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Best Debt Consolidation Loans

SoFi offers the best debt consolidation loans

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If you’re struggling with multiple monthly payments and high interest rates, a debt consolidation may help ease the burden. Debt consolidation loans are typically personal loans that can be used to repay multiple debts. Borrowers benefit from a single monthly payment, and in many cases, a lower interest rate. 

Not only can a debt consolidation loan help streamline your payments, but it can also help you save on interest charges. For instance, if you had two credit card balances totaling $10,000 with a 19% APR, and you were paying $100 monthly toward each, it would take over eight years to repay your balances.

You’d also pay nearly $10,000 in interest. If you consolidate that debt with a $10,000 personal loan with a 9% APR and a 60-month term, your monthly payments would be just over $200. Your interest charges would be $2,500, saving you nearly $7,500 total in interest.

But different lenders offer varying rates and terms, so it’s important to comparison shop to find the right option. The best debt consolidation loans offer competitive interest rates, flexible terms and loan amounts, and the option to pay your creditors directly. Here are the top lenders offering these loans.

Best Debt Consolidation Loans of February 2023

Why Trust Us
38
Lenders reviewed
40
Loan features considered
1,520
Data points analyzed
112
Primary data sources used
Investopedia collected key data points from several lenders to identify the most important factors to borrowers. We used this data to review each lender for fees, accessibility, repayment terms, and other features to provide unbiased, comprehensive reviews to ensure our readers make the right borrowing decision for their needs.

Best Overall : SoFi

The Balance's Rating
4.9

  • APR Range: 7.99% - 23.43%
  • Time To Receive Loan: 0 days
  • Loan Amount: $5,000 - $100,000
Pros and Cons
Pros
  • Can pay creditors directly

  • No origination fees

  • Pre-qualification available

Cons
  • High minimum loan amount

  • Good to excellent credit required

  • No co-signer option

Why We Chose It

Offering competitive rates and flexible repayment terms of 24 to 84 months, SoFi is our top pick for debt consolidation loans. In addition to competitive rates, this lender also offers an autopay discount of 0.25% and doesn’t charge origination, application, late payment, or prepayment fees. 

SoFi disburses loans as soon as the same day of approval, and it can pay your creditors directly, saving you time and hassle. This lender also offers perks like unemployment protection and the option to change your payment due date. Eligible borrowers may also qualify for multiple loans.

While SoFi does allow joint applications, co-signers aren’t permitted. Its minimum loan amount is also relatively high, so if you need to borrow a small sum, you may need to consider other lenders.

It’s common for personal loan lenders to offer maximum loans of $35,000 or $50,000. A maximum loan amount of $100,000 is rare, and this flexibility could be useful if you have a considerable amount of debt to consolidate. 

Qualifications
  • Loan restrictions: SoFi personal loans can’t be used for business purposes, investing, paying for college, buying real estate, or bridge financing. 
  • Borrower requirements: Borrowers need to be 18 (or the age of majority in their state); a U.S. citizen, permanent resident, or non-permanent resident alien; and employed or receiving income from another source. Credit score requirements aren’t disclosed. 
  • Membership requirements: None
  • States available: SoFi offers personal loans in all 50 states and Washington, D.C.

Best for Long Repayment Terms : U.S. Bank

The Balance's Rating
4.7

  • APR Range: 8.74% - 21.24%
  • Time To Receive Loan: 0 days
  • Loan Amount: $1,000 - $50,000
Pros and Cons
Pros
  • Competitive APRs

  • Multiple rate discounts available

  • Pre-qualification available

Cons
  • Late payment fees up to $29

  • Only available in 26 states

  • No co-signer option

Why We Chose It

U.S. Bank personal loans come with repayment terms as long as seven years, making them a good option for those seeking flexibility. This lender offers loans as small as $1,000 or as large as $50,000, and borrowers benefit from competitive APRs and multiple rate discounts. U.S. Bank offers a generous autopay discount of 0.50%, and an additional discount of 1.00% for borrowers with credit scores over 800. 

Joint applicants (but not co-signers) are permitted with U.S. Bank personal loans, and eligible borrowers have the option to take out multiple loans. This lender can also pay your creditors directly, and you can change your monthly payment due date if you choose. 

While U.S. Bank doesn’t charge origination fees or prepayment penalties, it does charge late payment fees of $29.

Qualifications
  • Loan restrictions: U.S. Bank personal loans can’t be used for education expenses. Loans of $35,000 to $45,000 can only be used for debt consolidation, major purchases, and home improvement. 
  • Borrower requirements: Borrowers need a 660 credit score to qualify for a U.S. Bank personal loan (non-U.S. Bank customers may need a higher score). While it’s likely U.S. Bank has other eligibility criteria, they aren’t disclosed. 
  • Membership requirements: None
  • States available: This lender’s personal loans are only available in 26 states: Arizona, Arkansas, California, Colorado, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Minnesota, Missouri, Montana, Nebraska, Nevada, New Mexico, North Carolina, North Dakota, Ohio, Oregon, South Dakota, Tennessee, Utah, Washington, Wisconsin, and Wyoming.

Best for Military Members : Navy Federal Credit Union

The Balance's Rating
4.0

  • APR Range: 7.49% - 18.00%
  • Time To Receive Loan: 0 days
  • Loan Amount: $250 - $50,000
Pros and Cons
Pros
  • Low rates

  • Unsecured and secured loans available

  • Low minimum loan amount

Cons
  • Restricted to military members, veterans, eligible family members

  • Doesn’t pay creditors directly

  • Credit score requirements not disclosed

Why We Chose It

Navy Federal Credit Union is our top pick for military members seeking debt consolidation loans. This lender offers relatively low rates and a range of loan terms—as long as 60 months for debt consolidation loans—and qualifying borrowers can get loans as small as $250 or as large as $50,000. Co-borrowers are permitted, refinancing loans are available, and active military members can access a rate discount, though details about that discount are unclear. 

Navy Federal debt consolidation loans can be disbursed as soon as the same day you’re approved. This lender also doesn’t charge origination fees, which can help you save money on upfront borrowing costs, and you won’t incur a prepayment penalty if you decide to pay off your loan early. However, you will pay a late fee of $29 if you’re behind on a monthly payment. 

Prospective borrowers don’t have the option to pre-qualify for loans with Navy Federal.

Qualifications
  • Loan restrictions: Navy Federal doesn’t mention loan restrictions, though many lenders don’t allow you to use personal loans for investing, financing higher education, gambling, or buying cryptocurrency. However, NFCU does outline different loan rates and terms for different purposes, like debt consolidation or home improvement. Check with a Navy Federal representative about restrictions if you plan to use your loan for something other than debt consolidation. 
  • Borrower requirements: Navy Federal mentions you’ll need proof of employment and income to apply, though it doesn’t disclose specific borrower requirements, including a minimum credit score. 
  • Membership requirements: Membership and loans are only available to active military members, veterans, and qualifying family members. 
  • States available: Navy Federal loans are available in all 50 U.S. states and Washington, D.C. 

Best for No Fees : Discover

The Balance's Rating
4.2

  • APR Range: 6.99% - 24.99%
  • Time To Receive Loan: 1 day
  • Loan Amount: $2,500 - $35,000
Pros and Cons
Pros
  • No origination fees or prepayment penalties

  • Funds available as soon as one business day after approval

  • Relatively long maximum repayment term

  • Will pay creditors directly

Cons
  • Relatively low maximum loan amount

  • Joint applications not permitted

  • No rate discounts available

Why We Chose It

Discover offers a competitive personal loan product with no origination fees or prepayment penalties, giving you the flexibility to repay your loan early if you’d like. 

Unlike most lenders, if you change your mind about the loan and decide you don’t need it within 30 days, you can give the money back and pay no interest. If your debt consolidation loan went directly to creditors, you’d be responsible for paying the money back if you want to cancel the loan.

Discover offers an impressively low minimum APR compared to competitors, and borrowers benefit from repayment terms as long as seven years, the ability to modify their payment due date, and the option to refinance (in certain cases). 

While Discover offers a range of loan amounts, from $2,500 to $35,000, its maximum loan amount is lower than certain other lenders offer. So if you have significant debt to consolidate, you might need to look elsewhere. It also doesn’t provide any common rate discounts, like a discount for setting up automatic payments, and joint applications aren’t permitted. 

Qualifications
  • Loan restrictions: Loan proceeds can’t be used to pay for college, to repay secured loans, or to pay off Discover credit cards or Discover debts.
  • Borrower requirements: Discover requires that borrowers have a 660 minimum credit score and a minimum annual income of $25,000. Borrowers must be 18 years old and U.S. citizens or permanent residents.
  • Membership requirements: None
  • States available: Personal loans from Discover are available in all 50 U.S. states and Washington, D.C.

Best for Bad Credit : Upgrade

The Balance's Rating
4.3

  • APR Range: 7.96% - 35.97%
  • Time To Receive Loan: 1 day
  • Loan Amount: $1,000 - $50,000
Pros and Cons
Pros
  • Low minimum credit score requirement (560)

  • Joint applications permitted

  • Can pay creditors directly

Cons
  • Has origination fees

  • Late payment fees apply

  • Relatively high maximum APR

Why We Chose It

Upgrade indicates it works with borrowers who have credit scores of 560 and above, making it more accessible than many lenders. Its flexible credit score requirements make it a good option if you have poor or limited credit.

Upgrade offers a relatively high maximum loan amount of $50,000 and repayment terms of up to seven years. Its loans can be disbursed as soon as a day after approval. Borrowers can apply with a joint applicant if they choose, and Upgrade lets you pre-qualify for loans with no impact on your credit score. Rate discounts are also available when you set up automatic payments from a qualifying account, choose an auto-secured loan, or opt to pay your creditors directly. 

While Upgrade debt consolidation loans have their perks, this lender does charge origination fees of up to 8.99% and $10 late payment fees. Its maximum APR of 35.97% is also relatively high.

Many lenders offering debt consolidation loans will only approve borrowers with good or excellent credit scores. Finding options if you have poor, fair, or limited credit can be challenging. See more options with our picks for the best loans for bad credit.

Qualifications
  • Loan restrictions: Borrowers can’t use an Upgrade loan for gambling, investing, or college expenses, including tuition or room and board.
  • Borrower requirements: Upgrade’s minimum recommended credit score is 560; sufficient credit history and a debt-to-income ratio (DTI) ​​greater than or equal to 75% are required.
  • Membership requirements: None
  • States available: Upgrade offers loans in all 50 U.S. states but not Washington, D.C.

Best for Quick Funding : Rocket Loans

The Balance's Rating
4.0

  • APR Range: 8.42% - 29.99%
  • Time To Receive Loan: 0 days
  • Loan Amount: $2,000 - $45,000
Pros and Cons
Pros
  • Same-day funding available

  • Pre-qualification available

  • Can change payment due date

Cons
  • Has origination fees

  • Late payment fees apply

  • Limited repayment terms

Why We Chose It

For borrowers who want to consolidate debt fast, Rocket Loans offers same-day funding in certain cases. It also has a relatively high maximum loan amount of $45,000, making it worth considering if you have a large amount of debt. 

If you complete your loan application and sign the agreement by 1 p.m. on a business day, Rocket Loans will send the funds by ACH to your bank account that same day. But your actual access to the funds will depend on your bank’s processing time.

Rocket doesn’t charge its borrowers prepayment penalties, so you’re free to pay off your loan early. But it does charge origination fees of 1%–7%, and the fee is deducted from your loan proceeds. So if you borrow $10,000 and your origination fee is 5%, you’ll receive $9,500 total. Late payment fees of $15 also apply, and repayment terms are limited to 36 or 60 months. 

Still, this lender’s quick funding, range of loan amounts, and autopay rate discount of 0.3% make it worth considering. 

Qualifications
  • Loan restrictions: Rocket Loans indicates its personal loans can’t be used to finance higher education or illegal activities. 
  • Borrower requirements: To qualify for a Rocket personal loan, you must be 18 or older and a U.S. resident in a state where Rocket is available. Rocket also indicates it considers credit, debt, and income in its loan decisions, but it doesn’t outline specific requirements.
  • Membership requirements: None
  • States available: Rocket is available in 47 states and Washington, D.C. Its loans aren’t available in Nevada, Iowa, or West Virginia.

Best Credit Union : First Tech Federal Credit Union

The Balance's Rating
4.1

  • APR Range: 8.99% - 18.00%
  • Time To Receive Loan: 0 days
  • Loan Amount: $500 - $50,000
Pros and Cons
Pros
  • Competitive APRs

  • No origination fees

  • Fast funding available

Cons
  • Membership required

  • No rate discounts available

Why We Chose It

First Tech is our top pick for best debt consolidation loan from a credit union. Its loans come with fairly low minimum and maximum APRs and no origination or prepayment fees. Terms are as long as 84 months, and you can borrow up to $50,000. 

This lender offers same-day funding in certain cases, and you can apply with a co-borrower if you need some help qualifying. Both unsecured and secured loans are available, and First Tech offers other perks like unemployment and natural disaster protection, and the option to change your payment due date or refinance your loan. You can also defer your first loan payment for 45 days if you’d like. 

The one major drawback is that you need to be a member to get a loan from First Tech, although anyone can become a member by joining certain groups for a small fee (and membership is free to some). Still, if you can qualify for membership, this lender has a lot to offer. 

Qualifications
  • Loan restrictions: First Tech personal loans can’t be used for higher education expenses, business expenses, investing, gambling, or illegal purposes. 
  • Borrower requirements: Borrowers are recommended to have a minimum credit score of 600. Other requirements likely apply as well, though First Tech doesn’t disclose them. 
  • Membership requirements: Membership is required. Membership is available for individuals in Lane County, Oregon; Computer History Museum or the Financial Fitness Association members; qualifying household members; or those who work with certain partner groups or the state of Oregon. 
  • States available: First Tech lends to borrowers in all 50 states and Washington, D.C.

Best for Fair Credit : Best Egg

The Balance's Rating
4.1

  • APR Range: 8.99% - 35.99%
  • Time To Receive Loan: 1 day
  • Loan Amount: $2,000 - $50,000
Pros and Cons
Pros
  • Unemployment and natural disaster protection

  • Unsecured and secured loans available

  • Free credit score access

  • Will pay creditors directly

Cons
  • High maximum APR

  • Has origination fees

  • Limited repayment terms

Why We Chose It

If you’re looking for more than a simple loan, Best Egg is worth considering. Borrowers get a variety of benefits, including:

  • Paying your creditors directly
  • Unemployment protection, which lets you pause payments for three months at a time if you lose your job
  • Hardship support if you become a victim of a natural disaster
  • The ability to change your due date to accommodate your finances
  • Access to one of your FICO credit scores
  • Fast funding, with disbursement as soon as the same day

However, Best Egg does charge origination fees of 0.99%—8.99%, and the origination fee is deducted from your loan funds. You won’t pay late fees or prepayment penalties, though, and Best Egg’s minimum recommended credit score is only 600. So despite the cost of the origination fee, this lender is still worth considering.

With Best Egg, you can change your loan payment due date, and refinancing is an option as well. Borrowers get free credit score access and the option to pay creditors directly. Funds can be disbursed in as little as one day. 

Qualifications
  • Loan restrictions: Best Egg loans can’t be used for higher education or business purposes.
  • Borrower requirements: Recommended minimum credit score of 600; must be 18 or older, be a U.S. citizen or permanent resident, and have a valid email, checking account, and physical address. 
  • Membership requirements: None
  • States available: Best Egg loans are available in 47 states, excluding Iowa, Vermont, West Virginia, and Washington, D.C.

Best for Large Loan Amounts : LightStream

The Balance's Rating
4.0

  • APR Range: 6.99% - 23.99%
  • Time To Receive Loan: 0 days
  • Loan Amount: $5,000 - $100,000
Pros and Cons
Pros
  • Large loan amount available

  • Same-day funding possible

  • No origination fees

Cons
  • Rates and terms vary by loan type

  • No pre-qualification option

  • Doesn’t pay creditors directly

Why We Chose It

LightStream is an online lender offering low rates and no origination fees for those who want to keep their borrowing costs low. It also has an autopay discount of 0.50%, which can reduce your rate even further. 

LightStream offers relatively large loans, up to $100,000. It has flexible terms, though amounts, terms, and rates vary by loan purpose. Borrowers benefit from fast funding (as soon as the same day), no prepayment penalties, and no late fees. Only borrowers with excellent credit can qualify for debt consolidation loans over $50,000. 

While LightStream does offer support if your area is impacted by a natural disaster and you’re struggling with loan payments, it doesn’t offer perks common with other lenders, like the option to pre-qualify for a loan or change your payment due date. Despite this, LightStream’s low rates and lack of fees make it a compelling option for debt consolidation. 

Qualifications
  • Loan restrictions: LightStream offers personal loans with different terms for different purposes, so borrowers can only use loan funds for the purpose they were approved for. 
  • Borrower requirements: You’ll need at least a 660 credit score to be eligible for a LightStream personal loan, and this lender will also consider your income, debt, credit history, and assets in its loan decisions. 
  • Membership requirements: None
  • States available: LightStream personal loans are available in all 50 U.S. states and Washington, D.C.

Best for Additional Features : Avant

The Balance's Rating
3.7

  • APR Range: 9.95% - 35.99%
  • Time To Receive Loan: 1 day
  • Loan Amount: $2,000 - $35,000
Pros and Cons
Pros
  • Low minimum credit score of 550

  • Pre-qualification available

  • No prepayment penalties

  • Flexible repayment terms

Cons
  • Has origination fees

  • Late payment fees apply

  • Doesn’t pay creditors directly

Why We Chose It

Borrowers with fair credit generally have fewer options when it comes to debt consolidation loans. But Avant’s recommended minimum credit score requirement is just 550, making it worth considering if your credit isn’t great. While it does have a relatively high maximum APR, this isn’t unusual for fair credit loans.

Offering accessible customer support seven days a week and convenient perks like the option to change your payment due date, Avant is our top choice for debt consolidation loans for fair credit. Applicants can pre-qualify to check their rates, and then borrowers can track and manage loan payments through the Avant Credit mobile app. Avant does not allow co-signers.

Avant doesn’t pay creditors directly, so you’ll have to send the funds yourself. You’ll also face an origination fee ranging from 1.00%–4.75% and late fees of $25. This lender’s maximum loan amount of $35,000 is also fairly low. But its low minimum credit score requirement, flexible terms, and other perks make Avant worth considering.

Qualifications
  • Loan restrictions: Avant personal loans can’t be used for business purposes, college expenses, or illegal activities. 
  • Borrower requirements: Borrowers are recommended to have at least a 550 credit score, and Avant will look at your income, debt, employment, and assets when determining loan approval. 
  • Membership requirements: None
  • States available: Avant lends to borrowers in 44 states and Washington, D.C. Its loans aren’t available in Iowa, Vermont, West Virginia, New York, Hawaii, and Maine.

Compare the Best Debt Consolidation Loans of February 2023

Overall Rating Best For
APR Range
Average Origination Fee
Late Fee
Time To Receive Loan
Loan Amount
Latest Repayment
Reset All
SoFi
4.9
Best Overall 7.99% - 23.43% 0.00% $0.00 0 days $5,000 - $100,000 84 months Check Rates
Hide, not for me
U.S. Bank
4.7
Best for Long Repayment Terms 8.74% - 21.24% 0.00% $29.00 0 days $1,000 - $50,000 84 months Check Rates
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Navy Federal Credit Union
4.0
Best for Military Members 7.49% - 18.00% 0.00% $29.00 0 days $250 - $50,000 180 months Check Rates
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Discover
4.2
Best for No Fees 6.99% - 24.99% 0.00% $39.00 1 day $2,500 - $35,000 84 months Check Rates
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Upgrade
4.3
Best for Bad Credit 7.96% - 35.97% 1.85%–8.99% $10.00 1 day $1,000 - $50,000 84 months Check Rates
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Rocket Loans
4.0
Best for Quick Funding 8.42% - 29.99% 1.00% - 7.00% $15.00 0 days $2,000 - $45,000 60 months Check Rates
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First Tech Federal Credit Union
4.1
Best Credit Union 8.99% - 18.00% 0.00% $0.00 0 days $500 - $50,000 84 months Check Rates
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Best Egg
4.1
Best for Fair Credit 8.99% - 35.99% 0.99% - 8.99% $0.00 1 day $2,000 - $50,000 60 months Check Rates
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LightStream
4.0
Best for Large Loan Amounts 6.99% - 23.99% 0.00% $0.00 0 days $5,000 - $100,000 120 months Check Rates
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Avant
3.7
Best for Additional Features 9.95% - 35.99% 0.00% - 4.75% $25.00 1 day $2,000 - $35,000 60 months Check Rates
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Final Verdict

If you’re seeking a debt consolidation loan, there’s no shortage of options available. Borrowers with fair or poor credit could qualify for a loan from Upgrade, Avant, or Best Egg. Each one has flexible credit score requirements and may be willing to work with you even if your credit isn’t stellar. But SoFi is our top pick for the best overall debt consolidation loan. 

SoFi offers competitive rates, no fees, and the option to pre-qualify for a loan and pay your creditors directly. Its loans are available in all 50 states and Washington, D.C., and you can get a 0.25% rate discount if you set up automatic payments from a qualifying account.

Guide to Choosing the Best Personal Loan for Debt Consolidation

Are You in Need of a Personal Loan?

You may want to apply for a personal loan for a variety of reasons, like to consolidate multiple debts or refinance at a lower interest rate. A personal loan may be able to help you simplify your bills, lower monthly payments, and let you get out of debt sooner. Personal loans can also help fund home improvement projects or provide needed cash in an emergency.

Compare Personal Loan Lenders

Compare several lenders before making a choice to help ensure you get the best possible rate. Consider the following factors when comparing lenders:

  • Loan amount: Minimum and maximum loan amounts vary by lender; make sure your desired loan amount falls within the given range. You don’t want to borrow more (or less) than what you need. Interest rate: Is the rate fixed or variable? (Most are fixed.) What will your rate be? What are rates based on and how can you lower your rate? The better your credit score, the lower your rate usually is.
  • Pre-qualification: Can you pre-qualify to check your rates without hurting your credit score? Most lenders offer this, and it's a great way to quickly shop around.
  • Fees: Look for prepayment fees, origination fees, and late fees. It'll be worth your time to find a lender with few or no fees.
  • Repayment periods: You need to know how long you have to pay back the loan and when your payments are due; you can often pick from a few options. Some lenders offer flexible terms and others are more stringent. Compare the different options between lenders, and note that in some cases shorter terms come with higher monthly payments, but you'll pay less money in the long run.
  • Funding times: If you need your money in a hurry, choose a lender with same-day or next-day loan funding. Funding times vary, and your access to the money will also depend on your bank, but money is usually disbursed within a few days of an approved loan application.

Debt reduction software can help you organize and execute a debt repayment plan that includes debt consolidation as one of its strategies.

Apply for a Personal Loan  

You’ll typically apply for a personal loan online, over the phone with an agent, or at a bank or credit union branch with a representative. You will generally need a form of photo identification, your Social Security number, and proof of income. Lender requirements vary, but bank statements, pay stubs, and tax returns are generally accepted. 

Keep in mind that having your finances in order improves your chances of approval and a good credit score improves your chances of getting a low interest rate.

Pros and Cons of Debt Consolidation

Pros
  • All debt is in one, manageable place

  • Potential to reduce the overall interest rate and save money

  • May help you get out of debt faster

Cons
  • Newly freed-up space on credit cards could tempt you to spend again

  • Origination fees could add to the cost of the new loan

What Is Debt Consolidation and How Does It Work?

Debt consolidation is a method of paying down your debt by borrowing another loan, which you then use to pay off multiple smaller loans or credit cards. You may be able to consolidate high-interest credit card debt or other types of debt by borrowing a large amount.

One of the main advantages of debt consolidation is that it puts all of your debt “under one roof.” Rather than trying to keep track of several monthly payments and interest rates, you only have to make one, fixed monthly payment.

Additionally, depending on the rates you have across your accounts, you may end up with a lower overall interest rate, which could help you save money on the amount you pay in interest over the life of the loan.

When Does Debt Consolidation Make Sense?

If you’re hoping to simplify your bills and get out of debt faster, debt consolidation might help. Debt consolidation is most likely to make sense when you have good credit, but your debt amounts might be too high to complete a credit card balance transfer.

A debt consolidation loan may also be a good move if you don’t want to use the equity in your home to manage your unsecured debt.

If a debt consolidation loan doesn’t fit your budget or financial situation, there are alternatives to consider:

  • HELOC: A home equity line of credit, or HELOC, is based on the equity in your home. You might be able to pay off a large amount of debt at a reasonable interest rate. However, you’re securing that line of credit with your home, so if you run into any financial problems in the future, you could potentially lose your house.
  • Credit card balance transfer: It’s possible to use a balance transfer credit card to consolidate and pay off your debts. Many balance transfer cards offer 0% APR for a certain introductory period of time, too, so you can save on paying any interest for, say, 21 months. You may be able to pay off your debt faster when the entire payment goes toward one low-interest balance.
  • Debt snowball: Rather than putting everything together at once, the debt snowball method has you tackle your smallest balance first while maintaining your minimum payments on all other debts. As each debt is paid off in full, you add your old payment amount to the next debt on your list, accelerating the rate at which you pay down your next debt. Ideally, over time, you’ll eliminate each debt one by one until you’re debt free.
  • Debt avalanche: Similar to the debt snowball method, this strategy starts with your highest-interest debt. The debt avalanche method doesn’t offer the quick psychological win of the debt snowball, but it will save you the most money on interest and may be faster overall.

How Should I Choose a Personal Loan for Debt Consolidation?

To find the right fit for you, start by figuring out what you need to accomplish. Decide what’s important, whether it’s fast funding, low or no fees, or the ability to consolidate a large amount of debt. Some lenders also offer longer repayment periods, which could lower the amount you pay per month.

Additionally, if you have poor to fair credit, you might need to look for a lender that specializes in offering personal loans to those with credit problems. Pay attention to origination fees and other costs, and compare your loan options. Depending on what you qualify for, you might have no choice but to pay an origination fee.

It’s important to have a broad debt repayment plan when you use debt consolidation, though. Once you pay off your smaller loans and credit cards, you might be tempted to get into even more debt. This can be an issue with credit cards since paying them off through debt consolidation can “free up” more room to spend on those lines of credit. If you aren’t careful, you could accumulate a large amount of debt again.

While checking your loan options with a lender may not affect your credit score, officially applying for and securing a loan will. Consider doing all of your personal loan shopping within 30 days to reduce the number of inquiries to your credit. Opening the loan may ding your score slightly, but if you stay on top of your payments you should typically have nothing to worry about.

Methodology

Investopedia is dedicated to providing consumers with unbiased, comprehensive reviews of personal loan lenders. To rate providers, we collected hundreds of data points across more than 40 lenders, including interest rates, fees, loan amounts, and repayment terms, to ensure that our reviews help users make informed decisions for their borrowing needs.

Lightstream Disclosure: Your loan terms, including APR, may differ based on loan purpose, amount, term length, and your credit profile. Excellent credit is required to qualify for lowest rates. Rate is quoted with AutoPay discount. AutoPay discount is only available prior to loan funding. Rates without AutoPay are 0.50% points higher. Subject to credit approval. Conditions and limitations apply. Advertised rates and terms are subject to change without notice.

Payment example: Monthly payments for a $10,000 loan at 4.99% APR with a term of 3 years would result in 36 monthly payments of $300.00.

Personal loans for Debt consolidation title with written calculations

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