Juggling credit cards, personal loans, and rising interest rates? Debt consolidation loans can help you regain control with one monthly payment—often at a lower rate.
Whether your credit card balances are piling up or an adjustable-rate loan is starting to stretch your budget, consolidating your debt can give you some breathing room. A personal loan for debt consolidation may help lower your interest rate, simplify your finances, and put you on a faster path to becoming debt-free.
10 Best Debt Consolidation Loans
The best debt consolidation loan for you will depend on your credit, income, and how much you want to borrow. Some lenders focus on fair credit, while others offer perks like same-day funding or direct payments to your creditors.
Here are our top picks for debt consolidation loans, ranked by rates, borrower requirements, loan amounts, and how easy it is to apply. Once you’ve found a few options, get prequalified to compare offers without impacting your credit score.
1. Credible
- Loan Terms: Varies by lender
- Loan Amounts: $1,000 to $250,000
- Minimum Credit Score: 560
- APR Range: 6.49% to 35.99%
2. LightStream
- Loan Terms: 2 to 20 years
- Loan Amounts: $5,000 to $100,000
- Minimum Credit Score: 660
- APR Range: 6.49% to 25.29% (with AutoPay discount)
3. SoFi
- Loan Terms: 2 to 7 years
- Loan Amounts: $5,000 to $100,000
- Minimum Credit Score: 680
- APR Range: 8.99% to 29.49% (with autopay and direct deposit discounts)
4. Upstart
- Loan Terms: 3 or 5 years
- Loan Amounts: $1,000 to $50,000
- Minimum Credit Score: 300
- APR Range: 6.70% to 35.99%
5. Happy Money
- Loan Terms: 2 to 5 years
- Loan Amounts: $5,000 to $40,000
- Minimum Credit Score: 640
- APR Range: 11.72% to 24.67%
6. Upgrade
- Loan Terms: 2 to 7 years
- Loan Amounts: $1,000 to $50,000
- Minimum Credit Score: 580
- APR Range: 7.99% to 35.99% (with autopay)
7. OneMain
- Loan Terms: 2 to 5 years
- Loan Amounts: $1,500 to $20,000
- Minimum Credit Score: None
- APR Range: 18.00% to 35.99%
8. PersonalLoans.com
- Loan Terms: 3 to 72 months
- Loan Amounts: $250 to $35,000
- Minimum Credit Score: Varies by lender; generally 580+
- APR Range: 5.99% to 35.99%
9. Avant
- Loan Terms: 2 to 5 years
- Loan Amounts: $2,000 to $35,000
- Minimum Credit Score: 550
- APR Range: 9.95% to 35.99%
10. LendingClub
- Loan Terms: 2 to 6 years
- Loan Amounts: $1,000 to $40,000
- Minimum Credit Score: Not specified
- APR Range: 7.90% to 35.99%
What Is a Debt Consolidation Loan?
A debt consolidation loan combines multiple debts, such as credit cards and personal loans, into one new loan with a single monthly payment. The main goals are to reduce interest costs, simplify repayment, and create a clearer payoff timeline.
Instead of juggling several balances with different due dates and interest rates, you replace them with one fixed payment that stays the same each month. This can make budgeting easier and help you stay consistent with payments.
Example: How Debt Consolidation Can Lower Monthly Payments
Imagine you have three credit cards:
- $5,000 at 24% APR
- $3,000 at 22% APR
- $2,000 at 19% APR
Your combined monthly payments might total around $375, with a large portion going toward interest.
If you consolidate that $10,000 into a personal loan at 12% APR over three years, your monthly payment could drop to about $330. More of each payment goes toward the balance, and you get a clear end date for becoming debt-free.
When a Debt Consolidation Loan Does Not Make Sense
Debt consolidation is not always the right move. It usually does not help if the new loan has a higher interest rate than your current debts, or if you plan to keep using credit cards and add new balances after consolidating. In those cases, total debt can grow instead of shrink.
Consolidation works best when it lowers interest costs and is paired with controlled spending and consistent payments.
Pros & Cons of Debt Consolidation Loans
A debt consolidation loan can make debt easier to manage, but the trade-offs matter just as much as the benefits. Looking at both sides clearly can help you avoid a move that feels helpful now but causes problems later.
Pros
- Lower interest rates: If you qualify for a lower APR than your current credit cards, and plan to consolidate high-interest credit card balances, more of each payment goes toward the balance instead of interest, which can reduce total payoff time.
- Simplified payments: One monthly payment replaces multiple due dates, lowering the chance of missed payments and late fees.
- Potential credit score improvement: Paying off revolving balances can reduce credit utilization, which may help your credit score over time if payments stay on track.
Cons
- Longer repayment can cost more overall: Extending your loan term may lower your monthly payment, but it can increase the total interest paid across the life of the loan.
- Fees can reduce savings: Origination fees and other upfront costs can eat into interest savings, especially if you plan to pay off the loan quickly.
- Easy to fall back into debt: Once credit cards are paid off, it can feel safe to use them again. New balances combined with the loan payment can leave you worse off than before.
- Does not fix spending habits: If overspending caused the debt, consolidation alone will not stop the cycle. Without a spending plan, debt often returns.
See also: Debt Consolidation Loans for Bad Credit
How to Apply for a Debt Consolidation Loan
Getting approved is not just about filling out an application. Each step affects your rate, loan terms, and long-term results, so it pays to be deliberate.
Step 1: Review Your Credit and Financial Details
This step sets expectations. Your credit score, income, and existing debt determine which lenders will approve you and what rates you will see.
Before applying, review your credit score, monthly income, and total balances. Lenders usually require proof of income, employment details, and a list of debts you plan to consolidate. Knowing these numbers upfront helps you avoid applying for loans you are unlikely to qualify for.
Step 2: Use Prequalification Tools to Compare Options
Prequalification protects your credit while giving you real numbers to work with. Most lenders use a soft credit pull at this stage, so there is no impact on your credit score.
Use prequalification to compare APRs, loan amounts, and repayment terms across multiple lenders. This step often reveals large differences in cost that are not obvious from advertised rates.
Step 3: Compare Total Cost, Not Just the Monthly Payment
A lower payment can look attractive, but it does not always mean the loan is cheaper.
Compare APRs, origination fees, and repayment length. A longer term may reduce monthly payments while increasing total interest paid. Focus on how much the loan will cost from start to finish, not just what it costs each month.
Step 4: Submit a Full Application With Your Top Choice
Once you choose a lender, the full application triggers a hard credit check. This is the point where accuracy matters.
Submit complete and accurate information and upload documents promptly. If approved, review the loan agreement carefully to confirm the rate, fees, payment schedule, and funding method before accepting.
Applying With a Co-Borrower Can Improve Approval Odds
A co-borrower with stronger credit or higher income can improve your chances of approval and may help you qualify for a lower interest rate. Both borrowers share responsibility for repayment, so this option works best when expectations are clear and trust is high.
Tips for Success With a Debt Consolidation Loan
A debt consolidation loan can reduce interest costs and simplify payments, but results depend on follow-through. These steps help make sure the loan actually moves you forward instead of becoming another layer of debt.
Stick to a Written Spending Plan
A budget keeps your cash flow predictable and makes room for your loan payment every month. List fixed expenses first, then assign limits to flexible spending. When your loan payment is treated like rent or utilities, missed payments become far less likely.
Pay More Than the Minimum When Possible
Extra payments reduce interest and shorten the loan timeline. Even a small monthly increase can cut months or years off repayment. Any windfalls, tax refunds, or reduced expenses can be redirected toward the balance to speed progress.
Add a Guardrail: Remove Easy Access to New Debt
This is the step that prevents backsliding.
Once your credit cards are paid off, freeze them or remove them from digital wallets. You can keep the accounts open to preserve credit history, but eliminating instant access lowers the chance of impulse spending that rebuilds balances. A consolidation loan works best when new debt is physically harder to create.
Alternatives to Debt Consolidation Loans
A personal loan isn’t your only option for managing debt. Depending on your credit, income, and financial goals, one of these alternatives could be a better fit.
Balance Transfer Cards
These credit cards offer 0% introductory APRs, usually for 12 to 21 months. If you can pay off your balance during the promo period, you could save a lot in interest. Just be aware of transfer fees and the high APR that kicks in after the intro rate ends.
Home Equity Loans
A home equity loan lets you borrow a lump sum using your home as collateral. Interest rates are often lower than unsecured loans, but you risk foreclosure if you can’t keep up with payments. This option works best for homeowners with substantial equity and stable income.
HELOCs
A home equity line of credit works more like a credit card—you borrow only what you need and repay it as you go. HELOCs offer flexibility and relatively low rates, but since they’re secured by your home, they carry the same risk as a home equity loan.
Debt Management Plans
Offered by nonprofit credit counseling agencies, these plans help you repay unsecured debts through a single monthly payment. Your counselor may be able to negotiate lower interest rates and waived fees. These plans usually take three to five years to complete.
Credit Counseling
If you’re not ready to commit to a debt management plan, credit counseling can still help. A certified counselor can help you create a budget, review your debt, and explore the best options based on your financial situation—all without pressure to enroll in a program.
Debt Settlement
This involves negotiating with creditors to settle your debt for less than what you owe. It can be effective if you’re behind on payments and can’t keep up, but it will damage your credit and often comes with steep fees. Make sure you fully understand the risks before working with a debt settlement company.
Bankruptcy
Bankruptcy is a legal process that can discharge or restructure your debts. While it may offer a fresh start, it’s a serious step that can impact your credit for up to 10 years. It should only be considered after exploring all other options.
See also: Should I File Bankruptcy?
Final Thoughts
Debt consolidation loans can be a helpful tool for simplifying debt and reducing monthly payments. By consolidating multiple balances into one manageable loan, you can streamline your finances and focus on paying off debt. However, it’s important to weigh the pros and cons before committing, and ensure you’re choosing the right option for your financial situation.
Whether you decide on a consolidation loan or explore alternatives like balance transfers or debt settlement, make sure to develop a solid repayment plan to stay on track and avoid new debt in the future.
