Debt consolidation is when you take out one loan and use it to pay off other debts that you have, leaving you with one monthly payment and interest rate. This can help you manage your debt more efficiently, and, in some cases, reduce the total amount of interest you’ll pay if the new loan’s APR is lower.
Generally, you’ll need a personal loan for debt consolidation, which means replacing multiple loans with a single loan instead. Business Insider’s personal finance experts chose the best personal loans for consolidating debt, and we highlight their features below.
Top Lenders Offering the Best Personal Loans for Debt Consolidation in March 2025
Apply for Debt Consolidation Loan Offers Online
LightStream Personal Loan
Regular APR
6.49% to 25.29% (with AutoPay discount, rates vary by loan purpose)
Loan Amount Range
$5,000 to $100,000
- Competitive APR
- Approval decisions should come shortly after applying
- Loans can be funded the same day
- Wide range of borrowing amounts and terms
- No fees
- Only available to people with good credit
- No pre-approval option
Product Details
- Loan amounts range from $5,000 to $100,000
- Loan term lengths range from 2 to 12 years
- Apply online and you’ll receive a response shortly during business hours.
- Receive your funds as soon as the same day
- Loans are made by Truist Bank, member FDIC
SoFi® Personal Loan
8.99% – 29.99% fixed (with all discounts)
Loan Amount Range
$5,000 to $100,000
- High maximum loan limit
- No fees required
- Competitive APR
- High minimum credit score requirement
- High minimum loan amount
- No in-person support
Product Details
- Loan amounts range from $5,000 to $100,000
- Loan term lengths range from 2 to 7 years
- Usually receive your money in a few business days after your application is approved
- Loans are made by SoFi Lending Corp.
Avant Personal Loan
Regular APR
9.95% to 35.99%
Loan Amount Range
$2,000 to $35,000
- Funds generally deposited by the next business day
- No prepayment penalty
- Multiple types of fees
- High maximum APR
- Low maximum loan limit
Product Details
- Loan amounts range from $2,000 to $35,000
- Loan term lengths range between 2 to 5 years
- Administration fee of up to 4.75%, which will be deducted from your loan proceeds when the loan is funded, and late fee that varies by state
- Loans made by WebBank, member FDIC
Lightstream is a highly regarded lender for many loan types, and has been a top pick across Business Insider’s coverage of the best personal 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.
Although Lighstream offers high 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 one of the best places to consolidate debt, 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 review
Upgrade is one of the best companies to consolidate debt because it is great for fast cash. This lender 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.
Be aware that Upgrade does charges origination and late fees. You could pay a late fee of up to $10 if you don’t make a full payment within 15 days of your due date.
A SoFi personal loan is the best option for anyone with a high balance, as this lender makes debt consolidation loans of $5,000 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 student loans have stringent eligibility requirements. SoFi personal loans have a minimum credit score of 680. According to NerdWallet, the average income among borrowers is over $100,000.
Getting 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.
While Avant is accessible to borrowers with poor credit scores, approval might go hand in hand with high interest rates on your loan. Additionally, borrowers may face origination fees and limited loan amounts compared to other lenders.
In 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.
Payoff offers loans with a 0% to 5% origination fee. Competing lenders Prosper and Best Egg charge 1.00% to 9.99% and 0.99% and 9.99% origination fees, respectively. The better deal will depend on your credit score, income, and repayment term.
Happy Money Personal Loan review
Upstart is a top choice for borrowers with limited credit history because it evaluates more than just credit scores when determining loan eligibility. Upstart assesses factors such as work experience and education, making it easier for individuals with low or no credit scores to qualify.
With a minimum credit score requirement of just 300, Upstart offers accessibility that many other lenders do not, making it an attractive option for those who are building or rebuilding their credit. Another key advantage of Upstart is its quick funding process, allowing borrowers to receive funds as soon as the next business day if approved by 5 p.m. ET.
While Upstart’s flexible qualification criteria make it appealing, it does come with higher costs, including origination fees of up to 12% and APRs of 6.70% to 35.99% fixed. Additionally, the lack of co-signer options may limit borrowing opportunities for some applicants.
Debt Consolidation Loan Company Trustworthiness
The BBB measures businesses based on factors like their responsiveness to customer complaints, honesty in advertising, and transparency about business practices.
We’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.
Here is each company’s score:
All of our top picks are rated A or higher 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.
What Is a Debt Consolidation Loan?
Debt consolidation takes a group of different debts you owe and turns them into one monthly payment. For example, let’s say you have a few credit cards, all carrying a balance. You’re tasked every month with making several payments, each at different amounts, with different due dates and different interest rates. It can be a lot to manage.
Debt consolidation can help make your payments and monthly bills more manageable by condensing your debt into one simple payment.
How Debt Consolidation Works
Debt consolidation works by combining multiple debts into a single loan, making repayment more manageable. A borrower takes out a new loan and uses the funds to pay off existing debts, such as credit cards, medical bills, or personal loans. Instead of juggling multiple payments with varying interest rates, the borrower makes one fixed monthly payment on the new loan.
In some cases, you may be able to save money on interest if your loan’s interest rate is lower than the APR on your debts. With a structured repayment schedule, borrowers can stay on track to pay off their debt within a set timeframe. Additionally, making consistent, on-time payments can improve your credit score.
Benefits of Consolidating Debt with a Loan
- Simplified payments. One monthly payment instead of managing multiple due dates.
- Lower interest rates. May reduce overall interest costs if the new loan has a lower rate.
- Faster debt payoff. Structured repayment terms can help borrowers become debt-free sooner.
- Improved credit score. Timely payments and a lower credit utilization ratio can boost credit scores.
Types of Loans Used for Debt Consolidation
- Balance Transfer Credit Cards: Offer a 0% APR introductory period for transferring high-interest credit card debt.
- Home Equity Loan or HELOC: Use home equity as collateral for lower interest rates.
- Unsecured Personal Loan (Debt Consolidation Loan): A fixed-term loan without collateral, based on creditworthiness.
- 401(k) Loan: Borrow from a retirement account, with repayment typically through payroll deductions.
How to Qualify for a Debt Consolidation Loan
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.
Most lenders will allow you to prequalify for a loan, which allows you to compare interest rates and terms without affecting your credit score.
Best Personal Loans for Debt Consolidation: Lender Comparisons
The best online lenders often provide faster approval times and more flexible qualification criteria than traditional banks and credit unions, making them a popular choice for debt consolidation. They typically offer competitive interest rates, especially for borrowers with good credit, and their application processes are almost entirely digital. However, they may charge higher origination fees (ranging from 1% to 8%) and have fewer in-person customer service options compared to brick-and-mortar institutions.
On the other hand, traditional banks and credit unions may offer lower interest rates and fewer fees. Credit unions, in particular, tend to have more lenient terms and personalized service but may require membership. While these lenders often have stricter credit requirements and slower processing times, they can be a good option for existing customers or members.
Pros and Cons of Debt Consolidation Options
Advantages of Debt Consolidation
- Simplifies payments. Instead of juggling multiple bills, you make one monthly payment, reducing stress and minimizing the risk of missing payments.
- Lower interest rates. If you qualify for a consolidation loan with a lower interest rate, you can save money on interest over time.
- Potentially improves credit score. Consistently making on-time payments can boost your credit score, and reducing credit utilization may also help.
- Fixed repayment schedule. Unlike revolving credit (like credit cards), a debt consolidation loan has a clear repayment timeline, helping with financial planning.
Potential Drawbacks
- Potential fees. Some consolidation loans come with origination fees, balance transfer fees, or prepayment penalties.
- Longer repayment period. Lower monthly payments may extend the repayment period, meaning you could pay more in interest over time.
- Doesn’t eliminate debt. It restructures your debt, but you still owe the same amount and need discipline to avoid racking up new debt.
How to Choose a Debt Consolidation Loan
Understanding how to consolidate debt can help simplify your finances and reduce the total interest you owe. The main benefits of consolidating debt are streamlining your debts into a single account with one monthly payment and reducing the total amount of interest you’ll owe.
When shopping for the best loans for debt consolidation, look for an APR that is lower than the average you’re paying on the debt you want to consolidate. If you can’t qualify for a lower rate, a debt consolidation loan might not be a good choice for you.
Also consider the loan amounts, associated fees and penalties, as well as a lender’s credit score minimum and other eligibility requirements when choosing a debt consolidation loan.
Alternatives to Debt Consolidation Loans
If you’re looking for one of the best loans for debt consolidation because your credit cards carry high APRs, it’s worth your time to consider some alternatives.
Debt Consolidation vs. Negotiating a Lower Interest Rate
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.
Debt Consolidation vs. O% APR Credit Card
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. Remember that you’ll need to pay off your balance before the intro period ends to avoid being hit with high interest rates.
Debt Consolidation vs. Home Equity Lines of Credit (HELOCs)
A debt consolidation loan is an unsecured personal loan, meaning it doesn’t require collateral but may have higher interest rates depending on creditworthiness. In contrast, a home equity loan or HELOC uses your home as collateral, typically offering lower interest rates but putting your property at risk if you fail to make payments.
Home equity loans provide a lump sum with fixed interest rates, while HELOCs function as a revolving credit line with variable rates. Borrowers with significant home equity and good financial discipline may benefit from these options.
Other Strategies for Paying Off Debt
Tackling your debt head-on using strategies such as the avalanche and snowball methods is another alternative. The avalanche method prioritizes paying off debts with the highest interest rates first, saving you more money in the long run. Meanwhile, the snowball method focuses on eliminating smaller debts first, creating smaller wins that help maintain motivation.
How to Apply for a Debt Consolidation Loan
Debt Consolidation Loan Application Process and Requirements
After you’ve gotten prequalified with several lenders, compare their debt consolidation options and choose the one that best suits your needs. To complete the full loan application process you’ll need a significant amount of documentation, including things like:
- Pay stubs/proof of income
- The last couple years of tax returns
- Documentation of 401(k)s and other financial accounts
- Photo ID
- Rent/mortgage history
- Proof of collateral, if you’re pursuing a secured loan
Get these basics in order before applying for the loan, in order to speed up the process. You can apply for most loans by filling out a form online.
If you are approved, the lender will send you the final loan documents to sign off on. These include all the details such as the interest rate, the amount of time you have to pay it off, the amount you’re borrowing, the monthly payments, and any fees. Make sure you fully understand all of it before signing for the loan.
Common Mistakes to Avoid When Applying for a Debt Consolidation Loan
When applying for a debt consolidation loan, avoid common mistakes like not checking your credit score beforehand, which can lead to higher interest rates or denial. Borrowers should also be cautious about taking out more than they need, as this can lead to unnecessary debt. Additionally, failing to compare multiple lenders could result in missing out on lower interest rates and better terms.
What to do if You are Denied a Debt Consolidation Loan
If you’re denied a debt consolidation loan, start by reviewing the lender’s reason for rejection and work on improving your credit score by paying down balances and making timely payments. Consider applying with a co-signer who has strong credit or looking for lenders that specialize in working with lower credit scores.
Why You Should Trust Us: How We Chose the Best Debt Consolidation Loans
To find the best places to consolidate debt, 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:
- APR range: For the most help with debt payoff, the best personal loan for debt consolidation needs to have lower interest rates than the credit card or other debts you’re consolidating. We looked for the loans that had the lowest rates possible for each credit range and purpose. The average credit card interest rate was 21.76% in the third quarter of 2024, so we focused on loans that had the potential to beat this.
- Appropriate loan amounts: We looked for personal loans that had the most variety in loan amounts. To benefit the most borrowers, we included personal loans with maximum limits over $10,000.
- Minimum credit score requirements: Where available, we considered the minimum credit score requirements for each company. We considered the best debt consolidation loans for excellent, fair, and poor credit, grouping loans into categories based on these credit score requirements.
- Fees: We considered fees like origination fees or administrative fees in our decisions, looking for loans with the fewest or lowest fees. None of the best loans listed have prepayment penalties.
- Nationwide availability: We only considered loans with availability in most or all 50 US states.
See our ratings methodology for personal loans »
At Business Insider, our reviews are guided by editorial independence, meaning our recommendations and ratings are based on objective criteria, thorough research, and expert analysis. Advertisers do not dictate our content, ensuring our reviews remain transparent and unbiased.
We rate all personal loan products in our reviews and guides on a 1-5 scale. The overall rating is a weighted average that takes into account seven different categories, some of which are judged more heavily than others based on what we think is most important.
How We Review Debt Consolidation Loans
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.
Generally, What Makes a Personal Loan Good or Not Good?
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 a 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.”
How Should a Borrower Decide if They Should Take Out a Personal Loan?
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.”
Best Debt Consolidation Loan FAQs
Yes, it is possible to get a debt consolidation loan with bad credit, but options may be limited, and interest rates will likely be higher. Some lenders specialize in working with borrowers who have low credit scores, though they may require a co-signer or collateral.
Most lenders prefer a credit score of at least 600-650 for a debt consolidation loan, though higher scores (700+) generally qualify for better interest rates. Some lenders like Upstart Personal Loan may approve borrowers with scores below 600, but they often charge higher interest rates or require additional conditions.
.A debt consolidation loan is typically better for those who need a structured repayment plan with a fixed interest rate and monthly payment. In contrast, a balance transfer credit card with a 0% APR introductory period can be a great option for paying off debt interest-free, if you can repay the balance before the promotional period ends. It depends on your financial situation
If you need a longer repayment term and a predictable payment schedule, a loan may be the better choice.
