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Debt Consolidation Loan Rates for June 2024
Your credit score and debt-to-income ratio are key to determining your debt consolidation loan interest rate.
Jackie Veling Lead Writer | Buy now, pay later loans, debt consolidation, personal loans
Jackie Veling covers personal loans for NerdWallet. Her work has been featured in The Associated Press, the Los Angeles Times, The Washington Post, Yahoo Finance and elsewhere. Her work has also been cited by the Harvard Kennedy School. Prior to that, she ran a freelance writing and editing business, where she partnered with a wide range of clients, including U.S. Bank and Under Armour. She graduated from Indiana University with a bachelor’s degree in journalism.
Kim Lowe is a lead assigning editor on NerdWallet's loans team. She covers consumer borrowing, including topics like personal loans, buy now, pay later and cash advance apps. She joined NerdWallet in 2016 after 15 years at MSN.com, where she held various content roles including editor-in-chief of the health and food sections. Kim started her career as a writer for print and web publications that covered the mortgage, supermarket and restaurant industries. Kim earned a bachelor's degree in journalism from the University of Iowa and a Master of Business Administration from the University of Washington. She works from her home near Portland, Oregon.
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Consolidating debt with a personal loan can streamline your debt payoff journey and save you money if you get an interest rate that’s lower than the combined rate on your existing debts.
Interest rates on debt consolidation loans vary, but borrowers with good to excellent credit scores tend to get the lowest rates.
The average consolidation loan interest rate for consumers with good credit (690 to 719 credit score) is currently 12.84%, according to aggregate, anonymized offer data from users who pre-qualified for a personal loan through NerdWallet.
Average debt consolidation loan interest rates
Borrower credit rating
Score range
Estimated APR
Excellent
720-850.
10.44%.
Good
690-719.
12.84%.
Fair
630-689.
17.12%.
Bad
300-629.
21.82%.
Source: Average rates are based on aggregate, anonymized offer data from users who pre-qualified through NerdWallet from May 1, 2024, through May 31, 2024, and chose credit card consolidation or debt consolidation as their loan purpose. Rates are estimates only and not specific to any lender. The lowest credit scores — usually below 500 — are unlikely to qualify. Information in this table applies only to lenders with maximum APRs below 36%.
How does debt consolidation work?
If you have multiple debts — for example, you carry balances on a few different credit cards — a debt consolidation loan can help you pay them off all at once. Then, you make one payment toward the new loan.
But how does this save you money? The key is to choose a personal loan with an annual percentage rate that’s lower than your existing debts.
Let’s say you have $9,000 in total credit card debt with a combined average APR of 22% and a combined monthly payment of $450. It will take just over two years to be debt-free, and cost $2,250 in interest.
But if you consolidate the cards into a loan with a 14% APR and a two-year repayment term, you’d save $879 in interest. Your new monthly payment would be $432, and you could apply the extra monthly savings toward the loan to pay off the debt even faster.
Use our debt consolidation calculator to plug in your current balances, interest rates and monthly payments. Then, see how much you could save with a debt consolidation loan and compare options based on your credit score.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
APRRates displayed are fixed and include all discounts.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
APRRates displayed are fixed and include all discounts.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
APRRates displayed are fixed and include all discounts.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
APRRates displayed are fixed and include all discounts.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
APRRates displayed are fixed and include all discounts.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
How to get the lowest interest rate on a debt consolidation loan
To qualify you for a debt consolidation loan, lenders look at your credit score, credit history and debt-to-income ratio. Here’s how to ensure you get the lowest rate possible.
Build your credit: Taking steps to build your credit before you apply for a debt consolidation loan can have a big payoff in the rate you get. Start by downloading your free weekly credit report from AnnualCreditReport.com and checking for any errors or discrepancies. Make sure you make at least the minimum payments on your debts, and that these on-time payments are reflected in your credit reports.
Pay down debt (every bit helps!): If possible, pay down some debts, including any small debts. If you don’t have extra cash, consider a short-term side gig or sell things you don’t need and put that money toward your debt. This will improve your overall debt-to-income ratio, which lenders use to evaluate whether you can repay a debt consolidation loan. Avoid taking on additional debt.
Add a borrower to your application: You can boost your chances of qualifying for a debt consolidation loan by considering a joint or co-signed loan, which is when you add someone to your application — ideally someone who has a higher credit score. This person is equally responsible for the loan's repayment, and depending on the type of loan you choose, they may have equal access to the loan funds.
Add collateral to the loan: Another option is applying for a secured loan, in which you pledge an asset, like a car or savings account, as collateral for the loan. Because this helps guarantee the loan, lenders may be more willing to extend a lower interest rate, but you risk losing the collateral if you fail to repay.
Shop around: Like with any important decision, it’s best to thoroughly compare options before you decide on a debt consolidation loan. You can do this by pre-qualifying with multiple lenders, which lets you check what rates you may be eligible for, without a hard credit check. Compare any offers from online lenders with rates from your bank or local credit union.
How to choose a debt consolidation lender
It’s a good rule of thumb to go with the lender that offers the lowest rate, but you should also pay attention to the repayment term. Longer terms mean paying more interest overall, though your monthly payment will be lower.
You can also look for lenders that specialize in debt consolidation. These lenders will offer perks like sending loan funds directly to your creditors and offering free financial education to help you manage debt.
NerdWallet's ratings are determined by our editorial team. The scoring formulas take into account multiple data points for each financial product and service.
Upgrade accepts consumers with low credit, offering competitive rates, multiple rate discount options and credit-monitoring tools. It has special features for debt consolidation and home improvement loans.
Debt consolidation loans for borrowers with bad credit
You can still get a debt consolidation loan with bad credit. Some lenders specifically target borrowers with bad credit and will weigh other factors listed on your application, like your income or education.
Still, it may be hard for some borrowers with bad credit to qualify for a rate that's lower than their current debts. If you’re struggling to find affordable loan options, consider other debt payoff methods.
Comparing options? See if you pre-qualify for a personal loan - without affecting your credit score
Just answer a few questions to get personalized rate estimates from multiple lenders.
