Best Debt Consolidation Loans of December 2023
Our experts answer readers’ personal loan questions and write unbiased product reviews (here’s how we assess personal loans). In some cases, we receive a commission from our partners; however, our opinions are our own.Generally, you’ll need a personal loan for debt consolidation, which means replacing multiple loans with a single loan instead.Check if you’re prequalified for a loan without lowering your credit score.Most personal loan lenders ask about loan purpose when starting the application process, and loans to consolidate debt often have higher interest rates than other personal loans and other loan types. The best personal loan for you depends on your credit score, which will determine what you qualify for and can lower your rate.0.50% discount on regular rates with AutoPay7.99% to 25.49% (with AutoPay discount, rates vary by loan purpose)$5,000 to $100,000660LightStream offers some of the lowest rates on personal loans out there, provided you have a great credit score. The lender also has loans of up to $100,000 and can supply you with funding on the same day you apply and are approved.Get $200 when you open a Rewards Checking Plus account and make 3 debit card transactions8.49% to 35.99%$1,000 to $50,000580Upgrade is a solid lender if you can qualify for its lowest interest rate. But if your credit isn’t in great shape, you may be able to find a better deal elsewhere.0.25% AutoPay interest rate discount and a 0.25% direct deposit interest rate discount8.99% – 25.81% fixed (with all discounts)$5,000 to $100,000680SoFi is a strong personal loan lender for those with high credit scores — you’ll get perks like unemployment protection and no fees required. The best personal loan for you depends on your credit score, which will determine what you qualify for and can lower your rate.Offers emergency, home improvement, and debt consolidation loans9.95% to 35.99%$2,000 to $35,000600Avant Personal Loan is a good personal loan provider, especially if you have a lower credit score and need to receive your loan money quickly. Just be prepared to pay a high APR if you do have a low score.The minimum rate for loan amounts above $15,000 is 11.75% APR11.72% – 24.67% APR$5,000 to $40,000640A Happy Money Payoff Loan personal loan is a great option for those with good credit scores who are eligible for the lender’s lowest APR. However, borrowers can only use the funds to consolidate credit card debt.Relationship discount of 0.25%8.49% to 24.49% (with relationship discount)$3,000 to $100,000UndisclosedWells Fargo Personal Loan are a good choice if you need a significant amount of cash, as you can borrow up to $100,000 with the lender. However, if you’re not a current customer, you can’t apply for a personal loan without visiting a branch. Personal loans are the most common type of loan used for debt consolidation. Other options for consolidating debt include a home equity loan, a home equity line of credit (HELOC), and a balance transfer credit card.When you take out a debt consolidation loan, the funds are used to pay down the debts you have with multiple lenders, leaving you with a single monthly payment to make. It does not erase your debt, and you might end up paying more over the long term even if you end up paying less each month on the consolidation loan.Your credit will often be boosted in the long run if you consolidate your debt because it can reduce the amount you owe and lower monthly minimum payments, which all affect your credit score. With a debt consolidation loan, you can will benefit from a lower interest rate. That will increase the amount you are paying toward your balances each month, which will then decrease the amount of time it takes to pay off your debt.Most personal loans allow a variety of uses. While most include credit card consolidation or debt consolidation, not all do. Read the fine print of any personal loan you’re applying for, and make sure that debt consolidation is an acceptable use of the proceeds. All of the loans we considered had an option to use the loan for debt consolidation, if not a separate loan, which we included details for. Lightstream is a highly regarded lender for many loan types, and has been a top pick across Insider’s coverage of the best personal loans and best auto loans. However, this lender only works with borrowers with good or better credit, with a minimum credit score requirement of 660. LightStream offers consistently low personal loan interest rates, though its minimum interest rate for debt consolidation is higher than its typical personal loan’s interest rates. However, this lender does not have any prepayment or origination fees. Same-day funding is available with LightStream. Watch out for: Maximum loan amount limits. Only borrowers with excellent credit can borrow the $100,000 maximum, and anyone without excellent credit may not qualify for the full amount.LightStream defines excellent credit as an account with five or more years of credit history, stable and sufficient income for debts, and a variety of credit history with little or no credit card debt. If you’re looking for a debt consolidation loan, chances are you have a significant amount of debt, and may not fit these qualifications.Additionally, LightStream doesn’t have a way to pre-qualify online. You’ll have to apply for the loan to find out exactly what your rates and terms could look like, which could make comparison shopping difficult. LightStream Personal Loan ReviewUpgrade is great for fast cash because it allows you to get your money within one business day after your loan is reviewed and approved. You’re also able to get a loan for as little as $1,000, which is less than many of the other competitors on our list. It could be a good choice if you only have a small amount of debt you need to consolidate.What to watch out for: Origination and late fees. Your origination fee will be late fee of up to $10 if you don’t make a full payment within 15 days of your due date.Upgrade Personal Loan ReviewA SoFi personal loan is the best option for anyone with a high balance, as this lender makes debt consolidation loans of up to $100,000. Debt consolidation loans from this lender are comparable in rates to those offered by LightStream, but SoFi offers higher loan limits to all applicants, whereas LightStream only allows some borrowers to borrow up to $100,000. Similarly, SoFi doesn’t have any application or prepayment fees as well as doesn’t require an origination fee. SoFi offers unique features like unemployment protection, which could put loans in forbearance for up to three months if you find yourself out of work. Watch out for: Stringent requirements. SoFi personal loans have a minimum credit score of 680. According to NerdWallet, the average income among borrowers is over $100,000.SoFi Personal Loan ReviewGetting a loan with bad credit, whether to consolidate debt or for something else, can be expensive, or hard to qualify for. An Avant personal loan is the best bet for borrowers with poor credit, requiring a minimum credit score of 600.Compared with other personal loan lenders offering debt consolidation loans for bad credit borrowers, Avant’s terms are the most generous. While there is an administration fee, it could be lower than competitors’ fees with a cap up to 4.75% in administration fees with an undisclosed late fee and returned payment fee. Avant also has the advantage of offering fast personal loan funding.Watch out for: High rates with a low credit score. While Avant is accessible to borrowers with poor credit scores, approval might go hand in hand with high interest rates on your loan.Avant Personal Loan ReviewIn the fair credit range, it can be tough to qualify for a personal loan with reasonable interest rates — many lenders have a minimum of 660 or 680. However, a Happy Money Payoff Loan™ could be a good option for people with credit scores as low as 640. Interest rates are comparable to those offered by LightStream and SoFi, but this lender has less stringent requirements. Compared with competitors Prosper and Best Egg, which both have the same 640 minimum credit score requirement, Payoff’s interest rates are capped lower, and could have lower origination fees. Watch out for: Origination fees. Payoff offers loans with a 0% to 5% origination fee. Competing lenders Prosper and Best Egg charge 1% to 5%, depending on your financial situation and 0.99% and 5.99% origination fees, respectively. The better deal will depend on your credit score, income, and repayment term.Happy Money Personal Loan ReviewFlexibility makes Wells Fargo personal loan a top contender for best personal loans for debt consolidation. Wells Fargo separates debt consolidation loans from personal loans, but the interest rates are the same.Benefits include competitive interest rates and an autopay discount of 0.25% if payments are made from a Wells Fargo account. For unsecured personal loans, the most common type for debt consolidation, there are no origination or prepayment fees.Wells Fargo can send your loan funds to your Wells Fargo bank account, or to a credit account outside of Wells Fargo to pay down your debts directly. Watch out for: Wells Fargo’s history with data security and compliance. The bank has faced several federal penalties for improper customer referrals to lending and insurance products, and security issues tied to creating fake accounts several years ago. Wells Fargo Personal Loan ReviewOther Debt Consolidation Loans We ConsideredWe’ve compared each institution’s Better Business Bureau score to give you another piece of information to choose your lender. Whether you’re considering a $5,000 loan or a $10,000 loan, a trustworthy lender can improve your loan experience. The BBB measures businesses based on factors like their responsiveness to customer complaints, honesty in advertising, and transparency about business practices. Here is each company’s score:With the exception of Wells Fargo, our top picks are rated A+ by the BBB. Keep in mind that a high BBB score does not guarantee a positive relationship with a lender, and that you should continue to do research and talk to others who have used the company to get the most complete information possible. Wells Fargo is currently rated an F by the BBB due to government actions against the business and a failure to respond to 14 complaints. Most recently, the Consumer Financial Protection Bureau in December 2022 ordered Wells Fargo to return $2 billion to customers and pay a $1.7 billion penalty for legal violations involving auto loans, mortgages, and deposit accounts. The bank illegally charged fees and interest penalties on auto and mortgage loans. Additionally, it misapplied payments to those loans for many customers. If you’re uncomfortable with this history, you may want to use one of the other personal loan lenders on our list.Qualifying for a debt consolidation loan is the same as it is for most other kinds of personal loans. Generally, lenders require a credit score in the mid-600s, although some will accept borrowers with lower scores. Remember, though, that with a lower credit score you’ll pay a higher interest rate.In addition to checking your credit score, debt consolidation companies will also need proof of your employment and ability to repay in order to determine eligibility. They will also check your debt-to-income ratio to make sure you haven’t borrowed more than you can feasibly pay back.If you’re looking for a debt consolidation loan because your credit cards carry high APRs, it’s worth your time to consider some alternatives.One often underutilized strategy is to simply ask your credit card company for a lower rate. There’s no guarantee that they’ll agree. However, they may well do so, especially if you’ve been diligent about payments. You can also ask about upgrading your credit card, which may come with a lower APR and other perks. You may also be able to get a lower rate by transferring your balances to a different credit card. Cards designed for this purpose often come with an introductory 0% APR period that can last anywhere from 12-18 months. Tackling your debt head-on using strategies such as the avalanche and snowball methods is another alternative.We consulted loan and financial planning experts to inform these picks and give their insights into finding the best loans for your needs. You can read their advice at the bottom of this post.Andre Jean-Pierre:”One of the most important factors to consider in a personal loan is the interest rate. Because personal loans are typically unsecured, they usually carry higher interest rates than secured lending options. However, if a person has a strong credit profile, a personal loan can carry lower APR than other unsecured sources of financing such as credit cards.”Forrest McCall:”One of the best ways to use a personal loan is to pay off other high-interest debts like credit card debts. Because you can often lock in lower rates than a revolving line of credit like a credit card it can be a smart decision for your finances and save you thousands in interest payments over time.”Fred Winchar:”Whether or not to take a personal loan depends on if one can afford it. The purpose of the loan and the value that comes with it is of importance to note. In most cases, it is beneficial to use the loan to invest in a project that can bring extra income or savings.”Ryan Wangman: “Borrowers should carefully consider alternatives to personal loans before taking one out. Personal loans can come with high interest rates, especially for borrowers with poor credit. If you can’t fit those monthly payments into your budget, steer clear of the loan.”Personal Finance Insider’s mission is to help smart people make the best decisions with their money. We understand that “best” is often subjective, so in addition to highlighting the clear benefits of a financial product, we outline the limitations, too. We spent hours comparing and contrasting the features and fine print of various products so you don’t have to.To find the best personal loans for debt consolidation, we combed through the fine print and terms of about a dozen personal loans to find the ones that were best suited to help with consolidating debt. We considered four main features: See our ratings methodology for personal loans »
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