By: Elizabeth Wells
As of Monday, April 06, 2020
Debt consolidation loans allow borrowers to use a fixed-rate, unsecured personal loan to pay off or reduce multiple unsecured debts more easily. These loans are offered by traditional brick-and-mortar banks, credit unions and online lenders.
Check out eight top lenders of personal loans for debt consolidation and find out what it takes to qualify and how to apply. Then, use Bankrate’s debt consolidation calculator to see how much you could save.
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When shopping for the best debt consolidation loan, look for the lowest interest rate, a loan amount that meets your needs, an affordable and workable repayment term and low to no fees. Loan details presented here are current as of the publish date. Check the lenders’ websites for more current information. The top lenders listed below are selected based on factors such as APY, loan amounts, fees, credit requirements and broad availability.
| Lender |
Best for
|
Est. APR
|
|---|---|---|
| Best Egg |
Best for high-income earners with good credit
|
5.99% - 29.99%
|
| Payoff |
Best for consolidating credit card debt with below-average credit
|
5.99% - 24.99%
|
| LightStream |
Best for high-dollar loans and longer repayment terms
|
5.99% - 16.79%
|
| PenFed |
Best for smaller loans and no fees
|
6.49% - 17.99%
|
| OneMain Financial |
Best for fair to poor credit
|
18.0% - 35.99%
|
| Discover |
Best for good credit and next-day funding
|
6.99% - 24.99%
|
| Upstart |
Best for little credit history
|
6.53% - 35.99%
|
| Marcus by Goldman Sachs |
Best for consolidating large debts
|
6.99% - 28.99%
|
Overview: Best Egg offers unsecured personal loans for a variety of purposes, including debt consolidation. The best rates and terms go to borrowers who earn $100,000 or more and have a credit score of at least 700, which is “good” on the FICO scale. Some borrowers can qualify to borrow up to $50,000, although most loans range from $2,000 to $35,000.
Perks: There is no penalty if you pay off your consolidation loan ahead of schedule. Application and approval are done online, and it’s possible to get your money within a single business day.
What to watch out for: Origination fees range from 0.99 percent to 5.99 percent, and the fee is taken off the top of the loan. So, if you borrow $10,000 and pay a 1 percent origination fee, $9,900 will be disbursed to you, but you pay back $10,000. Best Egg also requires at least three years of credit history with no delinquencies. There is a $15 fee for late payments.
| Lender | Best Egg |
|---|---|
| Bankrate Rating | 4.7 / 5.0 |
| Min. Credit Score | 640 |
| Est. APR | 5.99% - 29.99% |
| Loan Amount | $2,000 - $35,000 |
| Term Lengths | 3 years or 5 years |
| Min. Annual Income | $100,000 to qualify for lowest APR |
| Fees | Origination fee: 0.99% to 5.99% of loan amount. Late fee: $15 |
Read Bankrate's expert Best Egg Review
Overview: Payoff is different from other lenders in that its debt consolidation loans are for paying off just credit cards. The application and approval process are done online.
Perks: There are no application fees, prepayment penalties, late fees or annual fees. Borrowers with so-so credit and a debt-to-income ratio up to 50 percent may qualify. You can raise your credit score if you abide by the terms of your debt consolidation loan.
What to watch out for: Origination fees range from 0 to 5 percent. Payoff does not issue loans in Massachusetts, Mississippi, Nebraska, Nevada and West Virginia.
| Lender | Payoff |
|---|---|
| Bankrate Rating | 3.6 / 5.0 |
| Min. Credit Score | 640 |
| Est. APR | 5.99% - 24.99% |
| Loan Amount | $2,000 - $35,000 |
| Term Lengths | 2 to 5 years |
| Min. Annual Income | None |
| Fees | Origination fee: 0% to 5% of loan amount |
Read Bankrate's expert Payoff Review
Overview: LightStream offers unsecured, fixed-rate personal loans as big as $100,000, with up to seven years to repay. But you must have excellent credit and sufficient assets and income to qualify for a jumbo-size personal loan.
Perks: LightStream guarantees it will beat any competitor’s rate by one-tenth of a percentage point (0.1 percent). There are no origination fees or penalties for paying off your consolidation loan early. The application and approval process is done online, making it possible to get approved and have the money deposited into your account on the same day.
What to watch out for: You must have a credit score of at least 660 to qualify. Loans set up without automatic payment are 0.5 percent higher.
| Lender | LightStream |
|---|---|
| Bankrate Rating | 4.6 / 5.0 |
| Min. Credit Score | 660 |
| Est. APR | 5.95% - 16.79% (with autopay) |
| Loan Amount | $5,000 - $100,000 |
| Term Lengths | 2 to 7 years |
| Min. Annual Income | None |
| Fees | None |
Read Bankrate's expert Lightstream Review
Overview: Pentagon Federal Credit Union, known as PenFed, offers unsecured, fixed-rate personal loans for debt consolidation. PenFed is insured by the National Credit Union Administration (NCUA). Credit unions have lower costs and fees than other lenders because they are not for-profit businesses owned by their members.
Perks: PenFed does not charge origination fees, annual fees or prepayment penalties. You can borrow as little as $500. The application and approval process can be done online or at one of PenFed’s 51 branches. You can get approval within one business day. Credit unions tend to be a little more forgiving about having so-so credit.
What to watch out for: You must become a member of the credit union to apply for a loan. There is a minimum charge of $20 for late payments. The best rates and terms still go to the most creditworthy borrowers.
| Lender | PenFed |
|---|---|
| Min. Credit Score | 650 |
| Est. APR | 6.49% - 17.99% |
| Loan Amount | $500 - $25,000 |
| Term Lengths | Up to 5 years |
| Min. Annual Income | None |
| Fees | Late fee: $20 for late payments. |
Overview: OneMain Financial offers unsecured, fixed-rate personal loans to consumers with damaged credit. Loan amounts are smaller and rates are higher than typical debt consolidation personal loans. Your credit history, income and debt load determine whether you qualify.
Perks: There is no penalty for paying off the loan early. If you do not qualify for an unsecured personal loan, OneMain may accept your car, boat, RV or motorcycle as collateral, provided it is insured and appraises at a sufficient value.
What to watch out for: OneMain charges an origination fee, which varies by state, and rolls it into the monthly payments. Late fees also vary by state. OneMain Financial does not operate in Alaska, Arkansas, Connecticut, Massachusetts, Rhode Island and Vermont. Borrowers in these states have unsecured loan limits of $7,000 to $8,500: Florida, Iowa, Maine, Mississippi, North Carolina, New York, Texas and West Virginia.
| Lender | OneMain Financial |
|---|---|
| Bankrate Rating | 3.7 / 5.0 |
| Min. Credit Score | 622 |
| Est. APR | 18.0% - 35.99% |
| Loan Amount | $1,500 - $20,000 |
| Term Lengths | 2 to 5 years |
| Min. Annual Income | None |
| Fees | Origination fee: Varies by state; 1% to 10% of loan amount or a flat rate of $25 to $300. Late fee: Varies by state; $5 - $30 or 1.5% - 15%. |
Read Bankrate's expert OneMain Financial Review
Overview: Discover Financial Services offer unsecured personal loans for debt consolidation, with the option to pay creditors directly. The average Discover borrower has very good credit.
Perks: Discover personal loans have no origination fees, closing costs or prepayment penalties. It’s possible to get an approval decision the same day you apply and get your money the next business day, provided your application is accurate and complete.
What to watch out for: There is a $39 penalty for late payments. Co-signers are not permitted and Discover personal loans cannot be used to pay for college education expenses or to pay off a secured loan.
| Lender | Discover |
|---|---|
| Min. Credit Score | 660 |
| Est. APR | 6.99% - 24.99% |
| Loan Amount | $2,500 - $35,000 |
| Term Lengths | 3 to 7 years |
| Min. Annual Income | $25,000 annually |
| Fees | Late fee: $39 |
Overview: Upstart offers unsecured personal loans for debt consolidation to consumers who don’t have much credit history but have a regular income. Upstart considers an applicant’s education, area of study, earning potential and job history.
Perks: Upstart does not charge prepayment penalties. Payment options are flexible, including the option to pay by check. The initial application generates a soft credit pull that does not hurt your score. You can get your loan money in one business day after approval.
What to watch out for: There is no rate discount with automatic payments. You must have a U.S. bank account. Upstart charges origination fees of up to 8 percent, which is steep.
| Lender | Upstart |
|---|---|
| Bankrate Rating | 3.8 / 5.0 |
| Min. Credit Score | 620 |
| Est. APR | 6.53% - 35.99% |
| Loan Amount | $1,000 - $50,000 |
| Term Lengths | 3 or 5 years |
| Min. Annual Income | None |
| Fees | Origination fee: Up to 8%. Late fee: The greater of 5% of the unpaid amount or $15 |
Read Bankrate's expert Upstart Review
Overview: Marcus by Goldman Sachs offers unsecured personal loans for debt consolidation to consumers who don’t have much credit history.
Perks: You can change the date your monthly bill is due up to three times during the life of the loan. The $40,000 loan limit can accommodate borrowers with a lot of debt to consolidate. Your application triggers a soft pull on your credit, which doesn’t affect your credit score. There are no fees.
What to watch out for: No co-signers are allowed. It can take five days to receive your loan funds. Consumers with lackluster credit may not qualify.
| Lender | Marcus by Goldman Sachs |
|---|---|
| Bankrate Rating | 3.7 / 5.0 |
| Min. Credit Score | 660 |
| Est. APR | 6.99% - 28.99% |
| Loan Amount | $3,500 - $40,000 |
| Term Lengths | 3 to 6 years |
| Min. Annual Income | None |
| Fees | None |
Read Bankrate's expert Marcus by Goldman Sachs Review
If your unsecured debts are eating up 40 percent or more of your income, a personal loan for debt consolidation is worth considering.
“If you currently have multiple debt obligations that you are juggling, a consolidation loan can be a way to simplify your life and possibly save on interest costs,” says Greg McBride, CFA, Bankrate chief financial analyst. “A good candidate is a borrower who has steady income, decent credit, a discipline to refrain from running up more debt and a desire to pay off what is currently owed.”
A lender will look at your credit history, income and your debt-to-income ratio to see whether you have been a reliable borrower and have the means to repay the loan. Before you apply for a loan, get a copy of your credit report from each of the three major credit bureaus. Credit score requirements vary by lender, but most lenders want a borrower with a FICO score of at least 670. Some debt consolidation loan companies work with consumers with tainted credit, though, so don’t assume a lower credit score will disqualify you.
Debt consolidation loans can save you money in interest charges, make budgeting easier and reduce bill-paying stress. If not used wisely, though, a debt consolidation loan can add to your troubles.
If you take out a loan to pay off credit cards, for example, then start using those cards again, you are digging an even deeper hole that you may not be able to climb out of.
If you have more questions about debt consolidation, check out our Debt Consolidation Guide.