Best Debt Consolidation Loans of November 2024

on SoFi's website

Key Facts:

SoFi offers online personal loans with consumer-friendly features for good- and excellent-credit borrowers.

Qualifications

Must be at least 18 years old in most states.
Must be a U.S. citizen, permanent or non-permanent resident, including DACA recipients and asylum seekers.
Must be employed, have sufficient income from another source, or have an offer of employment to start within the next 90 days.
Acceptable income sources: Employment, spouse’s income, retirement, alimony, child support, Social Security payments and disability benefits.

Available Term Lengths

2 to 7 years

Fees

Origination fee: 0% to 7%.
Late fee: None.

Disclaimer:

Fixed rates from 8.99% APR to 29.99% APR reflect the 0.25% autopay interest rate discount and a 0.25% direct deposit interest rate discount. SoFi rate ranges are current as of 02/06/2024 and are subject to change without notice. The average of SoFi Personal Loans funded in 2022 was around $30K. Not all applicants qualify for the lowest rate. Lowest rates reserved for the most creditworthy borrowers. Your actual rate will be within the range of rates listed and will depend on the term you select, evaluation of your creditworthiness, income, and a variety of other factors. Loan amounts range from $5,000– $100,000. The APR is the cost of credit as a yearly rate and reflects both your interest rate and an origination fee of 0%-7%, which will be deducted from any loan proceeds you receive. Autopay: The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. Autopay is not required to receive a loan from SoFi. Direct Deposit Discount: To be eligible to potentially receive an additional (0.25%) interest rate reduction for setting up direct deposit with a SoFi Checking and Savings account offered by SoFi Bank, N.A. or eligible cash management account offered by SoFi Securities, LLC (“Direct Deposit Account”), you must have an open Direct Deposit Account within 30 days of the funding of your Loan. Once eligible, you will receive this discount during periods in which you have enabled payroll direct deposits of at least $1,000/month to a Direct Deposit Account in accordance with SoFi’s reasonable procedures and requirements to be determined at SoFi’s sole discretion. This discount will be lost during periods in which SoFi determines you have turned off direct deposits to your Direct Deposit Account. You are not required to enroll in direct deposits to receive a Loan.

Pros

Multiple rate discounts.
Fast funding.
Large loan amounts.
Joint loan option.
Mobile app to manage loan.

Cons:

No option to choose initial payment date.
High minimum loan amount.

Disclaimer:

Upgrade: Best for overall debt consolidation loan

2024 Best Personal Loan for Debt Consolidation

5.0

Nerdwallet Rating

Est. APR

9.99-35.99%

Loan amount

$1K-$50K

Min. credit score

580

on Upgrade's website

Key Facts:

Upgrade personal loans come with multiple rate discounts and offer direct payment to creditors. This lender has a low minimum credit score requirement, making the perks stand out even more.

Qualifications

Minimum credit score: 580.
Minimum number of accounts on credit history: One account.
Maximum debt-to-income ratio: 75%, including mortgage payments.
Minimum length of credit history: Two years.
Minimum income requirement: None. Lender accepts income from alimony, retirement, child support, Social Security, disability benefits and other sources.

Available Term Lengths

2 to 7 years

Fees

Origination fee: 1.85% to 9.99%.
Late Fee: $10.
Failed payment fee: $10.

Disclaimer:

Personal loans made through Upgrade feature Annual Percentage Rates (APRs) of 9.99%-35.99%. All personal loans have a 1.85% to 9.99% origination fee, which is deducted from the loan proceeds. Lowest rates require Autopay and paying off a portion of existing debt directly. Loans feature repayment terms of 24 to 84 months. For example, if you receive a $10,000 loan with a 36-month term and a 17.59% APR (which includes a 13.94% yearly interest rate and a 5% one-time origination fee), you would receive $9,500 in your account and would have a required monthly payment of $341.48. Over the life of the loan, your payments would total $12,293.46. The APR on your loan may be higher or lower and your loan offers may not have multiple term lengths available. Actual rate depends on credit score, credit usage history, loan term, and other factors. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. There is no fee or penalty for repaying a loan early. Personal loans issued by Upgrade's bank partners. Information on Upgrade's bank partners can be found at https://www.upgrade.com/bank-partners/.

Pros

Secured and joint loans.
Multiple rate discounts.
Mobile app to manage loan payments.
Direct payment to creditors with debt consolidation loans.
Long repayment terms on home improvement loans.

Cons:

Origination fee.
No option to choose your payment date.

Disclaimer:

LightStream: Best for debt consolidation loan for low rates

Nerdwallet Rating

Est. APR

6.99-25.29%

Loan amount

$5K-$100K

Min. credit score

660

on LightStream's website

Key Facts:

LightStream is a solid option for good-credit borrowers, with no fees and a promise to beat competitors’ rates.

Qualifications

Minimum credit score: 660, but can vary depending on the loan purpose and amount.
Maximum debt-to-income ratio: 50%.
Minimum credit history: 3 years.
Income sources accepted: Employment, retirement, rental income, alimony, child support, Social Security payments and disability benefits.
Must be a U.S. citizen or permanent resident who is at least 18 years old and has a U.S. bank account.

Available Term Lengths

2 to 7 years

Fees

Origination fee: None.
Late fee: None.

Disclaimer:

Rates quoted are with AutoPay. Your loan terms are not guaranteed and may vary based on loan purpose, length of loan, loan amount, credit history and payment method (AutoPay or Invoice). AutoPay discount is only available when selected prior to loan funding. Rates without AutoPay are 0.50% points higher. To obtain a loan, you must complete an application on LightStream.com which may affect your credit score. You may be required to verify income, identity and other stated application information. Payment example: Monthly payments for a $10,000 loan at 7.99% APR with a term of 5 years would result in 60 monthly payments of $202.72. Some additional conditions and limitations apply. Advertised rates and terms are subject to change without notice. Truist Bank is an Equal Housing Lender. © 2024 Truist Financial Corporation. Truist, LightStream, and the LightStream logo are service marks of Truist Financial Corporation. All other trademarks are the property of their respective owners. Lending services provided by Truist Bank.

Pros

No fees.
Rate discount for autopay.
Long repayment terms and large loan amounts.
Fast funding.
Rate Beat program and Experience Guarantee.

Cons:

No option to pre-qualify.
No direct payment to creditors with debt consolidation loans.
High minimum loan amount.

Disclaimer:

Happy Money: Best for credit card consolidation

4.0

Nerdwallet Rating

Est. APR

11.72-17.99%

Loan amount

$5K-$40K

Min. credit score

640

on Happy Money's website

Key Facts:

Happy Money may be a smart way to consolidate high-interest credit card debt into one fixed monthly payment, but well-qualified borrowers may find lower rates elsewhere.

Qualifications

Must have a valid Social Security number or individual taxpayer identification number.
Minimum credit score: 640.
Minimum credit history: 3 years and 2 accounts.
Maximum debt-to-income ratio: 55%, including mortgage.
Not a resident of Iowa, Massachusetts and Nevada.

Available Term Lengths

2 to 5 years

Fees

Origination fee: Up to 7%.

Disclaimer:

This offer does not constitute a commitment to lend or an offer to extend credit. Upon submitting a loan application, you may be asked to provide additional documents to verify your identity, income, assets, or financial condition. The rate and terms you may be approved for will be shown to you during the application process. Loans subject to an origination fee, which is deducted from the loan proceeds. Refer to full borrower agreement for all terms, conditions and requirements. Only loans applied for and issued on or after January 10, 2024, are covered under the TruStage™ Payment Guard Insurance Policy. Please refer to the certificate of insurance, provided to you with your loan origination documents, for terms and conditions of the coverage. Some exclusions apply. Claims must be submitted for review and approval to CUMIS Specialty Insurance Company, Inc. TruStage™ Payment Guard Insurance is underwritten by CUMIS Specialty Insurance Company, Inc and not by Happy Money. CUMIS Specialty Insurance Company, our excess and surplus lines carrier, underwrites coverages that are not available in the admitted market. Product and features may vary and not be available in all states. Certain eligibility requirements, conditions, and exclusions may apply. Please refer to the Group Policy for a full explanation of the terms. The insurance offered is not a deposit, and is not federally insured, sold or guaranteed by any financial institution. Corporate Headquarters 5910 Mineral Point Road, Madison, WI 53705.

Pros

Option to pre-qualify with a soft credit check.
Offers direct payment to creditors.
No late fee.
Hardship program for borrowers in need.

Cons:

Origination fee.
No rate discount.
No co-sign or joint loan option.
No option to choose initial payment date.

Disclaimer:

Achieve Personal Loans: Best for consolidation loan for rate discounts

4.0

Nerdwallet Rating

Est. APR

8.99-29.99%

Loan amount

$5K-$50K

Min. credit score

640

on Achieve's website

Key Facts:

Achieve personal loans can be a good debt consolidation option for fair- or good-credit borrowers who qualify for one of the lender’s rate discounts.

Qualifications

Minimum credit score: 640.
Maximum debt-to-income ratio: 70% including a mortgage payment or other housing expense.
Minimum income: None.
Minimum credit history: 3 years across 2 accounts.
Must be a U.S. citizen or permanent resident living in a state where Achieve operates.
Must provide a Social Security number or ITIN.

Available Term Lengths

2 to 5 years

Fees

Origination fee: 1.99% - 6.99%.
Late fee: $8.

Disclaimer:

Personal loans available through Achieve.com (NMLS #138464) or Achieve Personal Loans (NMLS ID #227977) are made by Cross River Bank, a New Jersey State Chartered Commercial Bank, Equal Housing Lender. Loan applications are subject to credit review, underwriting criteria and approval. Loans are not available in all states and available loan terms/fees may vary by state. Loan amounts range from $5,000 to $50,000. APRs range from 8.99% to 29.99% and include applicable origination fees that vary from 1.99% to 6.99%. Repayment periods range from 24 to 60 months. Example loan: four-year $20,000 loan with an origination fee of 6.99%, a rate of 15.49%, and corresponding APR of 19.54%, would have an estimated monthly payment of $561.60 and a total cost of $26,956.80. To qualify for a 8.99% APR loan, a borrower will need excellent credit, a loan amount less than $12,000.00, and a term of 24 months. Adding a co-borrower with sufficient income; using at least eighty-five percent (85%) of the loan proceeds to pay off qualifying existing debt directly; or showing proof of sufficient retirement savings, could also help you qualify for lower rates. Funding time periods are estimates and can vary for each loan request. Same day decisions assume a completed application with all required supporting documentation submitted early enough on a day that our offices are open. Achieve Personal Loans loan consultants' hours are Monday-Friday 6am-8pm AZ time, and Saturday-Sunday 7am-4pm AZ time.

Pros

Multiple rate discounts.
Direct payment to creditors for debt consolidation.
Joint loan option.
Fast approval and funding.
Access to a dedicated loan consultant.

Cons:

Origination fee.
High minimum loan amount.
No mobile app.

Disclaimer:

Best Egg: Best for secured debt consolidation loan

Nerdwallet Rating

Est. APR

7.99-35.99%

Loan amount

$2K-$50K

Min. credit score

600

on Best Egg's website

Key Facts:

Best Egg is worth considering for borrowers looking for a secured loan or to consolidate debt, but the loans come with an origination fee.

Qualifications

Minimum credit score: 600.
Maximum debt-to-income ratio: 70% including a mortgage.
Minimum credit history: 3 years and 1 account.
Acceptable income sources: Employment, household income, alimony, retirement, child support, Social Security payments and disability benefits.
Must be a U.S. citizen or permanent resident and at least 18 years of age.

Available Term Lengths

3 to 5 years

Fees

Origination fee: 0.99% - 9.99%.

Disclaimer:

*Trustpilot TrustScore as of December 2022. Best Egg loans are personal loans made by Cross River Bank, a New Jersey State Chartered Commercial Bank, Member FDIC, Equal Housing Lender or Blue Ridge Bank, N.A., Member FDIC, Equal Housing Lender. The Best Egg Credit Card is issued exclusively by First Bank & Trust, Member FDIC, Brookings SD pursuant to a license by Visa International. Visa is a registered trademark, and the Visa logo design is a trademark of Visa International Incorporated. “Best Egg” is a trademark of Best Egg Technologies, LLC. Offers may be sent pursuant to a joint marketing agreement between Cross River Bank, Blue Ridge Bank, N.A. and/or First Bank & Trust and Marlette Marketing, LLC, a subsidiary of Best Egg, Inc. The term, amount, and APR of any loan we offer to you will depend on your credit score, income, debt payment obligations, loan amount, credit history and other factors. Your loan agreement will contain specific terms and conditions. About half of our customers get their money the next day. After successful verification, your money can be deposited in your bank account within 1-3 business days. The timing of available funds upon loan approval may vary depending upon your bank’s policies. Loan amounts range from $2,000– $50,000. Residents of Massachusetts have a minimum loan amount of $6,500 ; Ohio, $5,001; and Georgia, $3,001. For a second Best Egg loan, your total existing Best Egg loan balances cannot exceed $100,000. Annual Percentage Rates (APRs) range from 8.99%– 35.99%. The APR is the cost of credit as a yearly rate and reflects both your interest rate and an origination fee of 0.99%– 9.99% of your loan amount, which will be deducted from any loan proceeds you receive. The origination fee on a loan term 4-years or longer will be at least 4.99%. Your loan term will impact your APR, which may be higher than our lowest advertised rate. You need a minimum 700 FICO® score and a minimum individual annual income of $100,000 to qualify for our lowest APR. For example: a 5‐year $10,000 loan with 9.99% APR has 60 scheduled monthly payments of $201.81, and a 3‐year $5,000 loan with 7.99% APR has 36 scheduled monthly payments of $155.12. To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. What this means for you: When you open an account, we will ask for your name, address, date of birth, and other information that will allow us to identify you. We may also ask to see your driver’s license or other identifying documents. Best Egg products are not available if you live in Iowa, Vermont, West Virginia, the District of Columbia, or U.S. Territories. TO REPORT A PROBLEM OR COMPLAINT WITH THIS LENDER, YOU MAY WRITE OR CALL– Operations Manager, Email: crt-resolutions@bestegg.com, Address: P.O. Box 42912, Philadelphia, PA 19101, Phone: 1-855-282-6353. This lender is licensed and regulated by the New Mexico Regulation and Licensing Department, Financial Institutions Division, P.O. Box 25101, 2550 Cerrillos Road, Santa Fe, New Mexico 87504. To report any unresolved problems or complaints, contact the division by telephone at (505) 476-4885 or visit the website https://www.rld.nm.gov/financial-institutions/

Pros

Wide range of loan amounts.
Secured loan options.
Direct payment to creditors with debt consolidation loans.
Fast funding.
Free credit score monitoring.

Cons:

Origination fee.
No rate discounts.
No mobile app to manage loan.

Disclaimer:

Universal Credit: Best for debt consolidation loan for bad credit

4.0

Nerdwallet Rating

Est. APR

11.69-35.99%

Loan amount

$1K-$50K

Min. credit score

580

on Universal Credit's website

Key Facts:

A Universal Credit loan is a sound option for bad-credit borrowers looking to build credit, but rates are high compared to similar lenders.

Qualifications

Minimum credit score: 580.
Minimum number of accounts on credit history: 1 account.
Maximum debt-to-income ratio: 75%, including mortgage and the loan you’re applying for.
Minimum length of credit history: 2 years.
Minimum income requirement: None. Lender accepts income from alimony, retirement, child support, Social Security and other sources.

Available Term Lengths

3 to 5 years

Fees

Origination fee: 5.25% to 9.99%.
Late fee: Up to $10.
Non-sufficient funds fee: $10.

Disclaimer:

Your loan terms are not guaranteed and are subject to our verification and review process. You may be asked to provide additional documents to enable us to verify your income and your identity. You may be required to have some of your funds sent directly to pay off your credit cards. This rate includes an Autopay APR reduction of 0.5%. By enrolling in Autopay your payments will be automatically deducted from your bank account. Selecting Autopay is optional. Annual Percentage Rate is inclusive of a loan origination fee, which is deducted from the loan proceeds. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. Personal loans issued by Universal Credit's bank partners. Information on Universal Credit's bank partners can be found at Universal Credit | Bank Partners . Please refer to Universal Credit's Terms of Use and Borrower Agreement for all terms, conditions and requirements. Accept your loan offer and your funds will be sent to your bank or designated account within one (1) business day of clearing necessary verifications. Availability of the funds is dependent on how quickly your bank processes the transaction. From the time of approval, funds sent directly to you should be available within one (1) business day. Funds sent directly to pay off your creditors may take up to 2 weeks to clear, depending on the creditor.

Pros

Offers direct payment to creditors with debt consolidation loans.
Fast funding.
Offers multiple rate discounts.
Offers free credit score access.

Cons:

Charges origination fee.
Borrowers can choose from only two repayment term options.

Disclaimer:

LendingClub: Best for joint debt consolidation loan

Nerdwallet Rating

Est. APR

9.06-35.99%

Loan amount

$1K-$40K

Min. credit score

600

On NerdWallet

Key Facts:

LendingClub personal loans are a solid option for good- and fair-credit borrowers looking to consolidate debt and build their credit.

Qualifications

Minimum credit score: 600; average borrower score is above 700.
Minimum income: None; lender requires proof of income. Borrower average is $100,000 per year.
Maximum DTI: 40%.
Minimum credit history: 36 months and two accounts.

Available Term Lengths

2 to 6 years

Fees

Origination fee: 3% to 8%.
Late fee: 5% of payment or $15 after 15-day grace period.
Insufficient funds: $15.

Disclaimer:

Between April 1, 2024 to June 30, 2024, Personal Loans issued by LendingClub Bank were funded within 35 hours after loan approval, on average. 45% of Personal Loans issued by LendingClub Bank during the same period were funded within 24 hours after loan approval. Loan approval, and the time it takes to issue a credit decision, are not guaranteed and individual results vary based on creditworthiness and other factors, including but not limited to investor demand. A representative example of payment terms for a Personal Loan is as follows: a borrower receives a loan of $23,354 for a term of 36 months, with an interest rate of 11.49% and a 6.00% origination fee of $1,401 for an APR of 14.24%. In this example, the borrower will receive $21,953 and will make 36 monthly payments of $770. Loan amounts range from $1,000 to $40,000 and loan term lengths range from 24 months to 72 months. Some amounts, rates, and term lengths may be unavailable in certain states. For Personal Loans, APR ranges from 9.06% to 35.99% and origination fee ranges from 3.00% to 8.00% of the loan amount. APRs and origination fees are determined at the time of application. Lowest APR is available to borrowers with excellent credit. Advertised rates and fees are valid as of July 11, 2024 and are subject to change without notice. Unless otherwise specified, loans are made by LendingClub Bank, N.A., Member FDIC (“LendingClub Bank”), a wholly-owned subsidiary of LendingClub Corporation, NMLS ID 167439. LendingClub Bank is not an affiliate of NerdWallet and is not responsible for the products and services provided by NerdWallet. Loans are subject to credit approval and sufficient investor commitment. If a credit union is selected to invest in the loan, credit union membership will be required. Certain information that LendingClub Bank subsequently obtains as part of the application process (including but not limited to information in your consumer report, your income, the loan amount that you request, the purpose of your loan, and qualifying debt) will be considered and could affect your ability to obtain a loan. Loan closing is contingent on accepting all required agreements and disclosures at Lendingclub.com. “LendingClub” is a trademark of LendingClub Bank.

Pros

Joint loan option.
Direct payment to creditors with debt consolidation loans.
Option to pre-qualify with a soft credit check.
Option to change your payment date.

Cons:

Origination fee.

Disclaimer:

Discover® Personal Loans: Best for debt consolidation loan for fast funding

5.0

Nerdwallet Rating

Est. APR

7.99-24.99%

Loan amount

$2.5K-$40K

Min. credit score

660

on Discover's website

Key Facts:

With competitive rates and no origination fees, Discover personal loans are good options for borrowers with good and excellent credit.

Qualifications

Minimum credit score: 660.
Minimum annual household income: $25,000. Income can come from employment, retirement, alimony, child support, Social Security payments and disability benefits.
Must provide a valid U.S. address and email address.
Must be 18 years old with a valid Social Security number.

Available Term Lengths

3 to 7 years

Fees

Origination fee: None.
Late fee: $39.

Disclaimer:

This is not a commitment to lend from Discover Personal Loans. Your APR will be between 7.99% and 24.99% based on creditworthiness at time of application for loan terms of 36-84 months. For example, if you get approved for a $15,000 loan at 12.99% APR for a term of 72 months, you'll pay just $301 per month. You must have a minimum individual or household annual income of $25,000, be over 18 years of age, and have a valid US SSN to be considered for a Discover personal loan. Loan approval is subject to confirmation that your income, debt-to-income ratio, credit history and application information meet all requirements. Our lowest rates are available to consumers with the best credit. Many factors are used to determine your rate, such as your credit history, application information and the term you select. State restrictions may apply. A Discover personal loan is intended for personal use and cannot be used to pay for post-secondary education, to pay off a secured loan, or to directly pay off a Discover credit card. If your application is approved, we will send funds after you accept the loan. Your bank or creditor may take more days to process the funds. Discover makes loans without regard to race, color, religion, national origin, sex, disability, or familial status.

Pros

No origination fee.
Fast funding.
Direct payment to creditors with debt consolidation loans.
Wide variety of repayment term options.
Available nationwide.

Cons:

No rate discount.
Late fee.
No co-sign or joint loan option.

Disclaimer:

Reach Financial Personal Loans: Best for consolidation loan for flexible repayment terms

Nerdwallet Rating

Est. APR

5.99-35.99%

Loan amount

$3.5K-$40K

Min. credit score

660

On NerdWallet

Key Facts:

Reach Financial personal loans are suitable for good-credit borrowers looking to consolidate debt. Loans are funded fast, but they lack some key features offered by other lenders.

Qualifications

Minimum credit score: 660.
Minimum credit history: 3 years and 1 account.
Minimum net income: $1,000 left after monthly bills, such as rent and other debt installments, are paid.
Acceptable income sources: Employment, alimony, retirement, child support, Social Security payments and disability benefits.
Must be a U.S. resident who lives in one of the 41 states where the company does business, or Washington, D.C.

Available Term Lengths

2 to 5 years

Fees

Origination fee: 4% to 8%.
Late fee: $15.
Non-sufficient funds fee: $25.

Disclaimer:

All loans are subject to eligibility criteria and review of creditworthiness and history. Terms and conditions apply. All loans advertised are unsecured personal loans issued by FinWise Bank, a Utah chartered commercial bank, member FDIC, as creditor, on the Reach Financial platform. If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, and the loan term you select. Fixed Annual Percentage Rates (APR) range from 14.30% to 35.99%. You could receive a loan of $10,000 with an interest rate of 9.15%, an origination fee of $200, for an APR of 10.00%, which would result in total payment of $12,499 with 60 monthly payments of $208.31. Total approved loan amount reflects origination fee, which ranges from 0% to 8%. *Within 24 hours of your loan approval, loan proceeds will be available to pay thecreditors named on your Truth-In-Lending Disclosure.

Pros

Direct payment to creditors with debt consolidation loans.
Fast funding.
Customizable repayment terms.
Hardship program for borrowers in need.

Cons:

Origination fee.
No co-signed, joint or secured loan options.
Reports payments to only two of the three major credit bureaus.

Disclaimer:

How to choose the best debt consolidation loan

Use this quick guide to help compare debt consolidation companies like those listed above and the loans they offer.

1) Check that the lender’s loan amounts and terms match your debt. Personal loans for debt consolidation come in a wide range of loan amounts ($1,000 to $50,000) and repayment terms (two to seven years).

Look for lenders whose loans meet your debt payoff needs. For example, some lenders, like SoFi and LightStream, have minimum loan amounts of $5,000, which may be too high for small debts. Other lenders may not offer long-enough terms for paying down large debts.

2) Look for an annual percentage rate lower than your existing debts. The loan's annual percentage rate, or APR, represents its true annual cost and includes interest and any fees. The most affordable loan is the one with the lowest APR. Most online lenders let you pre-qualify with a soft credit check, so you can see your potential APR without submitting a formal application.

3) Avoid origination fees if you can. Lenders like Happy Money and Best Egg, charge origination fees to cover the cost of processing your loan. This one-time fee may range from 1% to 10% of the loan amount and is deducted from loan proceeds or added to the loan balance.

To keep costs down, avoid loans that include this fee – unless the APR (which includes the origination fee) is still lower than loans with no origination fee.

4) Look for special debt consolidation features. Lenders like Achieve and Discover may offer special consolidation features, such as direct payment to creditors. This means the lender pays off your creditors for you. Others, like LendingClub, offer free credit score monitoring. Consider these perks, but always prioritize an affordable loan you can repay on-time.

NerdWallet’s guide to debt consolidation loans

What are debt consolidation loans?
How do loans for consolidation work?
Are debt consolidation loans a good idea?
Debt consolidation loan interest rates
How to get a debt consolidation loan
What to know about debt consolidation loans for bad credit
FAQs about debt consolidation loans
Other ways to get out of debt

What are debt consolidation loans?

Debt consolidation loans are a type of personal loan that combine multiple unsecured debts — such as credit cards, medical bills or payday loans — into one fixed monthly payment, making the debt easier to pay off.

As long as the interest rate on the debt consolidation loan is lower than the average rate of your existing debts, you’ll save money and potentially get out of debt faster.

Debt consolidation loans are a particularly smart choice for consolidating high-interest debt, like credit cards.

How do loans for consolidation work?

Online lenders, banks and credit unions offer debt consolidation loans, which you can usually apply for online. Once you’re approved, the lender deposits the loan into your bank account, and you use that money to pay off all your debts at once, so you’re left with only the new loan. Some lenders will even pay off your creditors for you, saving you that step.

You then make monthly payments toward the debt consolidation loan until it’s paid off and you’re officially debt-free. Payments are fixed for the life of the loan, typically two to seven years.

» MORE: How do debt consolidation loans work?

Debt consolidation loan example

Let’s say you have $10,000 in credit card debt, spread out across four different credit cards.

The average annual percentage rate on a credit card is about 23%. If you’re making a minimum payment of $75 on each card, at 23% APR, it will take you four and a half years to be debt-free, and it will cost you an extra $6,200 in interest, on top of the original debt.

But if you pay off all your credit cards at once using a $10,000 debt consolidation loan, at 15% APR, you’ll save $2,841 on interest and get out of debt six months sooner. Here’s how it breaks down.

	Credit cards	Debt consolidation loan
APR	23%.	15%.
Monthly payment	$300.	$278.
Payoff period	4.5 years.	4 years.
Interest paid	$6,200.	$3,359.

Ask NerdWallet: Should I use a debt consolidation loan to pay off my credit cards?

"Consolidating credit card debt is almost always a smart move, because credit cards have really high interest rates, and when you carry a balance, you end up paying interest on interest. A debt consolidation loan has a fixed interest rate, so it stops the cycle of compounding interest, and rates tend to be lower.

It also gives you a plan. If you’ve only been able to make the minimum payments on your credit cards each month, you probably aren’t making much progress on your debt. A consolidation loan has a clear endpoint, as long as you make the monthly payments on time."

— Jackie Veling, Lead Writer on Debt Consolidation

Are debt consolidation loans a good idea?

Debt consolidation loans are a good idea if you can get a lower annual percentage rate than what you're currently paying on your other debts. Like with all financial decisions, carefully weigh the pros and cons of consolidating your debts before you apply for a loan.

Pros

You pay less in interest.
You may get out of debt faster.
You only have one payment.
You have a clear finish line.

Cons

You may not qualify for a low enough rate.
You still have debt you need to manage.
Consolidation won’t fix core spending issues.

Pros of debt consolidation loans

You pay less in interest: By getting a debt consolidation loan at a lower rate than your current debts, you’ll save on interest, which can make debt more manageable.
You may get out of debt faster: Because you’re saving on interest, you can use that savings to make larger payments on your loan, speeding up your debt payoff timeline.
You have only one payment: Unlike juggling multiple credit card bills or other debt repayments, you’ll have only one monthly payment with a consolidation loan.
You have a clear finish line: A debt consolidation loan gives you an exact date you’ll be debt-free, which can help you stay motivated as you make the payments.

Cons of debt consolidation loans

You may not qualify for a low enough rate: Not all consolidation loans come with low interest rates, and if you have bad credit (a score below 630), you may not get a rate that’s lower than your current debts.
You still have debt you need to manage: Consolidating debt is a smart choice for many, but remember the debt doesn’t disappear — it goes somewhere else. Most consolidation loans offer terms of two to seven years, so be prepared to stick to your monthly payments over that time period.
Consolidation won’t fix core spending issues: If you’re in debt because you struggle to budget, a debt consolidation loan won’t fix that. It may even make things worse if you use your newly freed credit cards to rack up additional debt.

Debt consolidation loan interest rates

The interest rate you get on a debt consolidation loan depends on factors like your credit score and debt-to-income ratio, which is the percentage of your monthly income that goes to debt payments. Borrowers with good to excellent credit scores tend to get the lowest interest rates on debt consolidation loans. See the table below to get an idea of what rate you can expect.

Average debt consolidation loan interest rates

Borrower credit rating	Score range	Estimated APR
Excellent	720-850.	9.63%.
Good	690-719.	13.15%.
Fair	630-689.	16.20%.
Bad	300-629.	20.82%.

Source: Average rates are based on aggregate, anonymized offer data from users who pre-qualified through NerdWallet from October 1, 2024, through October 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 the Federal Reserve impact interest rates?

The Federal Reserve doesn’t directly set interest rates on debt consolidation loans. It sets the federal funds rate, which trickles down to impact the interest rates of many types of credit, including debt consolidation loans.

You’ve probably heard that rates are high right now, and while that’s true, fixed-rate credit, such as debt consolidation loans, tend to be less affected.

On November 7, 2024, the Fed cut rates by a quarter point, its second cut of 2024. These cuts may lead to lower interest rates on debt consolidation loans, though it’s hard to say by how much.

Since lenders look at multiple factors when determining what rate you’ll get on a debt consolidation loan, it may be best to consolidate now and start the path toward getting out of debt, instead of waiting for more rate cuts that aren't guaranteed.

How to get a debt consolidation loan

1. Add up current debts and calculate the combined interest rate

The first step in getting a debt consolidation loan is having a clear picture of your current debt. You can use NerdWallet’s debt consolidation calculator to see your total balance, total monthly payment and combined interest rate across all debts.

Keep two numbers in mind moving forward: Your total debt, because this is the loan amount you need to apply for, and your combined interest rate, because you’ll want a lower interest rate on your consolidation loan.

2. Pre-qualify and compare loan options

One of the best ways to compare loan offers is to pre-qualify with multiple lenders, which lets you see your potential loan terms, including APR, without any effect on your credit score. Though not all banks or credit unions offer pre-qualification, most online lenders do.

» MORE: Pre-qualify for free on NerdWallet

3. Apply for a debt consolidation loan

Once you’ve decided on a lender, it’s time to apply for the loan.

Most loan applications are online and ask you to supply personal information like your Social Security number, address and other contact details. You also may be asked to provide proof of identity, employment and income.

Once you’ve submitted your application, the lender will make an approval decision. If you’re approved, you’ll sign the loan agreement and receive the funds. Funding time varies among lenders, but some lenders can fund the same day you’re approved.

4. Pay off creditors

Here’s the most important step: Use the loan proceeds to pay off your existing debts. Some lenders send the funds to your creditors for you, so you’ll need to provide account information about your existing debts — and check the accounts to make sure they’re paid off.

If a lender doesn’t offer direct payment, they’ll deposit the funds in an account of your choosing or mail a check, if you prefer. It’ll be up to you to make sure the right amount goes to each debt.

5. Begin making payments on your new loan

Once your existing debts are paid, you’re left with your new loan. Personal loan payments are monthly, though there’s usually no fee for paying off a loan early. Make a plan now to manage your personal loan payments.

As you make progress on paying off your loan, try to keep your credit card balances at or near zero until you’re debt-free. But avoid closing the accounts, which can lower your credit score.

What to know about debt consolidation loans for bad credit

You can still get a debt consolidation loan if you have bad credit (a 629 credit score or lower).

Look specifically for lenders that let you pre-qualify with a soft credit check — that way you can check if you meet the lender’s requirements without taking a hit to your credit score. This will also help you check if the rate you qualify for is lower than your existing debts.

Some online lenders specifically offer debt consolidation loans for borrowers with bad credit. If you’re not sure where to begin, your local credit union is also a good first stop.

» COMPARE: Best debt consolidation loans for bad credit

Frequently asked questions about debt consolidation

Does getting a debt consolidation loan hurt your credit?

Applying for a debt consolidation loan requires a hard credit check, which can temporarily ding your credit score. Making late payments on your new loan can also hurt your credit score. But if you use the debt consolidation loan to pay off debt, then pay off the new loan on time, the overall effect on your credit should be positive.

What is the minimum credit score for a debt consolidation loan?

The minimum credit score for a debt consolidation loan varies by lender. Bad-credit lenders may accept borrowers with credit scores of 629 or less.

What qualifies you for debt consolidation?

To qualify you for debt consolidation, a lender typically looks at your credit score, credit history, income and any existing debts. There are ways to boost your chances of getting approved for a loan, like building your credit and paying off small debts.

Is it hard to get a loan for consolidation?

You can apply for most debt consolidation loans online, including loans from banks and credit unions. A loan application will ask for details about the loan you want, your personal and contact information, and information about your income and any debts. It may require additional documentation, like proof of identity and proof of income.

Can I still use my credit card after debt consolidation?

You can still use your credit cards after debt consolidation. Consolidating your debts doesn’t close your credit cards, it just pays them off, but be careful about increasing your overall credit utilization and ending up in more debt than before.

Other ways to get out of debt

A debt consolidation loan isn’t your only option for paying off debt.

0% balance transfer credit card

For borrowers with good to excellent credit, transferring debts to a 0% balance transfer card is a great option — as long as you can pay it off during the introductory period, which can last up to 21 months.

This is sometimes called credit card refinancing, and it's similar to a consolidation loan. But because you pay no interest during the introductory period, you can get out of debt even faster.

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Nerdy Tip

Balance transfers work best if you can qualify for a card that covers the amount of your debt, and the savings in interest outweigh the balance transfer fee, which is typically 3% to 5% of the total amount transferred. Aim to pay off the balance in full before the zero-interest promotion expires and the APR resets to its normal, higher rate.

» MORE: Best balance transfer credit cards

Credit counseling

Nonprofit organizations offer credit counseling, which includes helping you create a debt management plan. Similar to other consolidation products, these plans roll your debts into one manageable payment at a reduced interest rate.

» MORE: Find the right debt management plan

DIY debt payoff strategies

If you’re not sure how to tackle debt, you may not need to consolidate. The debt snowball and debt avalanche methods are two common and effective strategies for paying off debt.

The snowball method focuses on paying off your smallest debt first, building momentum as you go. The avalanche focuses on paying off the debt with the highest interest rate first, then applying the savings elsewhere. Both can boost your payoff speed.

Debt relief

If you have significant debt (40% or more of your income) and no plan to pay it off, you may want to explore other strategies, like debt settlement or bankruptcy. Both of these options help eliminate unsecured debts, but they hurt your credit and are typically a last resort.