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Best debt consolidation loans in July 2023

Jul 11, 2023

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PERSONAL LOANS

Best for high-dollar loans and longer repayment terms

4.6

Bankrate Score
Est. APR
7.99- 25.49%
with Autopay
Loan amount
$5k- $100K
Term: 2-7 yrs*
Min credit score
Not disclosed
See offersArrow Right

Check rate with Bankrate

PERSONAL LOANS

Best for fast funding

4.7

Bankrate Score
Est. APR
8.49- 35.99%
with AutoPay
Loan amount
$1k- $50K
Term: 2-7 yrs
Min credit score
600
See offersArrow Right

Check rate with Bankrate

PERSONAL LOANS

Best for high-income earners with good credit

4.7

Bankrate Score
Est. APR
8.99- 35.99%
Loan amount
$2k- $50K
Term: 3-5 yrs
Min credit score
600
See offersArrow Right

Check rate with Bankrate

PERSONAL LOANS

Best for quick approval

4.6

Bankrate Score
Est. APR
7.99- 35.99%
Loan amount
$5k- $50K
Term: 2-5 yrs
Min credit score
640
See offersArrow Right

Check rate with Bankrate

PERSONAL LOANS

Best for using a co-borrower

4.1

Bankrate Score
Est. APR
9.57- 35.99%
Loan amount
$1k- $40K
Term: 3-5 yrs
Min credit score
660
See offersArrow Right

Check with Bankrate

PERSONAL LOANS

Best for consolidating credit card debt

4.6

Bankrate Score
Est. APR
11.25- 24.50%
Loan amount
$5k- $40K
Term: 2-5 yrs
Min credit score
585
See offersArrow Right

Check rate with Bankrate

PERSONAL LOANS

Best for people with bad credit

4.5

Bankrate Score
Est. APR
9.95- 35.99%
Loan amount
$2k- $35K
Term: 1-5 yrs
Min credit score
550
See offersArrow Right

Check rate with Bankrate

PERSONAL LOANS

Best for consumers with little credit history

4.7

Bankrate Score
Est. APR
4.60- 35.99%
Loan amount
$1k- $50K
Term: 3-5 yrs
Min credit score
Not disclosed
See offersArrow Right

Check rate with Bankrate

PERSONAL LOANS

BEST FOR GOOD CREDIT AND NEXT-DAY FUNDING

4.8

Bankrate Score
Est. APR
6.99- 24.99%
Loan amount
$2.5k- $35K
Term: 3-7 yrs
Min credit score
Not disclosed
Read our reviewArrow Right

On Bankrate

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How to compare debt consolidation loan lenders

There are many factors to consider before choosing an individual lender. Here are some key things to keep in mind when comparing lenders.

    1. Approval requirements. Lenders consider your credit score, income and debt-to-income ratio when assessing loan applications. If you have bad credit, look into lenders with more flexible approval criteria.
    2. Interest rates. Different lenders advertise different annual percentage rates. The lowest advertised rate is never guaranteed and your actual rate depends on your credit. Make sure to get a quote from lenders to see what interest rate you will be paying before applying.
    3. Fees. While some lenders do not charge any additional fees, be on the lookout for late fees, origination fees and prepayment penalties. Factor these in when calculating your monthly payment.
    4. Loan amounts. Make sure you know how much you need to borrow before choosing a lender, as each lender has its own loan amount range.
    5. Repayment options. Lenders typically offer several repayment term options. If you are taking out a larger loan, finding a lender that offers a long repayment period could help you decrease your monthly payment.
    6. Unique features. Some lenders offer special perks and features such as an introductory no interest period or online financial tools. For debt consolidation loans, it is a good idea to look for lenders who offer direct payments to creditors.
    7. Customer service. It is a good idea to look into a lender’s customer service options, including phone hours, online chat options and in-person customer service. If in-person service is important to you, make sure the lender you choose offers it before applying.

Compare debt consolidation loan lenders in July 2023

LENDER BEST FOR EST. APR LOAN AMOUNT LOAN TERM MIN. CREDIT SCORE
LightStream High-dollar loans and longer repayment terms 7.99%-25.49%* (with AutoPay) $5,000-$100,000 2-7 years Not specified
Upgrade Fast funding 8.49%-35.99% $1,000-$50,000 2-7 years 600
Best Egg High-income earners with good credit 8.99%-35.99% $2,000-$50,000 3-5 years 600
Achieve Quick approval 7.99%-35.99% $5,000-$50,000 2-5 years 640
OneMain Financial Fair to poor credit 18.00%-35.99% $1,500-$20,000 2-5 years Not specified
Avant People with bad credit 9.95%-35.99% $2,000-$35,000 1-5 years 550
Upstart Consumers with little credit history 4.60%-35.99% $1,000-$50,000 3 or 5 years No requirement
PenFed Smaller loans with a credit union 7.74%-17.99% $600-$50,000 Up to 5 years 700
LendingClub Using a co-borrower 9.57%-36.00% $1,000-$40,000 2-5 years 660
Happy Money Consolidating credit card debt 11.25%-24.50% $5,000-$40,000 2-5 years 585
Discover Good to excellent credit 6.99%-24.99% $2,500-$35,000 3-7 years 660

A closer look at our top debt consolidation loans

Here's a deep-dive into each lender, why is the best in each category and specifically who would benefit most from borrowing from the lender. 

Lightstream: Best for high-dollar loans and longer repayment 

Overview: Lightstream touts itself as the nation's premier online lender and is so confident that its customers will have a positive experience that it provides a $100 guarantee to back up these claims. As part of Truist bank, it offers loans for nearly every purpose.

Upgrade: Best for fast funding

Overview: Upgrade boasts a seamless online experience, customer support seven days a week and flexible borrowing amounts. Borrowers can receive competitive, fixed rates to consolidate debt up to $50,000.

Best Egg: Best for high-income earners with good credit 

Overview: Best Egg has earned its reputation as a legitimate and trustworthy online lender. The company has been in business since 2014 and has since served over 788,000 customers and has funded over 1.1 million loans.

Achieve: Best for quick approval

Overview: Previously known as FreedomPlus, Achieve offers borrowers flexible solutions for the consolidation of debt. The lender primarily caters to those with fair credit, as there is a minimum credit score of 620. 

OneMain Financial: Best for fair to poor credit

Overview: As a lender for over 100 years, OneMain has earned a trusted reputation among lenders. Offering both online and in-person service at over 1,400 locations, the lender exists to serve subprime borrowers and help them gain access to credit and other lending products.

Avant: Best for people with bad credit

Overview: Avant is a respected lender that has been in business since 2012. It is a competitive option for those that have less-than-perfect credit. The lender also does not enforce restrictions, limited to legal uses, on loan proceeds – ideal for those with different types of debt. 

Upstart: Best for little credit history 

Overview: Upstart has originated over $16 billion in personal loans to-date, earning them a trustworthy reputation among online lenders. It offers low loan amounts starting at $1,000 and relatively low APRS that start at 6.70 percent. 

PenFed: Best for smaller loans with a credit union 

Overview: Pentagon Federal Credit Union, also known as PenFed, is one of the country's largest online lenders that has historically been known to serve members of the armed forces, employees of the federal government and those affiliated with the military. While this is a critical part of its reputation, all borrowers are welcome to apply for its products.

LendingClub: Best for using a co-borrower 

Overview: LendingClub started as a peer-to-peer lender, but has since transitioned to a loan marketplace. It is a great option for small or midsize consolidation of debt as LendingClub has a minimum of $1,000.

Happy Money: Best for consolidating credit card debt 

Overview: Happy Money offers debt consolidation loans through a network of officially insured and licensed lenders. This lender is unique from other lenders as it also functions as a financial wellness company that offers financial assessments, resources and debt management tools.

Discover: Best for good to excellent credit

Overview: Although most commonly known for credit cards, Discover offers a plethora of products, including deposit accounts, student loans and personal loans – including debt consolidation loans. The bank has only one in-person branch, so it's best for those who are comfortable with completing the entire application process online.

How we choose Bankrate's best personal loan lenders

To select the best personal loans for personal loans, Bankrate’s team of experts evaluated over 30 lenders. Each lender was ranked using a meticulous 20-point system, focusing on four main categories:

  • Checkmark
    Affordability
    The interest rates, penalties and fees are measured in this section of the score. Lower rates and fees and fewer potential penalties result in a higher score. We also give bonus points to lenders offering rate discounts, grace periods and that allow borrowers to change their due date. 
  • Checkmark
    Availability
    Minimum loan amounts, number of repayment terms, eligibility requirements, ability to apply using a co-borrower or co-signer and loan turnaround time are considered in this category.
  • Checkmark
    Customer experience
    This category covers customer service hours, if online applications are available, online account access and mobile apps.
  • Checkmark
    Transparency
    For this factor, we consider how well information is presented to the borrower on the lender’s website. This includes listing credit requirements, rates and fees, in addition to offering prequalification.
Clock Wait
47
years in business
Credit Card Search
30+
lenders reviewed
Loan
20
loan features weighed
Rates
665
data points collected

Calculate what you could save by consolidating

What is debt consolidation?

Debt consolidation is a process where multiple high-interest debts — like credit cards and loans — are rolled into a single payment. Debt consolidation simplifies your repayment structure and can make it easier to keep track of your remaining debt and may help you pay it off faster. 

While there are multiple ways to consolidate your debt, borrowing a debt consolidation loan from a lender, bank or credit union is one of the most common methods.  

How does debt consolidation work?

There are several ways to consolidate debt, but the general process entails taking out a new debt — in this case, a personal loan —  to pay off multiple debts and streamline the repayment process. Borrowing a home equity loan or taking out a balance transfer credit card are also methods of debt consolidation. 

However, a debt consolidation loan is one of the most common and easiest ways to consolidate debt. With fixed interest rates and monthly payments, it's possible to save money over the life of your loan by securing a lower rate than what you had on your previous debts. 

Plus, a debt consolidation loan is an unsecured debt, meaning you don't need to secure the loan with collateral and run the risk of losing your assets, like your home, if you're unable to make the monthly payments. If debt consolidation isn't an option, working with a credit counseling agency to establish a debt management plan may be a better way of dealing with your debt.

Why consolidate your debt?

Debt consolidation has many potential benefits.

  • Potentially lower interest rates: If you have several credit cards with double-digit interest rates and you qualify for a debt consolidation loan at a lower rate, you can potentially save thousands in interest and fees.
  • Pay off debt sooner: Combining all the debt into one bucket can make it easier to pay the debt off sooner because you don’t have to balance separate payments.
  • Simplified finances: Credit card rates are variable and your monthly payments differ depending on your balance, so it can be hard to know when your debts will be paid off. Debt consolidation puts all of your payments in one place so you can keep track of it easier.
  • Set repayment schedule: A debt consolidation loan combines multiple debts into one monthly payment with a fixed rate and a set repayment term, so your monthly payments stay the same. You don’t have to worry about multiple due dates or varying payment amounts.
  • Credit score improvement: Credit scoring models, like FICO and VantageScore, place a lot of weight on your credit utilization ratio. When a new consolidation loan lowers your credit utilization ratio, your credit score might climb as a result.

Generally, a debt consolidation loan is a good idea if you can pay off the new debt, you have a high credit score to get good rates and you like the stability of a fixed monthly payment.

Although a debt consolidation loan can be helpful for many people, it won't solve your financial problems on its own. To reap the full benefits and avoid further issues, you’ll need to avoid making late payments and keep balances low on your recently paid off credit card accounts.

Pros and cons of debt consolidation loans

Before signing on the dotted line, it's important to be aware of the potential benefits and drawbacks that come with a debt consolidation loan. Here's what you need to know.

Pros

  • Checkmark

    Simplified payments: Debt consolidation turns multiple payments into one fixed monthly payment. Only having to make one payment a month — as opposed to four or five — can help encourage healthy repayment habits.

  • Checkmark

    Lower rates: Borrowers with above-average credit can qualify for lower interest rates and save money in interest over the life of the loan.

  • Checkmark

    Improve credit health: Consolidating your debts into one payment can help you grow your credit faster through simplifying the repayment process.

Cons

  • Potential fees: Many loans come with fees, like prepayment and origination fees that can eat into the overall value of your loan.

  • Doesn't pay down debt: While consolidation can help make your debt more manageable, it doesn't actually pay it down, and you'll still have to make the monthly payments.

  • Doesn't solve overspending: If you run up revolving accounts, like credit cards, or continue to live outside your means a debt consolidation loan may only offer temporary relief.

Alternatives to a debt consolidation loan

The best way to consolidate debt depends on your specific financial situation. Personal loans are a common method of debt consolidation, but there are other options such as a balance transfer credit card or a home equity loan. To decide what method of debt consolidation will work best for you, compare the interest rates and overall cost of each option and consider talking to a credit counselor.

How Fed rate hikes affect debt consolidation loans

In an effort to combat rising inflation, the Federal Open Market Committee (FOMC) raised interest rates several times in 2022 and continued to raise rates in 2023. There was a pause on rate hikes in June, but the changes over the previous months caused interest rates on personal loans to rise.

Most personal loans have fixed rates, meaning that borrowers who already have a personal debt loan for debt consolidation do not need to worry. However, those looking to take out a new loan may face higher rates as they continue to climb.

FAQs about debt consolidation loans