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By: and
Published: May 02, 2023 29 min read

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Debt consolidation can be an effective way to pay off large balances faster, especially if you have multiple high-interest debt payments to make every month.

Compare our picks for the best debt consolidation loans and read our guide to find out how consolidating can help reduce your debt, simplify your finances and save you money in the long run.

Our Top Picks for Best Debt Consolidation Loans of 2023

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Best Debt Consolidation Loans Reviews

  • No fees for loan origination, late payments or prepayment
  • It can offer lower interest than competitors under certain conditions
  • 0.50% rate discount for setting up Autopay
  • Terms from 2 to 12 years
  • Doesn't provide loan pre-approvals
  • Doesn't accept loan information via phone or fax
  • Autopay discount only available before loan disbursement
Loan amount:
Term options:
24 to 144 months depending on the loan type

Why we chose it: Lightstream is our top choice for large loans because of its $100,000 maximum and its flexible payment terms from two up to 12 years.

LightStream offers personal loans up to $100,000 with annual percentage rates (APR) ranging from 8.49% to 24.49% with its Autopay discount. Its terms range from 24 to 144 months, the widest range among the companies we evaluated.

You can check payment term options by entering your desired loan amount in their debt consolidation loan calculator. However, note that this calculator provides a general calculation using the lowest possible APR.

With its Rate Beat Program, Lightstream will offer an interest rate .10% lower than any competitor’s, but only if you were already approved for the competitor’s lower rate. This means you’d have to apply for both loans and actually get a lower APR elsewhere.

If the customer is not satisfied with their loan experience within the first 30 days, they can contact customer service and receive a questionnaire. After Lightstream evaluates the issue, the borrower can receive a $100 compensation.

Lightstream is a good option for those with excellent credit who need a large loan as it requires good to excellent credit, an established credit history, various open accounts and a stable and sufficient income.

  • Unemployment protection
  • Pays lenders directly
  • Accepts joint applications
  • Loan disbursement in one or two business days unless paying directly to creditors
  • 3 to 7 year term range isn't as varied competitors
  • Not open to Mississippi residents
  • Co-applicant must live in the same residence as the primary borrower
Loan amount:
Term options:
3 to 7 years

Why we chose it: SoFi’s consolidation loans don’t charge any origination, prepayment or late payment fees; additionally, they offer multiple ways to get discounts on their rates.

SoFi offers personal loans with interest rates starting at 8.99% APR (with Autopay discount) and caps at 23.43% APR with the discount. If the customer doesn’t use Autopay, rates will be 0.25% higher.

The company funds most personal loans on the same day of approval — unless the loan is for more than $20,000 or the borrower enrolls in Direct Pay, a service where SoFi pays lenders directly and the borrower doesn’t actually receive the funds. (Note that those who enroll in Direct Pay obtain an additional 0.25% APR discount on their loan rate.)

SoFi offers temporary payment modification and job placement assistance if a borrower were to lose their job. This benefit is offered in three-month increments for up to 12 months. Interest will continue to accrue during that period. To qualify, borrowers have to also qualify for governmental unemployment compensation and actively participate in SoFi’s Career Advisory Group as part of their job search.

Although its main competition offers longer payment terms, SoFi’s various additional banking services, accessible customer service and comprehensive mobile app make it an excellent choice for anybody looking for a no-fee loan.

  • Apply and check application status online
  • Accepts co-borrowers
  • No origination fee or prepayment penalty
  • You need to be a credit union member for disbursement
  • No Autopay discount
Loan amount:
Term options:
12 to 60 months

Why we chose it: PenFed’s minimum $600 loan amount paired with its high customer satisfaction and low interest rates make it the best choice for debt under $1,000.

Pentagon Federal Credit Union, known as PenFed, offers fixed-interest rates starting at 7.74% APR and terms up to 60 months for their debt consolidation loans. Borrowers looking for a small loan will be glad to know that there’s a $600 minimum you can apply for.

You don’t have to be a PenFed member to check your rates and get pre-approved. However, were you to actually apply for the loan, you’ll need to become a credit union member. PenFed will open a savings account in your name preloaded with $5 to establish your membership. After approval, the loan is disbursed within 1-2 business days.

PenFed doesn't charge origination or early payment fees, but it does charge a $29 late payment fee to those submitting their payment more than five days late.

PenFed features a mobile application for iOS and Android where members can check their loan status, make loan payments and transfer money between accounts.

  • Works with any type of credit
  • Online application process and loan calculator
  • Partners with TransUnion to provide credit score
  • Some lenders offer personal loans up to $250,000
  • Credit requirements depend on the company selected
  • Some of its lenders will charge an origination fee of up to 6% of the loan amount
Loan amount:
Depends on the lender you're matched with
Term options:
Depends on the lender you're matched with

Why we chose it: The Fiona marketplace allows borrowers to browse and compare multiple online lenders using different search factors like credit score and location.

Fiona offers personal loans for debt consolidation from an array of lending partners and for all types of credit, from poor to excellent. It partners with renowned companies such as LendingClub, SoFi, Avant and Marcus by Goldman Sachs.

Unlike most lenders on this list, some of Fiona’s lending partners offer secured personal loans for debt consolidation. Secured loans require a property or assets to back up the loan. A car title, stock investments, equity from life insurance policies, real estate, and precious metals are some of the properties and assets that Fiona’s partners accept as collateral for a secured personal loan. Do note, however, that were you to default on a secured loan, the lender could sell that collateral in order to pay the loan.

Among other loan offers, there’s refinancing for unsecured personal loans as well as secured loans, including auto, student loan and mortgage refinance.

Since Fiona is not a lender itself, but a marketplace, fees will depend entirely on the lender you’re matched with, so be sure to read the fine print during your application process.

  • Pays lenders directly
  • Same-day approval
  • You can return loan funds within 30 days
  • You can apply online or by phone
  • Minimum household annual income of $25,000
  • Late payment fee of $39
  • Funds cannot be used to pay secured loans or Discover credit cards
Loan amount:
Term options:
36 to 84 months

Why we chose it: Discover has some of the lowest interest rates in debt consolidation, a variety of options aside from loans and a rare 30-day guarantee if you need to return the funds.

Discover doesn’t charge any origination or prepayment fees, and its personal loan rates range between 6.99%-24.99% APR, some of the lowest minimum APRs available.

Discover features same-day approval in most cases, and loan funds are deposited into a savings or checking account within 1-2 business days. If a client is not satisfied with their experience or has the ability to pay back quickly and without interest, they can return the funds within 30 days.

While there’s no pre-established minimum FICO score requirement, Discover does require a minimum of $25,000 in annual income and, like most other lenders, evaluates debt-to-income ratio, credit history, application information and the selected payment term.

Clients can access 24/7 customer service over the phone and through the Discover mobile app for iOS and Android. They can also check their FICO score, access their bank account, make payments, and check balances through the app.

  • Helps develop a debt management plan
  • Doesn't charge a fee until all debts are settled
  • Could lower debt by over 50%
  • Could match customers with lenders through affiliate program if needed
  • Minimum of $10,000 debt
  • Charges a fee of 15-25% of the debt amount
Loan amount:
$1,000-$100,000 depending on match
Term options:
4 to 84 months depending on match

Accredited Debt Relief is a debt consolidation service that helps people both consolidate and renegotiate their debt. Customers must have at least $10,000 in unsecured debt and have to pay a fee of 15-25% of the debt after their debts are settled.

While that fee might seem high, there are two factors that come into play. First, Accredited doesn’t charge until accounts have been settled and there’s a clear path forward to get rid of the remaining debt. And second, outstanding debt could be reduced by up to 65% according to some testimonials, which would leave customers still paying much less than they originally owed.

In case a loan is needed or considered the best course of action, the company has an affiliate program to match customers with lenders. Loans range from $1,000 to $100,000 with competitive APRs starting at 4.90%. Note that all loans have origination fees ranging between 1% and 6%.

Accredited has been in business for over 13 years and is accredited by the the American Fair Credit Council, the Consumer Debt Relief Initiative and has a grade of A+ with the Better Business Bureau.

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Other lenders we considered

For our top list, we analyzed several debt consolidation loan lenders and selected the ones with competitive interest rates, excellent customer service and a variety of loan terms. The following companies didn’t stand out in those categories, but they might be a good fit for your needs.

National Debt Relief

  • Offers debt management services
  • Free consultation
  • Negotiates with creditors to settle client's outstanding debt
  • Online quote
  • Not a loan originator
  • Only works with clients that have at least $10,000 in debt
  • Charges a fee of 15-25% of the debt amount

National Debt Relief services include options for consolidation loans, credit counseling services, and bankruptcy referrals. To qualify, borrowers need to have at least $10,000 in unsecured debt. National Debt Relief also charges a fee of at least 15% of their client’s debt amount.

Why it didn’t make our top picks: National Debt Relief didn’t make it to our main list because it’s not a loan originator but instead a debt consolidation company or debt management service.

Happy Money

  • Payoff loan with customizable terms, rates and monthly payment
  • Interest rates start at 10.50%
  • Pays creditors directly
  • Loans start at $5,000
  • Origination fee of 0%-5% of loan amount
  • Approval takes 5-7 business days

Happy Money partners with credit unions to provide low interest rates and a low minimum credit score requirement. This company doesn’t charge any application, prepayment or late fees. However, it does charge an origination fee of up to 5% of the loan amount. Obtaining loan approval can take from 5 to 7 business days, and if you choose the option to pay creditors directly, funding can take up to two weeks.

Why it didn’t make our top picks: Happy Money charges an origination fee and their process is longer than other top lenders.

Best Egg

  • Approval in minutes
  • APR from 8.99%-35.99%
  • Funds within 24 hours after approval
  • Personal loan calculator
  • Origination fee of 0.99-8.99% of the loan amount
  • Origination fee on a loan term 4-years or longer will be at least 4.99%

Best Egg offers personal loans from $2,000-$50,000 with an APR that can go as high as 35.99%. It features an online application, and options for debt consolidation and credit card refinancing.

Why it didn’t make our top picks: Best Egg isn’t on our list because of its high origination fee and strict application requirements, which include a 700 FICO score and an annual income of at least $100,000. Its maximum APR is also higher than others on this list.

Lending Club

  • Customized loan options
  • Accepts co-borrowers
  • 15-days grace period after the due date to pay without penalties
  • Pays creditors directly
  • Origination fee of 2%-6% of the loan amount based on creditworthiness
  • Late payment fee

Lending Club, a marketplace for debt consolidation loans, features an online application with no application fees or prepayment penalties. Lending Club offers personal loans ranging from $1,000-$40,000 with APRs up to 36.00%.

Why it didn’t make our top picks: This company didn’t make it into our top choices because of its high origination fees, late payment fees and high interest rates.

OneMain Financial

  • Debt consolidation calculator
  • Brick-and-mortar locations
  • Loan specialist counseling
  • APR from 18%-35.99%
  • Late payment fees from 1.5-15% of loan payment
  • Origination fees from 1-10% of the loan amount

OneMain Financial offers online and in-person banking, with branches in 44 states. It features secured and unsecured debt consolidation loans from $1,500-$20,000 and terms from 24-60 months. To obtain a lower interest rate on large loans, OneMain requires collateral.

Why it didn’t make our top picks: OneMain Financial didn’t make our top picks because of its interest rates and fees, which are significantly higher than competitors.


  • Funded one day after approval
  • No prepayment penalty
  • Avant mobile app for iOS and Android
  • Administration fee up to 4.75%
  • APRs from 9.95%-35.99%
  • No Autopay discount available

Avant offers personal loans with APRs starting at 9.95%. Avant features loan pre-approval, Autopay and a mobile app available where customers can manage their loans. Customer service is available online, via email or by phone.

Why it didn’t make our top picks: This lender didn’t make our list because of its high interest rates and origination fees, and its lack of discounts to offset these costs.


  • Loans from $1,000-$50,000
  • No prepayment penalty
  • Check loan rate online
  • Only offers three and five years terms
  • High origination fee

Why it didn’t make our top picks: While Upstart ranks highly in customer satisfaction, its high origination fee and little variety in payment terms (3-5 years) kept it off our list.

Upstart debt consolidation loans range from $1,000-$5,000. Potential borrowers can obtain a pre-approval with a soft credit pull that won’t impact their credit score. Most loans are funded the next business day after approval. Upstart’s APRs range from 6.70%-35.99%.


  • Online application
  • Same-day approval
  • Loan funding in one to three business days after approval
  • Not suitable for smaller loans
  • Origination fee of 1.99%-6.99%

Why it didn’t make our top picks: Achieve’s minimum loan amount is $5,000 and carries a high origination fee, which left it off our main picks.

Achieve offers personal loans for debt consolidation featuring same-day approval and funding between one to three business days after accepting the loan offer. Achieve isn’t part of our main list because of its high origination fee and limited terms of 2 to 5 years.

Debt Consolidation Loans Guide

Debt consolidation loans can help you manage your debt more easily and, in some cases, even pay it off faster. Read on for more information about how debt consolidation loans work, how to apply for them , and other alternatives for debt management.

What is a debt consolidation loan?

A debt consolidation loan is a type of personal loan meant to pay off high-interest debt, thereby making it easier and quicker to pay. The best debt consolidation loans offer lower APRs than many other loans or credit cards, which can translate to significant savings for borrowers.

There are different types of debt consolidation options:

  • Personal loan: a typically unsecured loan to pay for existing debt, finance a big purchase, pay medical bills, or cover home improvements or renovations. For an in-depth look at these types of loans, check out Money’s picks for best personal loans.
  • Balance transfer: when credit card debt is transferred to another credit card with a lower interest rate
  • Home equity loans and home equity lines of credit: lets the customer borrow money by leveraging their home equity. These can be tax-deductible when used for home improvements.

How do debt consolidation loans work?

A debt consolidation loan is a loan used to pay off multiple smaller loans. Once you’re approved, lenders will disburse funds within a couple of business days. You can use the funds to pay off your creditors or, in certain cases, have the lender pay creditors directly.

Debt consolidation loans streamline debt management as you only have one due date to keep track of and one payment to make. Additionally, debt consolidation loans often have much lower APRs than your existing debt, which can save you thousands of dollars in interest.

However, debt consolidation loans can have certain costs as well, such as an origination fee, late fee and even an early payment fee — an additional cost if you were to pay the loan in full before your agreed term is done.

Before selecting a loan, borrowers should compare interest rates, loan terms and fees. A debt consolidation loan is worth it if it allows the borrower to save in the long run. If the interest rate and fees in a debt consolidation loan exceed what you’re currently paying for other loans and credit card debt, a debt consolidation loan might not be the best option.

How does a debt consolidation loan affect your credit?

A debt consolidation loan will inevitably alter your credit score in some way or another, but it’ll depend on a few factors if that change is for the better or the worse.

Some things that could impact your score include:

  • Hard inquiry. In order to approve your loan, lenders will do a hard inquiry on your credit, that is, they will request a full review of your credit history which places a mark in your report. This can temporarily lower your score.
  • Credit age. Opening a new account — whether it’s a loan, credit card or mortgage — will lower your average credit age, which affects your score. How much it decreases depends on your accounts’ age. The longer your history, the less impact to your score.
  • Number of accounts. The number of accounts you have also affects your credit. In certain cases, the more accounts the merrier, but too many accounts can hurt you too, especially if they’re revolving credit. Additionally, a new loan can impact your eligibility for new accounts if it substantially increases the amount you owe overall.

However, debt consolidation can also help your credit score. For instance, it can help you keep better track of your accounts and pay on time. It’ll also decrease your credit utilization ratio. This ratio indicates how much of your revolving credit (credit cards or lines of credit) you’re using, and the lower the ratio, the better for your credit score.

If the debt you’re eliminating is mostly credit card debt or lines of credit, a consolidation loan will lower that utilization ratio when you pay off your account and will most likely improve your score. This doesn’t mean that creditors will automatically approve you for more credit, but it’s a big step in the right direction.

How to choose the best debt consolidation loan

Selecting the right debt consolidation loan will depend on your financial goals and how much of a monthly payment you can afford.

When choosing a debt consolidation loan consider the following:

Interest rates

A debt consolidation loan should be considered if the APR is lower than what the borrower is currently paying for their outstanding debt. Most lenders offer fixed and adjustable-rate loans. Your interest rate will depend on your credit score (FICO or VantageScore), current income and your debt-to-income ratio, among other factors.

Debt consolidation APRs commonly range between 6.99% and 24.99%, although there are outliers on both ends of the spectrum with rates as low as 5.99% and as high as 36.00%. Make sure you’re getting a lower APR than most of your debt. If you got a low, sub 15% APR on your credit cards due to excellent credit back when you applied, it would be counterproductive to get a high-interest rate of over 20% to consolidate your debt.


Most, although not all, lenders charge a variety of fees, including origination, late payment and, in some cases, a prepayment penalty. Origination fees usually range from 0% to 7% of the loan amount, but can go higher. A late payment fee can be a fixed fee ranging from $25-$45, or it can be calculated based on the loan amount. A prepayment penalty or early payoff fee can be a fixed fee, a percentage of the loan balance or the interest amount the lender is losing by the early payment.

Loan terms and repayment options

Consider a loan’s repayment terms (and its early repayment fees as mentioned above). The lender should offer a wide range of repayment options, from one to seven years, for example, and more if it offers loans for large amounts. A long term (for instance, 36 months) along with an early repayment fee can be an inconvenient combination.

Also look at the repayment methods and additional perks. Some lenders offer payment options using a mobile app, website or phone, as well as direct deposit. Look for lenders with options that work the best for you.

Many lenders also offer their clients identity theft and credit score monitoring and the option of paying creditors on your behalf.

How to get a debt consolidation loan

  1. Do a credit check by requesting your reports from one or all three credit bureaus. This can help you get a better idea of the interest rate you’ll get before risking a hard pull on your credit.
  2. Calculate your debt and determine the interest rate you’re currently paying on your credit cards and other outstanding debt. This will help you calculate the interest rate you’d need from a debt consolidation lender in order for the loan to be worthwhile.
  3. Research lenders, their interest rates, loan terms and fees.
  4. Use a loan or a debt-to-income ratio calculator to get an idea of the rate you can obtain with your credit score.
  5. Decide on a lender that offers a lower interest rate — and lower payment — than what you currently have.
  6. If the pre-approved offers involve a higher interest rate than what you’re currently paying, consider whether you have a friend or family member with a higher credit score that is willing to act as co-signer.
  7. Apply for a loan.
  8. Make sure to read the fine print of the offer before accepting it.
  9. Obtain the loan funds and pay your debt or, if the lender has a direct payment option, have the lender pay your creditors on your behalf

If your loan application is denied because of poor or no credit, the next step should be to improve your credit score and credit history. To fix your credit, you can find a credit repair service or research and improve your credit report on your own.

Alternatives to debt consolidation loans

Lenders and credit card companies offer other options as well as debt consolidation.

Negotiate with debt collectors

If some of your debt is delinquent and has been sold to debt collectors, you might have a chance to reduce what you owe. Debt is usually bought for much lower than its original amount. This means you have a chance to negotiate with collection agencies and come to a middle ground between what you originally owed and what they paid for your debt.

If you’re being contacted by debt collectors, it’s important to know your rights, as established by the Fair Debts Collection Practices Act (FDCPA). Ask for all the information regarding your debt before proceeding with any payment. Once it’s confirmed, negotiate the payment amount and terms with the collection agency until you reach an agreement you’re satisfied with.

Note that, while you can negotiate to pay less than what you owe, this compromise will be reflected in your credit history and negatively impact your score.

Here, you can find a more detailed guide on how to negotiate with debt collectors.

Debt consolidation companies

Debt consolidation companies do not provide you with the funds to pay off your debt like a debt consolidation loan would; instead, they serve as a middleman between you and your creditors. You have a single monthly payment directly with them and they pay your bills at a lower interest rate.

These services could also reach an agreement with creditors to reduce the amount you have to repay, in some cases for up to 30% of your original debt.

The main advantage of debt consolidation programs is that, since it’s not a loan, they don’t take into account your credit score. Additionally, these services give counseling, help you analyze your debt and develop a plan to avoid more debt-related problems in the future.

Keep in mind that debt consolidation programs do not cover secured loans such as home and auto loans, among others.

Home equity loans and home equity lines of credit

Home equity loans and home equity lines of credit let the customer borrow money against their home equity. Home equity is the difference between the value or amount your home could be sold for and what you owe the mortgage lender.

With a loan, a lump sum is disbursed in one payment. Lines of credit (HELOCs), on the other hand, are revolving credit. You can withdraw money from this line of credit as needed during its draw period; when this period ends, you pay back whatever you used in monthly installments.

If this sounds like the right choice for you, check out Money’s best home equity loans for more information.

Balance transfer credit cards

An option to consolidate high-interest credit card consolidation debt is to transfer balances to a new credit card with low or no interest. Many credit cards offer an introductory period from 12 to even 21 months with 0% APR, allowing customers to pay off or significantly lower their balance while not adding any additional debt.

Take a look at Money’s best balance transfer credit cards for more information.


Bankruptcy is a legal action taken by people or businesses that have reached a point where they’re unable to pay back their debt. It should be the last resort for dealing with creditors and debt issues as it has a significantly negative impact on your credit score and your ability to obtain credit in the future. There are two main types of bankruptcies:

  • Chapter 7: when a trustee takes control of your property to sell it or turn it into a profit to pay your creditors. Depending on the state you live in you might be able to keep some of your properties.
  • Chapter 13: A court approves a repayment plan where you agree to pay part of your wages to your creditors. A trustee will be appointed by the court to collect the money from you and make sure that the payment plan is completed.

Not all debt can be discharged by the court when you file for bankruptcy. Some of the debt that cannot be discharged is:

  • Child support
  • Student loans
  • Court fines
  • Most taxes

A bankruptcy will appear on your credit report for around ten years, making it more challenging to apply and be approved for credit in the future.

If your situation calls for this measure, read our guide on how to file for bankruptcy for more detailed information.

Debt Consolidation Loans FAQ

How do debt consolidation companies work?

Unlike debt consolidation loans, debt consolidation companies help people to reduce their debt by consolidating all debt payments into one and negotiating with creditors for lower payments. Some companies charge a percentage of the debt.

How do you get a debt consolidation loan with bad credit?

There are lenders that work with customers with poor credit; however, most lenders will require at least a 620 FICO score. Additionally, lenders will invariably charge borrowers with a poor or no credit history, its highest APRs. Having said that, if you have bad credit, you have a few options: look for a lender that works specifically with low credit scores, get a co-signer or work to repair your credit before applying.

Debt consolidation or bankruptcy, which is better?

Bankruptcy should be the last resort to managing your debt. Debt consolidation is a better option than bankruptcy and, with time, can help increase your credit score and improve its history. Bankruptcy stays in your credit report for up to 10 years.

Where can I get a debt consolidation loan?

You can apply for a debt consolidation loan online using one of our recommendations, or you can also apply for a loan at banks, credit unions, online marketplaces or through a debt consolidation agency like National Debt Relief.

How to get approved for a debt consolidation loan


Banks, credit unions and other financial institutions consider FICO or Vantage credit scores, income, debt-to-income ratio, delinquencies and loan amount for personal loan approval. When applying for a debt consolidation loan, make sure to:

  • Check your credit score and debt-to-income ratio. Many borrowers require a minimum credit score of at least 620 to qualify
  • Research lenders, check rates and fees
  • Use debt consolidation calculators or pre-approvals

    If your quotes come back with a high interest rate, consider applying with a co-signer or co-borrower. It can improve your chances of getting a better interest rate and lower monthly payments.

How We Chose the Best Debt Consolidation Loans

To select the best debt consolidation loans we took into consideration:

Rates. We chose lenders that offered some of the lowest APRs on the market.

Variety of loan terms. We favored lenders that offered a wide array of repayment terms, from six months to more than five years.

Customer service. The best debt consolidation lenders should have accessible customer service and loan specialists, as well as a variety of ways to reach them — phone, email and chat.

Streamlined application process and fast funding. While some lenders do require customers to call or visit a bank branch, we favored those that made the application and funding process as quick and painless as possible.

Less or no fees. Most lenders charge fees; we looked for those that charged the least if at all.

Summary of Money’s Best Debt Consolidation Loans of 2023