Advertiser Disclosure
Best Debt Consolidation Loans of December 2021
Manage debt with a debt consolidation loan to lower your interest and save on monthly payments.
Advertising Disclosure: Some of the loan offers on this site are from companies who are advertising clients of U.S. News. Advertising considerations may impact where offers appear on the site but do not affect our editorial independence.
Paying off your debt with a low-interest debt consolidation loan is easier and faster than making minimum payments on credit cards. One of these loans could come in handy if you need to consolidate credit card debt or other bills accumulated during the coronavirus crisis.
This guide to the best debt consolidation loans explains the borrowing process and how to pick the right personal loan for your needs.
What Is the Best Debt Consolidation Loan Company?
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Lender | Learn More | APR | Max. Loan Amount | Min. Credit Score |
|---|---|---|---|---|
 SoFi 4.6 | 5.24% to 19.88% | $100,000 | Not disclosed | |
| 5.99% to 17.99% | $50,000 | 650 | ||
| 6.99% to 19.99% | $40,000 | 670 | ||
 LightStream 4.3 | 2.49% to 19.99% | $100,000 | 670 | |
 Payoff 4.3 | 5.99% to 24.99% | $40,000 | 600 | |
 Upstart 4.3 | 5.31% to 35.99% | $50,000 | 300 | |
 Best Egg 4.2 | 5.99% to 35.99% | $50,000 | 640 | |
 Earnest 4.2 | As low as 4.99% | $250,000 | Not disclosed | |
 TD Bank 4.2 | 6.99% to 21.99% | $50,000 | Not disclosed | |
 U.S. Bank 4.2 | 5.99% to 18.49% | $50,000 | 660 |
Methodology: U.S. News selects the Best Loan Companies by evaluating affordability, borrower eligibility criteria and customer service. Those with the highest overall scores are considered the best lenders.
To calculate each score, we use data about the lender and its loan offerings, giving greater weight to factors that matter most to borrowers. Personal loan companies are evaluated based on customer service ratings, interest rates, maximum loan term, minimum and maximum loan amounts, minimum FICO score, online features, and origination fees. The weight each scoring factor receives is based on a nationwide survey on what borrowers look for in a lender.
To receive a rating, lenders must offer qualifying loans nationwide and have a good reputation within the industry. Read more about our methodology.
Best for loans of up to $100,000 with no fees
Before You Apply
- Minimum FICO credit score: undisclosed
- Loan amounts: $5,000 to $100,000
- Repayment terms: up to 84 months
- Better Business Bureau rating: A+
Best Features
The lender does not charge origination, prepayment or late fees.
Loans of up to $100,000 are available.
Co-borrowers are accepted.
Borrowers become members and get special benefits.
Best for low minimum loan amounts
Before You Apply
- Minimum FICO credit score: 650
- Loan amounts: $600 to $50,000
- Repayment terms: up to 60 months
- Better Business Bureau rating: A+
Best Features
Terms extend up to 60 months.
There are no origination fees.
Borrowers can get as early as next day access to funds upon approval.
Before You Apply
- Minimum FICO credit score: 670
- Loan amounts: $3,500 to $40,000
- Repayment terms: up to 72 months
- Better Business Bureau rating: A+
Best Features
Marcus does not charge any fees on its personal loans.
Borrowers can adjust their payment due date.
Before You Apply
- Minimum FICO credit score: 670
- Loan amounts: $5,000 to $100,000
- Repayment terms: up to 144 months
- Better Business Bureau rating: A+
Best Features
More than 30 different loan uses are available.
Loans of up to $100,000 are available.
LightStream has no origination, prepayment or late fees.
Payoff is not a bank; instead, it works with lending partners that originate the loans. The company, which considers itself a financial wellness firm, is based in California.
In 2017, Payoff launched a sister company called Happy Money, which takes a psychological approach to money matters. Today, Payoff is a service under the Happy Money umbrella.
Before You Apply
- Minimum FICO credit score: 600
- Loan amounts: $5,000 to $40,000
- Repayment terms: up to 60 months
- Better Business Bureau rating: A+
Best Features
Borrowers don’t face prepayment or late fees.
Borrowers can get preapproved with no hard credit check.
Some borrowers with fair credit may be eligible.
Best for borrowers with no credit or poor credit
Before You Apply
- Minimum FICO credit score: 300
- Loan amounts: $1,000 to $50,000
- Repayment terms: up to 60 months
- Better Business Bureau rating: A
Best Features
Next-day funding: Upstart says 99% of applicants who accept their loans by 5 p.m. Eastern Time Monday through Friday will get their money in one business day. The exception is loans for education expenses, which are subject to a waiting period of three business days, according to federal law.
No credit history required: Upstart offers loans to borrowers with no credit scores, which traditional lenders may not do. If you have little or poor credit history, your loan will likely be more expensive, however.
No prepayment penalty: You can repay all or part of your loan anytime without being charged a fee.
Before You Apply
- Minimum FICO credit score: 640
- Loan amounts: $2,000 to $50,000
- Repayment terms: up to 60 months
- Better Business Bureau rating: A+
Best Features
Loan funding typically takes one to three business days.
The minimum loan amount is $2,000 in most states.
Borrowers incur no prepayment penalty.
Before You Apply:
Minimum FICO credit score: Not disclosed
Loan amounts: $1,000 to $250,0000
Repayment terms: up to 144 months
BBB rating: A
Best Features
Prospective borrowers can match with loan options within 60 seconds.
Loans available up to $250,000.
Searching loan options on Fiona doesn’t impact your credit score.
Lender Highlights:
- Minimum FICO credit score: undisclosed
- Loan amounts: $2,000 to $50,000
- Repayment terms: up to 60 months
- Better Business Bureau rating: B+
Best Features
No origination fee.
Personal loans are issued by one of the 10 largest banks in the United States.
Before You Apply
- Minimum FICO credit score: 660
- Loan amounts: $1,000 to $50,000
- Repayment terms: up to 60 months
- Better Business Bureau rating: A+
Best Features
Pays out loan funds relatively quickly.
Offers a 0.50% rate discount if you use a U.S. Bank personal checking or savings account to make automatic payments.
Does not charge an origination fee.
What Is the Best Interest Rate on a Debt Consolidation Loan?
When you shop around for the best personal loan interest rate, you can save. Compare your personal loan offers with national average trends for personal loans to know if you've found a good deal.
*Rate as of October. 7, 2021
Personal Loan Finder
U.S. News Survey: Holders of Unsecured Debt Live Paycheck to Paycheck
U.S. News Survey
U.S. News Survey: Holders of Unsecured Debt Live Paycheck to Paycheck
According to a new U.S. News survey, people with unsecured debt are struggling. More than 42% of respondents say living paycheck to paycheck is the thing they want to change most about their financial situation. Almost two-thirds of respondents have at least $10,000 in debt, and a significant 7.3% hold $50,000 or more of debt.
People with unsecured debt are seeing the level grow, too. Compared with a year ago, 41.7% of respondents have more unsecured debt, even though 38.9% of respondents have decreased their spending.
Unsecured debt is debt that isn't backed by collateral like a house or car. For more than half of respondents, their main source of unsecured debt is credit cards. For 20.5% of respondents, personal loans are their main source of unsecured debt.
Additional Survey Insights
To deal with their debt, 25.1% of respondents would consider taking out a debt consolidation loan. Only 5.2% of respondents would consider getting a second mortgage.
Fortunately, few respondents appear to be paying extremely high interest rates. Only 3.5% of respondents say they have debt with an interest rate higher than 30%.
U.S. News Survey Methodology
- U.S. News ran a nationwide survey through PureSpectrum Insights in August 2021 with a sample size of 1,202 people.
- The survey was configured to be representative of the general American population.
- The survey was screened to only include people who held unsecured debt.
- The survey asked nine questions relating to unsecured debt.
Survey Results
What Are Debt Consolidation Loans and How Do They Work?
A debt consolidation loan is a type of personal loan that combines high-interest debts and allows for one low-interest monthly payment. Debt consolidation loans can be used to pay unsecured debts, which may include:
- Credit card bills.
- Medical bills.
- Personal loans.
- Payday loans.
Interest on debt consolidation loans, unlike credit cards, isn't compounded – compound interest is interest charged on interest. The rate typically stays the same for the life of the loan.
Unsecured personal loans for debt consolidation are widely available through banks, credit unions and online lenders. Some debt consolidation companies offer instant prequalification and approval online. Prequalifying can make comparing loan offers and closing costs easy, as lenders estimate your terms using a soft credit check that doesn't affect your credit score.
Because collateral is not required for these loans, you must meet the lender's credit and debt-to-income ratio requirements. Your actual rate when you apply depends on your creditworthiness, and the better your credit score, the more likely that you will get a low interest rate.
Are Debt Consolidation Loans a Good Idea?
Debt consolidation loans can be a good idea if they help you save money on interest, lower your monthly payments or potentially increase your credit score. These are some of the ways debt consolidation can help:
- Interest savings. If you have high-interest debt, a debt consolidation loan can help you save money with a low interest rate. You will save money on interest, for example, if you combine two credit card balances with annual percentage rates of 16.24% and 23.99%, respectively, into a debt consolidation loan with a 15% APR. "Rates can be considerably lower than credit card rates," says John Ulzheimer, a credit expert who has worked at Equifax and Experian. Also, loans have to be paid off in a designated period of time, which gives you an end date for your debt. "You can't say the same about credit cards," he adds.
- Lower monthly payment. A debt consolidation loan may make it easier to achieve on-time payments by spreading out your debt payments over several years. A history of on-time payments can help your credit score.
- Improved credit score. By taking out a new loan and leaving consolidated accounts open but unused, you will have more total available credit. This results in a lower credit utilization ratio, which can increase your credit score.
Do Debt Consolidation Loans Hurt Your Credit Score?
Debt consolidation loans generally offer a boost to your credit score as long as you make your payments on time. But that's only if you use them as intended: to pay off your debt and not to add to it.
"You'll be converting score-damaging revolving debt into practically benign installment debt. As long as you don't charge up your cards again, you'll be happy with your new scores," Ulzheimer says.
Still, consider these dangers of debt consolidation loans:
- You may end up paying more interest. There's no guarantee that your debt consolidation loan will have a lower interest rate than your credit card rates or other types of debt. And if you extend the repayment term length, you might pay more interest in the long run.
- You may end up adding more debt. Consolidating credit card debt leaves cards free to use again and add to your debt.
- Other options may offer better savings. A 0% balance transfer credit card or home equity loan could offer a lower interest rate option.
Who Can Get a Debt Consolidation Loan?
Before you shop around for a debt consolidation loan, consider whether you're likely to be approved. Most lenders look at:
- Your credit score. Debt consolidation loan companies typically have a minimum credit score requirement of at least fair or good credit. To get a low interest rate, you'll need a higher credit score. A fair credit score signals that you are a greater risk to lenders, and you will be quoted a higher interest rate than another customer with good credit. With very good or excellent credit, you could qualify for a lender's lowest consolidation loan rate. You might not meet a lender's minimum credit score to qualify for a debt consolidation loan with bad credit.
- Your income. Lenders may require a minimum annual income and will consider your debt-to-income ratio. A debt-to-income ratio is the percentage of your gross monthly income that goes toward paying your debts. A lower ratio is better because it shows that you don't spend too much of your income paying debts. Some debt consolidation loan companies allow debt-to-income ratios as high as 50%, meaning your monthly debt obligations should add up to no more than half of your gross monthly income.
- Your credit history. Most lenders look for a credit history free of bankruptcies, tax liens, repossessions or foreclosures. Some lenders allow co-signed or joint applications because they can reduce the risk of lending. But if you use a co-signer, proceed with caution. If you use a co-signer to help you qualify for a loan and you default, you may damage your relationship as well as your co-signer's creditworthiness.
How to Choose the Best Debt Consolidation Loans for You
The best debt consolidation loan company for you is one that will approve your loan at a low interest rate, with terms and services that meets your needs.
Evaluate debt consolidation loan companies based on these features to find the best fit:
- Interest rates. A lower interest rate makes your loan cheaper, so this should be the primary factor when comparing debt consolidation loan companies. Most lenders offer fixed-rate personal loans, while others offer both fixed- and variable-rate loans. Use prequalification or rate-check tools from debt consolidation loan companies to compare rates and terms to expect based on your creditworthiness. Because prequalification should trigger just a soft credit check, you can shop around for consolidation loan rates without hurting your credit score.
- Loan terms. Loan terms vary by lender but include loan amount, repayment term length and details on disbursement. Prequalification can estimate how much you might be able to borrow and for how long. Lenders may place restrictions on how you can use the loan.
- Fees and penalties. Fees and penalties can increase the cost of your loan. You may pay origination, prepayment and late payment fees. Origination fees are charged by many, but not all, lenders for loan processing. Sometimes, lenders allow grace periods before they charge fees for late payments, if they charge them at all. Typical late fees range from $15 to $39. Your lender could also charge a returned payment fee or check processing fee, which might cost about $15 each.
- Repayment options. Make sure it's easy to pay. Look for a lender that offers flexible payment options that work for you, whether that's payment by phone, mail, wire transfer, app and online. Some lenders have flexible repayment options that allow you to change your due date or offer discounts if you sign up to make automatic payments each month from your bank account.
- Customer satisfaction ratings. Good customer service is important when you need help. Read personal loan reviews to find out what other consumers think of a lender you're considering. Check the Better Business Bureau for lender ratings, reviews and complaints.
How Do You Get a Debt Consolidation Loan?
Getting a debt consolidation loan requires a few steps: prequalifying, choosing your loan terms, finalizing your application and closing.
1. Prequalify. Prequalifying uses a soft credit check to produce a rate quote, which will estimate the minimum loan amount you're approved for and the interest rate.
2. Choose your loan terms. Your loan terms set the repayment schedule, loan amount and other features. Typical loan amounts range from $1,000 to $40,000, depending on your creditworthiness.
Most borrowers have between two and five years to repay their loans. You will confirm your interest rate and any origination fees – typically 1% to 5% of your loan.
3. Finalize your application. You'll confirm the details of the loan and verify your identity, annual income and other qualifying information. Some lenders allow you to apply on a secure website.
The lender will pull your credit report to verify creditworthiness, which will result in a hard inquiry on your credit. Be certain of your choice when you apply because too many hard inquiries in a short period of time could pull down your credit score.
4. Get approved and close. Once approved, the loan will go through the closing process, and you will receive funds. Most debt consolidation loans provide wire transfers, but some offer direct payment to creditors or send a check to you for deposit in a bank account. You may receive funds as soon as the next business day.
What Are the Alternatives to Debt Consolidation Loans?
Debt consolidation loans are a good option for many people with debt, but they aren't the only option. Debt consolidation comes in many forms. If you can't qualify for the best personal loan with good repayment terms, alternatives include:
Home equity loans. They generally have better interest rates than unsecured personal loans because using your home as collateral makes these loans less risky for lenders. And you can get lower monthly payments, as loan repayment term lengths can be 10 years or longer.
But you could lose your home to foreclosure if you can't make your payments, and if you face bankruptcy, discharging a home equity loan compared with unsecured debt is much harder.
Balance transfer credit cards. You can move credit card debt to a card with a 0% balance transfer APR and make interest-free payments on the new balance for up to 21 months. Though, you'll pay a fee of 3% to 5% of the balance you transfer.
By comparison, personal loans for debt consolidation could offer term lengths as long as 60 months, though you'll have to pay interest.
Learn more about 0% APR balance transfer credit cards with the U.S. News Best Balance Transfer Credit Cards Guide.
Debt relief services. Certified nonprofit credit counselors can help you strategize how to pay off your debt and negotiate with creditors to lower your interest rates and fees. A counselor may recommend a debt management plan to pay your creditors. The plan may require fees, such as a setup fee and a monthly fee.
Debt settlement. Usually, for-profit debt settlement companies negotiate with creditors to settle your debt. But debt settlement companies charge high fees and penalties and even higher interest rates. And you can damage your credit history if you stop paying your bills.
Consider debt settlement companies as alternatives to bankruptcy because the damaging effects to your credit report can be long lasting.
Bankruptcy. Declaring bankruptcy is a last resort if you can't pay your debts.
Bankruptcy will hurt your credit and may remain on your credit report for up to 10 years. You will lose all of your credit cards, some or all of your luxury possessions – such as designer clothes or multiple vehicles – and any property that is not exempt from sale.
But if you have serious debt and are being sued by creditors or have a pending foreclosure or repossession, bankruptcy can be a lifeline.
What Should You Do Before You Apply for a Debt Consolidation Loan?
Getting a debt consolidation loan is a financial decision not to be taken lightly. Before you apply, do a little homework to avoid missteps and find the best deal.
These four moves can help:
1. Consider alternatives. You may pay less in interest with debt consolidation loan alternatives, such as a credit card balance transfer.
2. Establish a repayment plan and budget. Planning how you will make the new loan payments is essential, especially if you've struggled to keep up in the past. You can:
- Assess your total debt by tallying up your credit card balances, student loans, car loans and other accounts.
- Track your spending to see where your money goes each month, identifying areas to cut back.
- Compare your debts with your expenses to determine how much to allot to paying down debt each month and to create a budget.
Once you know how much you can put toward your debt, make sure your loan terms work with your budget.
3. Shop around for the best quote. Compare options from a few debt consolidation loan companies to ensure that you're getting the best debt consolidation loan rates and repayment terms you can afford. Most lenders offer rate quotes, which trigger soft credit inquiries that will not harm your credit score.
4. Avoid scams. Red flags include aggressive sales representatives, "guaranteed" approvals and quick-fix promises, as well as requirements such as upfront payments before loan approval.
"No lender should charge you upfront before you get the loan ... and you certainly shouldn't send money with a wire transfer or prepaid card," cautions Gerri Detweiler, education director of business credit website Nav.
5. Make a plan to avoid new debt. A debt consolidation loan can wipe the slate clean and allow you to start fresh with no credit card balances or other credit commitments. Although it may be tempting, avoid using your newly cleared accounts to shop or manage household expenses unless you can easily pay off the balances each month. You don't want to create new debt to manage on top of your debt consolidation loan.
View More Best Debt Consolidation Loan Companies
Best for digital customer care
Before You Apply
- Minimum FICO credit score: Not disclosed
- Loan amounts: $2,000 to $45,000
- Repayment terms: up to 60 months
- Better Business Bureau rating: A+
Best Features
Same-day loan funding may be available.
No prepayment penalties apply.
An online application process is available.
Before You Apply
- Minimum FICO credit score: 660
- Loan amounts: $2,500 to $35,000
- Repayment terms: up to 84 months
- Better Business Bureau rating: A+
Best Features
Discover has no closing costs or origination fees.
The lender offers loan terms from 36 to 84 months.
Borrowers get free access to a credit scorecard that includes their FICO credit score.
Best for loan amounts of up to $50,000
Lender Highlights
- Minimum FICO credit score: Not disclosed
- Loan amounts: $1,000 to $50,000
- Repayment terms: up to 84 months
- Better Business Bureau rating: B+
Best Features
Loans and lines of credit are available up to $50,000 and $25,000, respectively.
Borrowers can complete the entire loan process online.
Best for FICO scores between 580 and 669
Before You Apply
- Minimum FICO credit score: 580
- Loan amounts: From $2,000 to $36,500
- Repayment terms: up to 60 months
- Better Business Bureau rating: A+
Best Features
Receive loan funds as soon as the next business day after approval.
Qualify for a personal loan with fair credit.
Prequalify with a soft pull that won’t harm credit.
Prepay your loan with no penalties and change your payment due date.
Best for low fees and discounts
Before You Apply
- Minimum FICO credit score: undisclosed
- Loan amounts: $1,000 to $35,000
- Repayment terms: up to 36 months
- Better Business Bureau rating: A+
Best Features
A range of loan amounts and repayment terms.
No prepayment penalty and no origination or application fee.
Get a 0.25-percentage-point discount if you set up autopay using a PNC checking account.
Applicants can secure a loan with a co-signer.
Before You Apply
- Minimum FICO credit score: Not disclosed
- Loan amounts: $1,000 to $40,000
- Repayment terms: up to 60 months
- Better Business Bureau rating: not rated
Best Features
Loans of $1,000 or more are available.
Joint applications are accepted.
Borrowers can qualify with fair to excellent credit.
Before You Apply
- Minimum FICO credit score: 580
- Loan amounts: $1,500 to $20,000
- Repayment terms: up to 60 months
- Better Business Bureau rating: A+
Best Features
Secured and unsecured options are available.
Co-signers are accepted.
Borrowers can get prequalified with a soft credit check.
OneMain approves loans for borrowers with lower credit scores.
Before You Apply
- Minimum FICO credit score: 670
- Loan amounts: $7,500 to $50,000
- Repayment terms: up to 144 months
- Better Business Bureau rating: A+
Best Features
Qualify with a fair credit score of 670.
Access personal loans up to $50,000.
Prepay loans without fees.
Receive loan funds in as little as 48 hours.
Before You Apply
- Minimum FICO credit score: 720
- Loan amounts: $5,000 to $50,000
- Repayment terms: up to 72 months
- Better Business Bureau rating: A+
Best Features
The loan application process is completely digital because Axos Bank is online only.
Flexible loan terms are three to six years.
You can borrow between $5,000 and $50,000.
No collateral is required.
Best for peer-to-peer loans of up to $40,000
Lender Highlights
- Minimum FICO credit score: 640
- Loan amounts: $2,000 to $40,000
- Repayment terms: up to 60 months
- Better Business Bureau rating: A+
Best Features
Prosper offers preapproval with a soft credit check.
Small-dollar loans of $2,000 or more are available.
Joint personal loans are available.
Advertising Disclosure: Some of the loan offers on this site are from companies who are advertising clients of U.S. News. Advertising considerations may impact where offers appear on the site but do not affect any editorial decisions, such as which loan products we write about and how we evaluate them. This site does not include all loan companies or all loan offers available in the marketplace.