If your debt is spread out over many accounts — some or all with a high interest rate — you might benefit from a debt consolidation loan. Debt consolidation can get you a lower interest rate so more of your payment can go toward paying the principal balance (instead of just interest). It could even lower your payment as well.
To choose the best debt consolidation loan for your needs, it’s important to understand the different types available and how debt consolidation works.
How does debt consolidation work?
Debt consolidation is the process of using one loan — with a lower interest rate or monthly payment — to pay off several of your existing debts. So, instead of multiple monthly payments, you have a single payment you can afford.
Put another way, when you go through debt consolidation, you refinance your debt. You might want to obtain a debt consolidation loan to save money on interest, pay your debt off faster, or simplify your bill-paying routine.
There are five basic steps to consolidate debt:
- Add up your debts, and determine how much you need to borrow.
- Look at the interest rates you’re currently paying.
- Find and apply for a debt consolidation loan with an interest rate lower than or equal to the rate you pay now.
- Use the money to pay off your current debt balances. Your debt consolidation loan lender may send payments to your creditors on your behalf.
- Repay your debt consolidation loan as agreed.
Learn More: How To Consolidate Bills
Tip: Avoid using your newly freed-up credit lines. If you rack up debt on them now, you could end up in worse financial shape than before you consolidated.
Advertiser DisclosureOverview
Lightstream is one of three Credible partner lenders to offer loan amounts up to $100,000, which makes it ideal for financing large expenses like home improvements or weddings. Funds are available as soon as the same day you apply, and you'll have up to 12 years to repay certain types of loans, including home improvement loans, RV loans, and boat loans. There are no origination fees, and rates are low — Lightstream's lowest APR beats SoFi's advertised lowest APR by 1 percentage point. But you'll need good credit to qualify.
Unlike most lenders, Lightstream does not let you prequalify on its site. Nor does it provide a contact phone number next to its customer service hours on its website.
Repayment terms
2 - 12 years, depending on loan purpose
Eligibility
Available in all states except RI and VT
Time to get funds
As soon as the same business day
Loan uses
Credit card refinancing, debt consolidation, home improvement, and other purposes
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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.
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
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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.
Eligibility
Available in all 50 states
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
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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)
Loan uses
Credit card refinancing, debt consolidation, home improvement, major purchase, other
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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%.
Eligibility
Available in all 50 states
Loan uses
Debt consolidation, paying off credit cards
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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.
Fees
Option to pay an origination fee in exchange for a lower rate
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
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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).
Fees
Origination fee, late fee, unsuccessful payment fee, check processing fee
Eligibility
Available in all states except DC, IA, VT, and WV
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
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Avant personal loans are a good choice for borrowers with bad credit looking for small- to moderate-sized personal loans. Loans are available up to $35,000 and you could get the money as soon as the next business day after approval. Plus, Avant is more likely than some lenders to approve the applications of borrowers who've prequalified with Avant. However, the lender charges an origination fee up to 9.99%, and its top-range interest rates are among the highest of the lenders we reviewed.
Fees
Origination fee, late fee, dishonored payment fee
Eligibility
Available in all states except HI, IA, MA, ME, NY, VT, and WV
Time to get funds
As soon as the next business day (if approved by 4:30 p.m. CT on a weekday)
Loan uses
Debt consolidation, emergency expense, life event, home improvement, and other purposes
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It’s worth considering a personal loan through Splash if you have good credit (ideally, a FICO score above 700). The platform offers loans from a wide range of lenders, and next-day funding is available. Plus, Splash has a live chat feature so you can get real-time answers without having to wait on hold or for an email. Loans are available up to $100,000 if you apply via Splash’s website.
Rates are competitive, but borrowers with excellent credit may find lower APRs elsewhere. If you need a repayment term longer than five years, you’ll need to look elsewhere as well.
Loan amount
$5,000 - $100,000 (up to $35,000 on Credible)
Eligibility
Available in all states except VT. OH and NM net disbursed amount must be greater than $5,000. MA must be greater than $6,000
Time to get funds
Same day available, typically 1-3 days
Loan uses
Debt consolidation, home improvement, medical expenses, major purchases
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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.
Eligibility
A U.S. citizen or permanent resident; not available in DC, IA, SC, WV
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
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BHG Financial stands out for offering the largest loan amounts — up to $200,000 — of any Credible partner lenders. Simply put, if you need an unsecured personal loan over $100,000, there are very few places to look, but BHG is one. You'll have up to 10 years to repay the loan, but you'll need an annual income of at least $100,000 to qualify and a FICO score that's 660 or higher. However, if you have a cosigner that meets these requirements, BHG will consider your application.
Loan amounts start at $20,000, so look elsewhere for small loans. And BHG charges a modest origination fee between 2% and 4%, depending on your financial profile. Loan funds are available within three to 14 days of loan approval. Note that you can't prequalify with BHG.
Fees
Origination fees, late fees
Eligibility
Available in all states except Maryland and Illinois
Loan uses
Debt consolidation, baby (adoption), engagement ring financing, moving (relocation), business, home improvement, special occasion, cosmetic procedures, major purchase, taxes, credit card refinancing, medical expenses, vacation, wedding, other
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Happy Money has been in operation since 2009 (formerly known as Payoff). It's an option for fair-credit borrowers (plus those with better credit), and notably has a relatively low top-end APR. In other words, you could qualify for a lower rate with Happy Money with fair credit, relative to other lenders that offer fair-credit loans. The company does charge an origination fee on some loans, up to 5%, but that's not as high as some other lenders' origination fees.
You should be prepared to wait a few days to get your money, as funding can take three to five days once approved. And loans aren't available in Massachusetts or Nevada. Happy Money has an A+ rating with the BBB and is ideal for debt consolidation and credit card consolidation loans.
Eligibility
Available in all states except MA, MS, NV, and OH
Time to get funds
As soon as 2 - 5 business days after verification
Loan uses
Debt consolidation and credit card consolidation only
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Reach is an option if you have fair credit, especially if you need money fast. According to the company, 90% of Reach personal loans are funded within one day of approval.
It's a good choice for debt consolidation and credit card refinancing, but borrowers with excellent credit may not find the lowest rates with Reach. The company also charges more fees than some of its competitors and doesn't offer direct pay or autopay discounts. If you need a 7-year term loan, you'll need to look elsewhere. Reach personal loans are not available in all states.
Fees
Origination Fee, $15 Late Fee, $25 NSF Fee
Eligibility
Available in all states except CO, CT, ME, NV, NH, TN, VT, WV, WY, and all U.S. Territories
Time to get funds
Funds typically deposited into your account in 1 business day13
Loan uses
Debt consolidation, credit card refinancing
Read full reviewOverview
OneMain Financial has multiple options for bad-credit personal loans. There is no minimum credit score required (if you apply directly with OneMain), which means you could get a loan with bad credit (FICO below 580). Plus, cosigners are allowed — a cosigner is someone (ideally, with good credit) who promises to repay the loan if you can't, which can make it easier to qualify or lower your rate. And, secured personal loans are available. You secure a loan with collateral, which may also help you qualify or lower your rate.
Rates are higher than competitors and OneMain charges origination fees as either a flat fee up to $500, or a percentage from 1% to 10% (depending on your state of residence). Note that even if you prequalify for a personal loan with OneMain, getting approved isn't a given.
Fees
Origination fee, unsuccessful payment fee, late fee
Eligibility
Must have photo I.D. issued by U.S. federal, state or local government
Time to get funds
As soon as 1 to 2 days after acceptance
Loan use
All except business, and education
Read full reviewPersonal loan for debt consolidation
A personal loan is a popular financial tool for debt consolidation. Once approved, you can use the funds for nearly any purpose, including paying off your current creditors.
Generally, personal loans have a fixed interest rate, giving you predictable and manageable monthly payments over the life of the loan. Usually, personal loans are unsecured, which means you don’t need to put up any collateral, like your car or home, to obtain funding. Repayment terms typically last from one to seven years, but some lenders offer even longer terms. And loan amounts can range from under $1,000 to over $100,000, depending on the lender and what you qualify for.
The average personal loan interest rate on a two-year loan was 11.92% in May 2024, according to the Federal Reserve, which is markedly lower than the average credit card interest rate, which was 21.51% for the same month. Because of this, personal loans are often a good choice for credit card consolidation.
For example, say you owe $20,000 on credit cards, at an average rate of 21.51%, and are making $500 per month payments. It would take you six years to pay off the balance, and you’d pay $15,763.98 in interest. If you consolidate the debt using a personal loan at 11.92%, you could lower your payment to $440, pay off the debt in five years and one month, and pay only $6,763.75 in interest — that’s less than half as much. Or, you could reduce your payment to $348, pay off the loan over seven years, and still save over $4,000 in interest ($9,837.79).
As long as you qualify for an APR lower than or equal to what you’re currently paying, debt consolidation with a personal loan could make sense.
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Credit card debt consolidation
A credit card balance transfer lets you move some or all of your debt on one credit card to another. Balance transfer credit cards frequently offer a 0% promotional interest rate for a limited time after opening the account (usually 12 to 21 months), but charge a balance transfer fee, which could be up to 5% of the amount transferred.
For context, a 5% fee on a $20,000 balance would be $1,000 (the balance transfer fee is added to your balance). And at a 0% APR, your monthly payment would need to be $1,000 to pay off the entire balance within 21 months.
If you can pay off your new card before the promotion ends, you could save a lot of money in interest. But if you can’t, your rate will adjust to the card’s standard rate. Plus, making late payments could void the promotional rate and therefore the benefits of the balance transfer.
Home equity loans and HELOCs
Your home’s equity is the difference between what your property is worth and how much you owe on your mortgage. For instance, if your residence appraises at $500,000 and you owe $375,000, you have $125,000 in equity. A home equity loan or home equity line of credit (HELOC) can help you use that equity to pay off your high-interest debt.
A home equity loan is a type of secured loan, because your home is collateral for the loan. This means that should you default on the loan, the lender could foreclose to seek payment. On the other hand, it also means the rate on a home equity loan is often lower than what you’ll find on unsecured loans, like most personal loans. Home equity loans typically feature a fixed interest rate and payment, which could last up to 30 years. You’d receive funds in a lump sum to disburse to your creditors to pay off your debt.
A HELOC works much like a credit card. You receive a line of credit with a credit limit to spend throughout what’s called the draw period. During the draw period, you may only have to pay the interest accruing on the debt. Draw periods generally last up to 10 years.
Once the draw period ends, you’ll enter the repayment period. During this time, you can no longer use your credit line. You’ll have to make full principal and interest payments until the debt is gone — the repayment period typically lasts up to 20 years.
In either case, your home is the collateral. If you don’t repay the debt as agreed, your lender could foreclose on your house.
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Debt consolidation through student loan refinancing
If you have multiple expensive private student loans, it can make sense to refinance them if you can get a lower interest rate or a loan term that works better for your financial plans. However, you typically need excellent credit to qualify for the best rates.
If you have federal student loans, it’s generally not a good idea to refinance them with a private lender. This is because you’d forfeit benefits associated with federal student loans, such as income-driven repayment plans, loan forgiveness, and opportunities to use forbearance or deferment (while some private student loan lenders offer forbearance or deferment, not all do).
Tip: You don’t have to refinance your federal student loans to improve your financial situation. You can apply for an income-driven repayment (IDR) plan to give your budget some additional wiggle room. Your required monthly payment could drop down to as low as $0.
Choosing the right debt consolidation loan
There’s no one-size-fits-all way to become debt-free. The right debt consolidation loan for you depends on your financial situation.
For instance, a home equity loan or HELOC is off the table if you don't own your residence. Plus, even if you do own your house, you typically need a certain amount of equity in your home to get approved for a loan or line of credit — most lenders require at least 20% equity to qualify for a HELOC.
On the other hand, let’s say you have $300,000 worth of equity and $150,000 in non-mortgage debt you want to pay off. A home equity loan or HELOC could be your best bet because those financial tools may let you borrow more than a personal loan or balance transfer credit card, and at a lower rate. It also may be a better option if you don’t have good credit.
But if you’re uncomfortable putting your home on the line as collateral, a personal loan may be the better option. APRs range from around 5% to 36% — what you’ll be approved for depends on your credit score and financial profile. Like all loans, having excellent credit will net you the lowest rate.
But, if you want to pay as little interest as possible and can afford to pay off the balance within 12 to 21 months, a balance transfer credit card with a 0% promotional APR may work for you.
Tip: Prequalify with several personal loan lenders to compare all your options. You can prequalify directly on most lenders’ sites or through a personal loan marketplace. Prequalification does not impact your credit score. Note that a hard credit pull — which does affect your score — will follow when you submit a formal application. Prequalification is not an offer of credit, and final rates may be higher.
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FAQ
How do I get a debt consolidation loan?
You can get a debt consolidation loan by submitting an application through your chosen lender. However, prequalifying for several loans is a smart idea before applying. That way, you can compare your options and select the best loan for your financial goals.
How to get a debt consolidation loan with bad credit
It can be challenging to get a debt consolidation loan with bad credit, but it’s not impossible. You’ll need to prove to the lender that you’re not as great a risk to lend to as your credit score lets on. To do this, you can seek a secured loan, such as a home equity loan or HELOC, or a secured personal loan. Some lenders will also let you apply with a cosigner, which is a friend or relative with good credit who takes responsibility if you miss payments.
How to apply for a debt consolidation loan
You can apply for most debt consolidation loans online. Generally, you’ll need to provide personal and financial details, such as your name, contact information, Social Security number, employment status, and annual income. You may need to upload supporting documentation, like a copy of your photo identification or a recent pay stub.
Which is better: personal loan or debt consolidation?
A personal loan is just one debt consolidation method. Depending on your specific circumstances, it may or may not be the best solution for you. You might also consider consolidating debt with a balance transfer credit card, home equity loan, or HELOC.