for more debt: You cold end up with more debt if you pay down revolving credit lines, keep them open, and reuse them without paying off your balance in full.
- Eligibility issues: You may not qualify for a loan large enough to cover your debts or a rate low enough to beat your existing rates.
What are debt consolidation loan rates?
Debt consolidation rates range widely depending on your credit, income, and debt-to-income ratio (DTI), from as low as around 7% for superlative borrowers with FICO scores over 800 to around 36% for borrowers with bad credit. Prequalification is the best way to gauge what rate you might get before applying. But here's a look at average APRs across the credit spectrum:
Also, every debt consolidation loan comes with an interest rate and an annual percentage rate (APR). Here's a look at the difference between the two:
- Interest rates: The interest rate tells you the percentage of the loan amount you'll pay over the life of the loan to borrow the principal.
- APRs: The APR includes the interest rate plus any upfront fees-like origination fees-the lender may charge.
Knowing the APR makes it easier to compare between loans, as it better communicates their overall costs than interest alone.
When will interest rates go down?
Hopefully soon, if July's Fed meeting goes as many economists and market-watchers expect. In the face of stubborn inflation, the Fed has been hesitant to cut its benchmark rate, the effective Federal funds rate, keeping it at a target of 5.33% since July 2023. But the PCE Index, the Fed's preferred inflation gauge, was cooler than anticipated last month, rising 2.5% relative to last year—still north of the Fed's 2% target, but below the 2.6% it rose in May.
Though a rate cut as soon as tomorrow's meeting may be too much to hope for, the Fed may signal a 25 basis point rate cut as soon as September given the encouraging data. The impact this is likely to have on loan costs in the near term, however, is minor.
Debt consolidation loan calculator
A quick way to find out if a debt consolidation loan can save you money is to run the numbers with a debt consolidation loan calculator.
Enter information about your current debts, including the interest rate, remaining balance and monthly payment amount. The calculator then tells you the average rate and monthly payment amount you need to beat.
You can use the calculator below to find out if a debt consolidation loan works for you.
How to compare debt consolidation loans
- Loan amount: The amount a lender is willing to let you borrow can vary from around $500 to $50,000 or more depending on the reason for your loan.
- APR: The total annualized cost of the loan including any upfront fees. APRs for personal loans from traditional lenders can range from 6.99% to 35.99%.
- Fees: Some lenders may charge additional fees, like origination fees, which can be as high as 12% and impact how much money you receive upfront. Others may charge prepayment penalty fees or late payment fees.
- Interest rates: The annual cost of borrowing the loan amount. You can determine the interest that you'll pay over the life of the loan by using a loan calculator to estimate your costs.
- Terms: Personal loan lenders offer different term lengths that can range from two to seven years or more. If you are looking to get a loan for home improvement, some lenders offer terms as long as 12 years.
- Monthly payment amount: The amount you'll pay per month for the loan will depend on your APR and the terms you set. If you choose a shorter term, your monthly payments may be higher. Keep your budget in mind when deciding how much you can comfortably avoid paying each month.
- Total cost: The total cost of the loan will be all of the fees as well as the interest you'll pay over the life of the loan. If you choose a longer term, you may be paying more in interest than you would for a shorter term. You can also use a loan calculator to see how much you'll pay over the life of your loan.
- Eligible debts: Some lenders will only allow you to pay down certain debts, so make sure the debts you are looking to consolidate are covered by the lender.
- Customer reviews: You can see how past customers rate their experience with a lender through sites like the Better Business Bureau (BBB) or TrustPilot.
How to get a debt consolidation loan
You can find debt consolidation loans from a variety of banks, credit unions, and online lenders. In most cases, they're unsecured personal loans, so approval depends on your credit scores, credit history, income, employment, and assets. However, if you have trouble qualifying, some lenders may allow you to apply with a cosigner or pledge collateral.
You can typically apply for a debt consolidation loan online within a few minutes by following these steps:
1. Prequalification
The first step is to see if you prequalify, also known as getting a quote or checking your rate. During this step, a lender will ask you for basic information about your identity, location, income, employment, and assets. You won't usually need to provide any documentation during this step, but will need to allow a soft credit check, which won't impact your score. This typically involves sharing some personal information such as your name, date of birth, and Social Security number.
2. Shop around
If you prequalify, the lender will provide you with an estimate of the loan you may qualify for. For example, you might hypothetically be able to borrow up to $20,000 for a term of three to seven years with an APR of 16% to 25%. To improve the odds of finding a competitive deal, shop around and collect a few quotes. You can do so manually or speed things up with the help of a site like Credible.
3. Full application
Once you find a loan that looks like a good fit, you can continue forward in the application process. Lenders will generally ask for more information and documents to back up your claims. For example, you may need to provide pay stubs, bank statements, or tax returns to prove your income. Lenders will also run a hard credit inquiry which will likely cause your credit scores to drop by a few points.
4. Approval
If approved, you'll receive a loan contract to review. Read it carefully. If all looks good, sign the contract and the lender will send the loan funds to your bank account. Lenders can vary in their funding times, but some send funds as soon as the same day while others may take up to a week.
Alternatives to a debt consolidation loan
Debt management plan (DMP)
Another option is a debt management plan (DMP) through a nonprofit credit counseling agency. If you go this route, a low- or no-cost counselor will take inventory of your debts and try to negotiate them on your behalf. For example, they may try to get creditors to reduce the interest rate, lower the payment amount, or reduce the amount owed. Once all your creditors have been contacted, the counselor creates a DMP. From there, you make a single payment to the counselor each month and they'll pay each of your eligible creditors.
Debt payoff strategies
You can also consider implementing a popular debt payoff strategy like the "snowball" or "avalanche" method. Both require you to take inventory of your debts and note your outstanding balances, monthly payment amounts and interest rates. From there, you continue to make all your minimum payments, but focus on paying more toward one debt at a time. The snowball method prioritizes the smallest debt first, while the avalanche method prioritizes the debt with the highest interest rate.
FAQ
Where can I get a debt consolidation loan?
You can find debt consolidation loans from many financial institutions, such as banks, credit unions and online lenders. They may be presented as debt consolidation loans or personal loans that can be used for debt consolidation. With a wide range of options, you can improve your odds of getting a good deal by shopping around and comparing quotes.
What can you use a debt consolidation loan for?
You can use consolidation loans to pay off a variety of outstanding debts, such as credit card balances, medical bills, personal loans, payday loans and court judgments. However, check with lenders because some restrict the debts you're allowed to consolidate. For example, Discover doesn't allow borrowers to consolidate secured loans or Discover credit card balances.
What is the minimum credit score for a debt consolidation loan?
The minimum credit score required for a debt consolidation loan varies by lender. Some require fair or better credit scores, while others don't have any specific minimums. You'll have to check with the lenders you're considering to see if you qualify.
How does debt consolidation affect your credit?
Debt consolidation loans can both help and hurt your credit. The initial hard credit check can cause your score to drop by a few points. Additionally, the large new loan can have negative effects. However, making consistent on-time payments will help your credit in the long run, and paying off revolving credit lines can provide a quick boost.
Can you get a debt consolidation loan with bad credit?
You may be able to get a debt consolidation loan with bad credit from a lenient lender. For example, Upstart offers debt consolidation loans and allows borrowers with credit scores as low as 300 through its website.
Meet the contributor
Lindsay Frankel
Lindsay Frankel has been covering personal finance for six years, with particular expertise in loans, insurance, and real estate. She’s written hundreds of articles across a range of well-known outlets, including LendingTree, Investopedia, SFGate, and more. Outside of writing, she enjoys playing music and exploring nature with her rescue dog, Lucy.