At Experian, one of our priorities is consumer credit and finance education. This post may contain links and references to one or more of our partners, but we provide an objective view to help you make the best decisions. For more information, see our Editorial Policy.
In this article:
A debt consolidation loan is a type of personal loan you can use to pay off other loans and credit card balances. Combining multiple debts into one new loan could make managing your monthly bills easier, save you money and help you pay off your debt faster. Here, we've narrowed down several top consolidation loans that can help you pay off debt.
The average credit card balance in the third quarter of 2021 was $5,221, according to Experian data. That debt doesn't come cheap. The Federal Reserve reported that, as of the third quarter of 2022, credit cards accruing interest had an average annual percentage rate (APR) of 20.40%, while personal loans with a 24-month term had an average 11.23% interest rate.
Getting a debt consolidation loan can save you money, but the terms on your loan will depend on your creditworthiness and the lender, which is why getting offers from top lenders can be important.
5 Top Debt Consolidation Loan Providers
Many lenders offer debt consolidation loans, including banks, credit unions and online-only lenders. Here are five top lending services we partner with that could be good fits for different types of borrowers or situations. You can quickly get an overview of the offerings and pros and cons of each lending service to see if they might make sense for you.
Best Debt Consolidation Loan That Considers More Than Credit Scores: Upstart
Est. APR
Term
Amount
Available loan amounts: $1,000 to $50,000
Est. monthly payment: $31 to $2,262
Grace period: 15 days
Application fee: $0
Loan Details
- Loan amounts from $1,000 - $50,000
- APRs from 7.8% - 35.99% with loan terms of 3 or 5 years
- Won't affect your credit score
- You can have funds in as fast as 1 day
- You are more than your credit score. On Upstart your education and experience help you get the rate you deserve.
Upstart is an online lending platform that may place less importance on your credit score than other lending services. In addition to your credit, their unique approach considers your employment, education and banking history, which could make qualifying easier for some people.
| Pros | Cons |
|---|---|
| Your credit score may be less of a factor in getting approved | An origination fee of 0% to 10% |
| Low minimum loan amount | Only two repayment terms available |
| Fast funding | No cosigners allowed |
Best Debt Consolidation Loan for Borrowers with Excellent Credit: SoFi
Est. APR
Term
Amount
Available loan amounts: $5,000 to $100,000
Est. monthly payment: $226 to $5,540
Grace period: 10 days
Application fee: $0
Loan Details
- Personal Loans with low fixed rates
- Borrow up to $100,000
- No Origination Fees Required, No Prepayment Penalties, and No Late or Overdraft Fees
- Simple online application with live support 7 days a week
- Apply Now
SoFi is an online lender and bank that tends to be a good fit for those with good to excellent credit. It offers fixed-rate loans with high potential loan amounts and few fees.
| Pros | Cons |
|---|---|
| No origination fees required | The minimum loan amount might be higher than you need |
| Borrowers get additional membership benefits, such as free career coaching | High credit score requirements |
| Cosigners are allowed |
Best Debt Consolidation Loan for Paying Off Credit Cards Directly: Upgrade
Est. APR
Term
Amount
Available loan amounts: $1,000 to $50,000
Est. monthly payment: $30 to $2,206
Grace period: 15 days
Application fee: $0
Loan Details
- Affordable loans from $1,000 - $50,000 with low fixed rates that will never change, affordable monthly payments, and no prepayment penalties
- Quick online application -- get pre-approved in just minutes
- Checking your rate won't impact your credit score
- Review multiple loan options so you can pick the amount and term that fits your budget and timeline
- With automatic payments and a customizable due date, managing your account is easy and you'll be able to circle the date on your calendar when you'll be debt free
You can use a loan from Upgrade to consolidate multiple types of debts, and Upgrade gives you the option of having the funds sent directly to credit card companies and other personal loan lending services. Upgrade then sends excess loan amounts to your bank account.
| Pros | Cons |
|---|---|
| Direct distribution can make consolidating debt easier | An origination fee of 1.85% to 9.99%, which is deducted from the loan proceeds. |
| Low minimum loan amount | Not available in U.S. territories |
| Cosigners are allowed |
Best Debt Consolidation Loan for Borrowers With Fair Credit: Avant
Est. APR
Term
Amount
Available loan amounts: $2,000 to $35,000
Est. monthly payment: $175 to $3,499
Grace period: 10 days
Application fee: $0
Loan Details
- Personal loans from $2,000 to $35,0001 entirely online
- Checking your loan options will not affect your credit score
- Funding as soon as next business day2
- No collateral needed and customer support available 7 days a week
Avant offers loans for borrowers with fair credit. While the interest rate range starts higher than other lending services', applicants with fair credit likely won't qualify for the best-advertised rates at those lending services. Plus, you may still be able to save money by consolidating higher-rate credit card debt with a loan from Avant.
| Pros | Cons |
|---|---|
| Good for people who don't have excellent credit | Administration fee (similar to an origination fee) up to 4.75% |
| Flexible loan amounts | Interest rate ranges are above average |
| Fast funding | No cosigners allowed |
Pros and Cons of Debt Consolidation Loans
While consolidating your debts can help you save money and manage your bills, there are pros and cons to consider:
| Pros | Cons |
|---|---|
| Save money. If your new loan has a lower interest rate than your current loans, less interest will accrue each month. For example, consolidating $4,500 worth of credit card debt at a 16% APR with a personal loan that has a 9% APR could lower your monthly payment by about $15 and save you about $355 overall. | Eligibility depends on creditworthiness. Depending on your credit scores and other factors, you might not qualify for a consolidation loan that has a low interest rate. |
| Lower your monthly payments. Your debt consolidation loan may have a smaller monthly payment than your current combined monthly payments. | It doesn't always lead to savings. Even if you get a loan with a low interest rate or monthly payment, you could wind up paying more interest overall if the loan has a long repayment term. |
| Improve your credit scores. Consolidating credit card debt with an installment loan could help increase your credit scores. | There may be fees. Some loans have origination and prepayment fees that can eat into your savings. The fees vary by lender and may depend on the loan amount and your credit. |
| Have a clear debt payoff schedule. Your new loan's repayment term gives you a clear timeline for paying off the debt. | It might lead to more debt overall. If you consolidate credit card debt and continue to use your credit cards without paying the bill in full, you'll wind up with more credit card debt in addition to your consolidation loan to repay. |
What to Look for in a Debt Consolidation Loan
As you compare debt consolidation loan lenders and offers, consider how the following:
- Loan amounts: Do the lender's minimum and maximum loan amounts match your needs?
- Repayment terms: How will the monthly payments impact your budget? You may be able to choose a longer term to lower the monthly payment, but a shorter term could save you the most money.
- Prequalification options: Can you get an estimate of your approval, loan amount and rates with a soft credit check—the kind that doesn't impact your credit scores?
- Origination fee: Will the lender charge you a fee, and, if so, can you get a similar offer with a lower (or no) fee from a different lender?
The interest rate on a debt consolidation loan is also important in determining whether taking out the loan and consolidating your debts make sense. Often, lenders advertise a range of potential annual percentage rates (APRs), but your rate will usually depend on your creditworthiness.
The rate range isn't particularly helpful, as you won't know your rate offer until you apply or get prequalified. However, if you have excellent credit, you may want to target lenders that offer the lowest potential rates.
Also, consider whether you want a loan with a fixed or variable rate. Many lenders offer fixed-rate loans, which give you the certainty of the same monthly payment amount for your loan's entire life. Variable rates often start lower than fixed rates, but may rise in the future.
How to Qualify for a Debt Consolidation Loan
While the application process may be similar at different lenders, each will have its own criteria for approving applications. Your eligibility, loan amount, interest rate and fees could depend on:
- Minimum requirements: You'll need to meet the lender's minimum requirements, such as being at least 18 years old and living in a state where the lender offers loans.
- Credit history and score: While the specific credit score requirement can vary—some lenders don't have a minimum credit score at all—your credit history and scores could be factors in whether you get approved and the rates and fees you'll pay. You can check your credit score for free with Experian.
- Verifiable income: You'll need to have proof that your income is high enough to afford the loan's monthly payment.
- Debt-to-income (DTI) ratio: Additionally, your monthly income compared with your monthly debt payments—your DTI ratio—can be an important factor in qualifying.
Lenders may have additional requirements related to your credit or finances. For example, you might have trouble getting approved if you filed for bankruptcy recently, have accounts that are past due or have recently applied for multiple credit lines.
Alternatives to a Debt Consolidation Loan
Many people use an unsecured personal loan to consolidate debts, but there are other options.
Secured Loan
You could use a secured loan, such as a home equity loan or cash-out mortgage refinance. However, using a secured loan to pay off unsecured debt (such as a credit card) can be risky. If you can't afford your secured loan payment, you can lose your collateral—your home in the case of a home equity loan or refinance.
Balance Transfer Credit Card
Alternatively, look into consolidating debt with a balance transfer credit card. These are cards that offer a promotional interest rate during an introductory promotional period. For example, your transferred balances could have a 0% introductory APR for 18 months. You can then pay down the balance while you aren't accruing interest. However, there may be a 3% to 5% balance transfer fee, which could impact your overall savings.
Debt Payoff Strategies
If you don't want to open a new account or are having trouble getting approved for a loan or credit card, you could also focus on different credit card debt payoff strategies. These can range from sticking to a budget while focusing on paying off the credit card with the highest rate to working with a credit counselor and setting up a debt management plan.
Check Your Credit and Compare Offers
Checking your credit can be a good first step if you're looking for a debt consolidation loan. Additionally, you can apply for prequalification on many personal loan lenders' websites. Or, you can save time by comparing multiple loan offers with the free Experian CreditMatchTM tool.
After signing in, you can submit a soft inquiry prequalification application with your desired loan amount and loan purpose—debt consolidation. Experian will then gather loan offers from its partners, and you'll have 30 days to compare each offer and determine which is for you.