Best Debt Consolidation Loans in November 2025

When to consolidate debt

Consider a debt consolidation loan if you:

• Need to lower your monthly payment
• Are able to lower your interest rate
• Would rather make one monthly payment than several
• Want to improve your credit by consolidating credit card debt

The most obvious reason to consolidate debt is to get a lower interest rate and save money. However, if you’re struggling to afford your current payments, you could potentially lower your overall monthly payment with a debt consolidation loan — by getting a lower interest rate, extending your repayment term, or both. In turn, this can help you avoid credit damage and increased costs from late payments and associated fees.

When not to consolidate debt

It’s generally not a good idea to consolidate debt if you: 

• Can’t afford the payment on a debt consolidation loan
• Can afford your current payments and can’t get a lower interest rate
• Aren’t struggling to track multiple payments
• Are considering bankruptcy

Simply put, if a debt consolidation loan doesn’t offer any advantages, such as a lower interest rate or lower monthly payment, it’s probably not a good idea. If you’re considering bankruptcy, it’s best not to take out new credit before doing so — the loan could be considered a fraudulent debt and not dischargeable. 

Best debt consolidation loan lenders of 2025

What kinds of loans can you consolidate?

You can consolidate most types of debt, especially if you use a personal loan that sends a cash lump sum to your bank account. Some lenders offer the option of sending loan funds directly to your creditors, sometimes with a small interest rate discount. Here are a few common examples of debt that can be consolidated with a personal loan:

• Credit cards
• Medical bills
• Payday loans
• Other personal loans
• Lines of credit

Some debts, though, are better consolidated with other loan types — student loans, for example, are typically best consolidated with a new student loan.

How does debt consolidation work?

Debt consolidation involves combining two or more existing debts into one loan, ideally with a lower interest rate or lower monthly payment than you’re currently paying. Consolidation leaves you with just one payment to make each month. 

A debt consolidation loan is often a type of installment loan, like a personal loan or a home equity loan. You could also use a low-APR or 0% APR credit card balance transfer offer to consolidate and refinance credit card debt, but you would have to pay off the entire balance during the low- or no-interest period to avoid interest charges. 

If you use a personal loan to pay off debt or refinance credit cards, you'd receive a lump sum. You would use that to pay off your debts and then repay the debt consolidation loan in monthly installments. Conveniently, some personal loan lenders offer to pay your creditors directly, and you might get a rate discount if you do so.

Remember, paying off your credit card balances through debt consolidation doesn’t erase debt. You still have to repay the lender that gave you the debt consolidation loan.

The key elements of a debt consolidation loan include:

• Repayment terms: Most lenders offer terms of two to seven years. Prepayment penalties for personal loans are rare, so you can typically repay the loan early if you manage your finances well.
• Loan amounts: Debt consolidation lenders usually require you to borrow at least $1,000, though some let you borrow up to $50,000 or more.
• Borrowing costs: The APR (annual percentage rate) for personal loans, including debt consolidation loans, typically ranges from 6.49% to 35.99%. APR accounts for the interest rate and any upfront lender fees. The lowest APRs are reserved for borrowers with excellent credit. Several factors influence your APR, including your credit score, credit history, income, and employment status. Personal loans typically have fixed interest, so your rate and payment stay the same for the life of the loan. 
• Fees: Lenders may charge fees for issuing a loan. An origination fee is a common one, and may be between 0% and 15% of the amount you borrow, depending on the lender. The origination fee may be deducted from your loan amount upfront, but the lender will clearly disclose both the amount and how you'll pay it, as required by the Truth in Lending Act. Any upfront fees are reflected in the loan's APR, which represents its total annual cost. 
• Funding times: Many lenders can fund a personal loan within 1 to 3 business days, but some offer same-day funding if you’re approved before the lender's daily cutoff time.

Tip: Because they include upfront fees, APRs can be more informative than interest rates alone for estimating the total cost of a loan.

Pros and cons of debt consolidation

Debt consolidation loans have clear benefits whether you have multiple accounts you want to consolidate or just need a lower monthly payment. (You can also use a debt consolidation loan to pay off one loan only). But they have some drawbacks you should also consider.

Pros

• One bill, one payment: You’ll have just one bill to keep track of and one payment to make each month.
• Lower APRs than credit cards: Average interest rates on personal loans are typically lower than the average rate on credit cards, so you might save money on interest and reduce the amount of your monthly payments. The average interest rate on a 2-year personal loan was 11.14%, according to Federal Reserve data, compared with an average credit card interest rate of 21.39%.
• Lower monthly payment: Even if you can't qualify for a lower rate, you could still lower your monthly payment by opting for a 5- or 7-year loan term. Note that this can result in higher total interest costs over the course of the loan. But it can be a good move to save your credit if you can't currently afford to make payments.
• Fixed rates and payments: Debt consolidation loans usually have fixed rates and repayment terms, which could help you set a timeline for paying off debt.
• Could improve your credit: Making timely payments every month until your loan is fully repaid can improve your credit. Your payment history makes up 35% of your FICO score.
• Discounts: Many lenders can use your loan to pay your creditors directly, and some offer direct pay discounts.
• Fast funding: Funding can be quick with a debt consolidation personal loan or credit card balance transfer.

Cons

• Hard credit check: Lenders typically run a hard credit inquiry when you apply, and the loan application may lower your credit score by as much as five points for up to a year.
• Upfront fees: Some loans have origination fees, which add to the cost of your loan.
• Could be hard to qualify: It can be hard to qualify for debt consolidation if you have bad credit.
• May not solve spending issues: You may be tempted to re-use credit cards you’ve paid off or take out other forms of debt.

How to compare debt consolidation loans

When shopping for debt consolidation loans, follow these steps:

1. Consider how much money you need to consolidate your debt.
2. Prequalify with multiple lenders to get a sense of the APR you’ll pay. (See if you prequalify by selecting “Find My Rate” or “Check Rates” on this page.)
3. Consider the impact of origination fees. Origination fees are paid upfront (out of the loan proceeds) and reduce the amount you or your creditors receive. You may need to borrow more than the amount you owe to compensate. Seek out lenders without origination fees, if possible.
4. Use a personal loan calculator to estimate monthly payments for different repayment periods based on APRs you've prequalified for.
5. Find lenders that offer the loan amount you need and the repayment term you want.
6. Prioritize lenders that pay your creditors directly (some will give you an interest rate discount for choosing the direct-pay option).

Learn More: How to Choose the Best Debt Consolidation Loan Lender

Debt consolidation loan alternatives

While a debt consolidation loan may help you simplify debt or pay it off faster, it’s not the only or always the best option.

Debt management plan

A debt management plan, or DMP, through a certified credit counseling agency can help you create a debt paydown plan in cooperation with your creditors. The credit counselor may also be able to negotiate to forgive fees or lower interest rates on your behalf.

Instead of paying your creditors directly, you pay the credit counseling agency instead, which then sends payments to your creditors. You’re typically required to close the accounts you’re paying off as well, and are not allowed to open new credit accounts.

Fees consist of an enrollment fee and monthly maintenance fees — both modest in comparison to most other debt consolidation alternatives.

Debt settlement (not recommended)

Debt settlement companies offer to negotiate with your creditors to reduce how much you owe. However, you’re often required to stop making even minimum payments as a negotiation tactic, and the process can take years. In turn, this can devastate your credit.

Even if you already have bad credit, settled debts stay on your credit report for up to seven years. Plus, there’s no guarantee that creditors will approve a settlement, and they could sue or seek to garnish your wages for repayment. Payment is usually made to the debt settlement company based on a percentage of the settled amount and only if the company succeeds in settling one or more of your debts. 

Debt avalanche or debt snowball methods

If you can’t get a lower rate, or don’t want to sacrifice credit score points to a hard credit pull (required for most new loan applications), it can make sense to keep your current debt and get strategic about paying it down.

The debt avalanche is the quickest way to go — make larger payments on debt with the highest interest rate, while paying the minimum on lower-rate balances. By paying down your highest-interest rate debt first, you can minimize interest costs, accelerating your debt payoff and saving money. But if you’re motivated by quick wins, choose the debt with the smallest balance to pay off first — this is the debt snowball method. The psychological impact of paying off one credit card or loan can be huge and keep you motivated to tackle the next debt in line. 

Bankruptcy

Bankruptcy is typically a last-resort option, but it can also be a strategic move if you’re working to preserve your retirement or savings accounts and don’t foresee being able to pay down debt with new income. That said, it has serious credit consequences and will stay on your credit report for up to seven to 10 years depending on the type of bankruptcy you file. If you can pay off debt via debt consolidation or a debt management plan, either is probably a much better option. Consult with a bankruptcy attorney to better understand the risks, benefits, and costs of filing. 

Methodology

Credible's rating system incorporates 1,216 data points across 32 partner and non-partner lenders. We rate lenders based on these weighted categories:

• Rates and fees: 18.75%
• Eligibility and options for bad and no credit: 17.5%
• Availability: 12.5%
• Loan amounts and terms: 10%
• Customer satisfaction: 10%
• Customer service: 10%
• Efficiency and fund delivery: 10%
• Discounts: 7.5%
• Credible proprietary data: 3.75%

Credible's team of experts gathers information from lender websites and directly from our partners. We consider partner lenders' statistics over a 12-month period — including average rates, average funding times, and average credit scores for approved applicants. Each data point is verified by a senior editor to make sure it's accurate at the time of publication. 

Learn more about how Credible rates lenders by exploring our personal loans lender rating methodology.

Where we get our data

Credible is a personal loans marketplace that partners directly with lenders to offer loans for a wide range of credit profiles and loan purposes. Because of these relationships, we have access to the most current interest rates that real borrowers are being approved for, along with average rates by credit score and loan purpose, approval rates overall and by lender, and more. The data we use is primary source data, updated weekly, and does not include any personally identifiable information about borrowers.