High-interest debt can be expensive and time-consuming to pay off, but personal loans for debt consolidation can help. Debt consolidation loans give borrowers the opportunity to pay off several accounts while wrapping up multiple monthly payments into one, typically at a lower APR. This can help you save a significant amount of money.
Debt consolidation loans are usually available at lower interest rates than other types of debt, like credit cards and payday loans. The best personal lenders for debt consolidation can help you pay off debt faster, with a chance to lower your payments and get relief from unmanageable monthly expenses.
Best Personal Loans for Debt Consolidation of December 2022
Best Overall : Discover
- APR Range: 6.99% - 24.99%
- Time To Receive Loan: 1 Days
- Loan Amount: $2,500 - $35,000
Discover Bank offers debt consolidation loans with APRs starting as low as 6.99%. Loans can be received as quickly as one business day, and payments can be made directly to creditors.
No origination fee
Pre-approval does not impact credit
Same-day loan decisions
Credit requirement is not disclosed
$39 late payment fee
No joint applications or co-signers
Discover launched its first financial product in 1985 and is now one of the largest credit card issuers in the U.S. But the company also offers personal loans for debt consolidation in all 50 states.
Discover's personal loan stands out with APRs that range up to 24.99% but start as low as 6.99%. Loan amounts start low too, from $2,500 up to $35,000, and come with no origination fee, which can make Discover a much cheaper option than some other lenders.
Additional benefits include a rate quote with no hard credit pull. Borrowers can get same-day loan approval and receive funds in as little as one business day.
Drawbacks include a $39 fee for late payments. Discover does not disclose credit requirements upfront, but applicants are required to have a household income of at least $25,000 to qualify. Loans can't be used to pay off secured debt or to pay off a Discover credit card.
Discover has poor customer ratings on Trustpilot, with customers citing a variety of challenges related to being approved for financial products and managing their accounts, although this isn’t unusual for lenders.
Discover accepts applications for debt consolidation loans online or by phone, at 1-866-248-1255.
Best for Additional Features : Avant
- APR Range: 9.95% - 35.95%
- Time To Receive Loan: 1 Day
- Loan Amount: $2,000 - $35,000
Avant works with borrowers who have poor credit. While the starting APR is high, and some may have to pay an administration fee, terms may still beat what other lenders offer to applicants with low credit scores.
Available to people with low credit scores
Pre-qualification does not impact credit
Funds available in one business day
Administration fee up to 4.75%
APR starts at 9.95%
Minimum loan amounts vary by state
Avant, a company founded in 2012, services loans from WebBank.
Borrowers give Avant high ratings for its quick and easy process, from loan application to funding. The lender offers pre-qualification with no hard inquiry, and funds are available in as little as one business day.
Unique features of this debt consolidation loan include an exceptionally low credit score requirement of just 580. Avant also offers loan modification plans to help borrowers who struggle with repayment.
The downside is that APRs range up to 35.95%, and while Avant's debt consolidation loans are available in amounts ranging from $2,000 to $35,000, minimum loan amounts vary by state. Late payments fees vary by state as well. Joint applications and co-signers are not allowed.
Applications can be submitted online, and Avant can be reached at 1-800-712-5407 for assistance.
Best Credit Union and for Quick Funding : First Tech Federal Credit Union
- APR Range: 6.70% - 18.00%
- Time To Receive Loan: 0 Days
- Loan Amount: $500 - $50,000
First Tech Credit Union stands out for its wide range of loan amounts and low maximum APR. Borrowers can go from application to funding in as little as one business day, and payments can be sent directly to your creditors.
Low maximum APR of 18%
First payment can be deferred for 45 days
Same-day funding available
Must be a credit union member to apply
Lowest rates only available for 24-month term
Credit score requirement not disclosed
First Tech Federal Credit Union was founded in 1952 and has physical branches in eight U.S. states. The credit union offers personal loans for debt consolidation across all 50 states, with terms that can be attractive for borrowers with a variety of needs.
Personal loans from First Tech range from as little as $500 up to as high as $50,000, and borrowers can choose from a 24- to an 84-month repayment period. The credit union also allows joint applications and co-signers.
It only takes a few minutes to complete an online application for a personal loan from First Tech Credit Union. From there, applicants who are approved can expect to receive funds in as little as one business day.
The maximum APR of 18% is relatively low (credit unions are capped at this rate). First Tech charges no origination fee or administration fee, and it has a fairly unique loan feature: You have the option to delay the first payment for 45 days. Borrowers should note that loans may accrue interest during that time.
First Tech doesn't disclose its credit requirements upfront, but applicants can get pre-qualified and see a rate quote without a negative impact on their credit scores. Applications can be submitted online.
Best for No Fees : Old National Bank
- APR Range: 6.26% - 25.00%
- Time To Receive Loan: 1 Days
- Loan Amount: $2,500 - $35,000
First Midwest loans have an exceptionally low APR range and relatively few fees. Even with the $150 documentation fee rolled in, rates can be as low as 6.26% and won't exceed 12.99%.
Low APR range
No origination fee or late fee
Co-applicants are allowed
Credit requirement is not disclosed
Only available in 24 states
$150 documentation fee
As of early 2022, First Midwest Bank is in the final stages of a merger with Old National Bank, which is headquartered in Indiana. First Midwest currently has branches in four states with over 250 physical bank locations.
The bank is outstanding when it comes to interest and fees—or the lack thereof —with an APR range starting at 6.26% and maxing out at 12.99%. There's no origination fee or late payment fee. Borrowers should be aware of the $150 documentation fee, however, which will be rolled into the loan's APR.
A wide range of loan amounts is available from First Midwest, from $5,000 to $35,000, with repayment terms up to seven years. Funds can be received in as little as 24 hours.
First Midwest is also a certified personal loan lender through LendingTree, where it's received 4.9/5 stars based on more than 4,000 reviews. It gets excellent ratings for its fees, closing costs, and customer service.
Some borrowers may not be qualified. First Midwest does not disclose a credit requirement, but says applicants should have "at least five years of credit history that is free of bankruptcies, foreclosures, repossessions, and other major credit issues." Eligible borrowers can apply online or visit a physical branch.
Best for Bad Credit : Upgrade
- APR Range: 7.46% - 35.97%
- Time To Receive Loan: 1 Day
- Loan Amount: $1,000 - $50,000
Unlike many other lenders, Upgrade allows co-signers and joint applicants. That means borrowers with poor credit can get help qualifying for debt consolidation loans.
Co-signers and joint applicants allowed
Low minimum credit score requirement
Rate quote does not impact credit
2.9% to 8% origination fee
APRs as high as 35.97%
Not available in all 50 states
Upgrade is a San Francisco-based fintech company that services loans from its banking partners, Cross River Bank and Blue Ridge Bank. Upgrade's all-online process includes a rate quote that won't impact your credit, an application that can be completed within minutes, and funding that's available within one business day of approval. And if you're getting a debt consolidation loan, funds can be sent directly to your creditors.
While Upgrade allows co-signers and joint applicants, borrowers with credit scores as low as 550 may qualify on their own. The downside is that you may be charged a hefty origination fee, up to 8%, which is deducted from loan proceeds. That means you'll need to apply for as much as 8% more than you want to borrow.
APRs start low, at 7.46%, but range up to a steep 35.97%, with the lowest rates requiring borrowers to use autopay and set up direct payments to some of their creditors.
Some other positive notes to consider include loans that start as low as $1,000 and range as high as $50,000, no prepayment fee, and the option to change your payment due date.
Borrowers in Georgia should note that loans start at $3,005 minimum, and the minimum is $6,400 in Massachusetts. Upgrade loans are not available to residents of Washington, DC, Connecticut, Colorado, Iowa, Maryland, Massachusetts, Vermont, or West Virginia.
Best for Military Members : Navy Federal Credit Union
- APR Range: 7.49% - 18.00%
- Time To Receive Loan: 1 Day
- Loan Amount: $250 - $50,000
Why We Chose It
Navy Federal Credit Union offers low-interest, low-fee, debt consolidation loans to active and retired members of the military and their families. Co-signers are permitted, and there is a 0.25% discount available for those who apply by phone or in person.
Long repayment terms
High loan limits
24/7 customer service available
Same-day funding possible
High late fees
Can't prequalify for a loan
Must be a member to get a loan
Navy Federal Credit Union (NFCU) was founded in the 1930s to provide financial products to members of the U.S. military and their families. NFCU is available to residents of all 50 states, and members can apply for loans online or in person at any of its branches.
Unsecured and secured loans are offered, and loan rates range between 7.49%-18% (as of this writing). Borrowers can select from a variety of repayment terms, but note that interest rates are higher for terms ranging from 37-180 months. There are no origination fees, although there is a $29 late payment fee.
Loans can be used for a variety of purposes, including debt consolidation, and loan amounts range from $250-$50,000. However, should you choose a debt consolidation loan, you will need to send the funds directly to your creditors; NFCU will not do that on your behalf.
In order to take out a personal loan, you must be a member of NFCU. There is no pre-qualification option, but there is an option for co-signers and same-day funding is available in many cases.
Compare the Best Personal Loans for Debt Consolidation of December 2022*APR ranges for some companies include a discount for automatic payments or existing bank customers.
Many lenders offer personal loans for debt consolidation, but our choices stand out from the pack. The best loan for you is one that will bring down your overall cost through a lower APR and minimal fees. Discover and First Midwest Bank are great choices, Discover offers rates as low as 6.99% APR and First Midwest Bank offers rates as low as 6.26% APR with no origination fees.
Your debt consolidation loan should also work for your situation, whether you need low monthly payments or you have poor credit. Borrowers with credit scores below 600 can consider applying through Upgrade or Avant, which allow you to get help qualifying with a co-signer or joint applicant.
Guide for Choosing the Best Personal Loans for Debt Consolidation
Should You Apply for a Personal Loan to Consolidate Your Debt?
The process of paying off debt can be long and costly. Each month you carry debt you're charged interest, which adds to your balance and extends your debt payoff date.
For someone working to be debt-free, debt consolidation can help in a few key ways. If your credit scores have improved since you took on your current debt, or if you have a co-signer or joint applicant, you may be able to qualify for a loan with a lower APR than your current debt(s). Consolidating with a lower APR means lower charges and a shorter timeline to becoming debt-free.
A personal loan from a reputable source—such as a bank, a credit union, or an established online lender—can be one of the most cost-effective solutions to reducing debt. Compared to credit cards, payday loans, or even balance transfers, consolidation loans generally have much lower interest rates and fees.
If you’re struggling to afford your debt payments, a consolidation loan can help in other ways. Debt consolidation could extend your payoff timeline. While this increases the overall cost of repayment, it can also reduce your monthly payments and help you balance your budget.
Before applying for a personal loan to consolidate debt, it's important to determine what your goal is. Compare the rates, fees, and monthly payments to your current situation when deciding if the loan meets your needs.
Comparing Personal Loan Lenders
It can be difficult to narrow down the field of potential lenders, but each one offers something different. Here's what to look for before applying:
- APR range: Consider both the minimum and maximum APR for loans, including any rate discounts you may be eligible for.
- Fees: Factor in up-front fees, like origination or administration fees, and determine if the fee will be withheld from your loan amount. Be sure to consider prepayment penalties and other fees that may come into play in the future, too.
- Credit requirement: Check to see if the lender discloses the minimum credit score required to qualify, and whether or not it will consider other information in lieu of good credit.
- Pre-qualification: Find out if you can get pre-qualified, and receive a quote on the loan you qualify for, without a hard inquiry into your credit.
- Loan amounts: Calculate the total amount of debt you wish to pay off and check to see if the lender offers loans that cover the full amount.
- Loan terms: Look at the term, or length of time you'll have to repay your loan. Many lenders present this information as a range of months, e.g. 24 to 84 months. Note that a longer repayment term will result in lower monthly payments but more money paid towards interest charges.
- Time to receive funds: Consider the length of time from beginning your application to getting approved and receiving funds. While the lender may transfer funds in as little as one business day, it may take several days or more for your bank or creditor to process the payment.
- Lending restrictions: Make sure loans are available to residents of your state, and that your intended use for the funds is allowed by the lender. The lender may also have age and citizenship requirements.
How to Apply for a Personal Loan
Once you've narrowed down your list of potential lenders, you'll need to submit an application. Most lenders accept applications online, however you may be able to visit a physical branch or get assistance over the phone.
To complete an application, you'll likely need to submit the following information:
- Contact details
- Income and employment details
- Social Security number or ITIN
- Reasons you're applying for the loan
- Desired loan amount
The lender may follow up by requesting more information. If your application is approved, you can review the offer before accepting. You may also be required to create an online account with the lender in order to manage your loan.
Be sure to make note of when your first payment is due and, if desired or required, set up autopay. You may also be able to change your due date.
Frequently Asked Questions
What Is Debt Consolidation?
Debt consolidation is the act of using one loan or credit card to pay off multiple debt accounts, usually at a lower APR.
This is often done to reduce the overall cost of debt repayment, but it can be a good way to get immediate financial relief by reducing the cost of your monthly debt payments. It can also help by reducing the number of accounts you have to manage.
What Are the Pros and Cons of Getting a Personal Loan for Debt Consolidation?
- Consolidate multiple debt payments into a single monthly payment
- Lower your APRs and save money on the overall cost of debt repayment
- Potentially eliminate debt faster
- Set a clear debt payoff date
- Improve credit scores by paying down debt faster and reducing revolving credit utilization
- Borrowers with poor credit may not qualify for better terms than their current debt
- Fees and interest can make consolidation loans costly
- Stretching out debt repayment can lead to paying more over time
Do Debt Consolidation Loans Hurt Your Credit?
Debt consolidation can affect your credit in a few ways but the effects are typically positive overall, after enough time has passed. Applying for and opening a new loan account can cause a short-term drop in your credit scores, due to the hard inquiry and new account. But paying off credit cards can lower your credit utilization ratio, which can help your scores grow, and reducing the number of accounts with balances can be good for scores as well. Making on-time debt payments each month also helps build your scores over time.
What Is the Difference Between Debt Consolidation and a Balance Transfer?
Debt consolidation refers to paying off multiple accounts, usually with a single new loan. A balance transfer, on the other hand, is a feature of credit cards; it refers to moving a balance from one account (of any kind) to a credit card. You can transfer just one balance, or, depending on the card issuer, you may be able to transfer multiple balances—just like debt consolidation.
Credit card balance transfers may require an upfront fee, often 3% of the total amount you transfer. You'll also pay interest charges each month on the balance you carry, unless you use a balance transfer card with a promotional 0% APR (this can be a great way to pay off debt). By comparison, a debt consolidation loan does not involve a transfer fee but will come with interest charges and may involve other fees, like an origination fee.
What Are Alternatives to a Debt Consolidation Loan?
If you're struggling with debt, a debt consolidation loan can be a good option that allows you to make one lump sum payment per month to one creditor rather than balancing multiple payments to several. However, if you have bad or fair credit, or you'd prefer not to go through the loan process, there are a few alternatives:
- Credit card balance transfer
- Negotiate with your creditors
- Establish a budget that factors in debt repayment
- Consider a debt relief program
While you can also take out a home equity loan or a loan against your 401(k), carefully consider the consequences of doing so before using one of those options. You might find the negatives outweigh the positives, and you might be better off using one of the other choices.
How We Chose the Best Debt Consolidation Loans
Our team evaluated 38 lenders and collected 1,520 data points before selecting our top choices. We weighed more than 20 criteria and gave a higher weight to those with a more significant impact on potential borrowers.
The top picks were selected based on factors like membership requirements (weighted 15%), average fixed APR (weighted 15%), and average origination fees (weighted 10%).
We also took into account the flexibility of repayment terms, helpful features like pre-qualification, and whether a co-signer or joint applications are permitted to ensure borrowers get the best possible experience. For further information about our selection criteria and process, our complete methodology is available.